State News

Statement from Gov. Henry McMaster on Dismissal of Lawsuit Challenging Return to Pre-Pandemic Unemployment Programs to Address Labor Shortage

Governor Henry McMaster released the following statement regarding today’s circuit court decision dismissing a lawsuit challenging the Governor’s decision to terminate South Carolina’s participation in optional federal pandemic-related unemployment-benefit programs and rejecting a request to reinstate the extra benefits:

“The Court correctly recognized that this lawsuit lacked merit from the start and appropriately rejected the plaintiffs’ effort to force the State to reenroll in these optional federal unemployment programs. I applaud the Court for dismissing this case and declining to reinstate the very  payments that helped create the current labor shortage.”

“These supplemental payments were intended to provide short-term assistance to individuals who lost their jobs, through no fault of their own, at the start of the pandemic. Continuing these supplemental benefits would have converted that emergency aid into a dangerous federal entitlement, incentivizing workers to stay at home rather than applying for one of the over 86,000 open positions in the State of South Carolina. Businesses large and small are fighting to survive and thrive, and they should not have to compete with federal benefits when looking for employees.”

“Today’s court decision to dismiss the lawsuit challenging the Governor’s ability to terminate optional federal unemployment benefits is critical to keeping our economy moving forward,” said President and CEO of the South Carolina Chamber of Commerce Bob Morgan. “We commend Governor McMaster for making the decision in May to take this action, balancing the needs of our employers and the citizens of South Carolina. We look forward to continuing to support the Governor, DEW, and other business associations in opposition to this lawsuit.”

On May 6, 2021, Governor McMaster directed the S.C. Department of Employment and Workforce (DEW) to terminate South Carolina’s participation in all federal, pandemic-related unemployment benefit programs, effective June 30, 2021.  Governor McMaster instructed the agency to take the action in a letter to DEW’s Executive Director Dan Ellzey. 

In a previous memo to Governor McMaster, Director Ellzey summarized the changes to the federal unemployment programs that went into effect on June 30.  Those programs included the following:

  • Pandemic Unemployment Assistance (PUA)
  • Pandemic Emergency Unemployment Compensation (PEUC)
  • Federal Pandemic Unemployment Compensation (FPUC)
  • Mixed Earners Unemployment Compensation (MEUC)
  • Emergency Unemployment Relief for Governmental Entities and Nonprofit Organizations
  • Temporary Federal Funding of the First Week of Compensable Regular Unemployment for States with No Waiting Week

On July 28, 2021, almost three months after the Governor’s announcement and four weeks after the extra benefits ended, four anonymous plaintiffs filed this lawsuit challenging Governor McMaster’s decision to terminate South Carolina’s participation in three of the new federal COVID-19-related unemployment-benefits programs: PUA, PEUC, and FPUC.  Plaintiffs also sought a preliminary injunction to require the State to reenroll in these three programs. Governor McMaster and Director Ellzey moved to dismiss the lawsuit and opposed the Plaintiffs’ request for a preliminary injunction.

In addition to denying Plaintiffs’ motion seeking a preliminary injunction, the Court also dismissed the lawsuit in its entirety, noting that “Plaintiffs cannot bring any cause of action here” and that “[t]he defects in the Complaint are legal ones that cannot possibly be cured.” 

A copy of the Court’s Order is available here.

The following entities filed briefs in support of the Governor’s decision to terminate the State’s participation in the new federal programs:

  • S.C. Chamber of Commerce
  • S.C. Restaurant & Lodging Association 
  • Chamber of Commerce of the United States
  • National Federation of Independent Business Small Business Legal Center

Copies of these briefs are available here and here.

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