(C) Iowa Capital Dispatch
This story was originally published by Iowa Capital Dispatch and is unaltered.
. . . . . . . . . .



Litigation continues over Reynolds' 2021 decision to curtail jobless benefits • Iowa Capital Dispatch [1]

['Clark Kauffman', 'Robin Opsahl', 'Brooklyn Draisey', 'More From Author', '- July', '.Wp-Block-Co-Authors-Plus-Coauthors.Is-Layout-Flow', 'Class', 'Wp-Block-Co-Authors-Plus', 'Display Inline', '.Wp-Block-Co-Authors-Plus-Avatar']

Date: 2025-07-10

Litigation over Gov. Kim Reynolds’ 2021 refusal to pay pandemic-related jobless assistance to 30,000 Iowans is continuing with a newly filed lawsuit alleging the governor’s decision was unlawful.

The lawsuit, filed in Polk County District Court, mirrors claims made by the same plaintiffs, Karla Smith of Pleasantville and Holly Bladel of Clinton, in a 2021 state-court lawsuit that was voluntarily dismissed by the plaintiffs before being refiled in 2023 in federal court.

The federal lawsuit was dismissed by U.S. District Court Chief Judge Stephanie M. Rose, partly due to jurisdictional issues. Rose ruled that one of the lawsuit’s central claims, which cited federal statutes, could not be based on “a violation of state law – even state constitutional law.” Rose also concluded the plaintiffs “did not have a continuing, constitutionally protected property interest in the pandemic-related unemployment insurance benefits.”

On June 3, 2025, the U.S. Court of Appeals for Eighth Circuit affirmed Rose’s decision. That same day, lawyers for Smith and Bladel filed their new lawsuit in state court, claiming the two women and thousands of other Iowans were illegally denied unemployment benefits in 2021 due to the actions of Reynolds and Iowa Workforce Development Director Beth Townsend.

According to the lawsuit, Reynolds and Townsend violated Iowa’s Employment Security law, which requires the state to “cooperate with the United States Department of Labor to the fullest extent” and make available to Iowans “all advantages available under the provisions of the Social Security Act that relate to unemployment compensation.”

Lawyers for Smith and Bladel are also seeking class-action status in the case in an effort to recover damages for thousands of Iowans who may have been harmed by Reynolds’ decision.

While the state has yet to file a response to the latest lawsuit, the claims were rejected by Reynolds in 2023 when she defended her actions by saying “the federal government doesn’t get to run” the state of Iowa.

“Paying people to stay home at a time when there are more jobs available than people to fill them defies common sense. Iowans know there is dignity in work,” Reynolds said then.

Ohio court recently ruled on issue

Iowa was one of at least 25 states, all led by Republican governors, that chose to terminate federal, pandemic-related unemployment assistance to jobless residents before the programs expired in 2021. The states did so largely in response to labor shortages, claiming the enhanced benefits were encouraging people to remain unemployed rather than return to the workforce.

Ohio was one of those states — and five months ago, in February 2025, as part of a class action lawsuit filed on behalf of Ohio residents, the Franklin County Court of Common Pleas ruled that Gov. Mike DeWine must reinstate Ohio’s Federal Pandemic Unemployment Compensation program and “take all action necessary to obtain Ohio’s share of FPUC program benefits from the Department of Labor.”

The State of Ohio is now appealing the ruling in an effort to block the federal government’s payment of pandemic-related unemployment benefits.

The litigation in Iowa, Ohio and other states stems from Congress’s March 2020 decision, at the outset of the COVID-19 pandemic, to approve the Coronavirus Aid, Relief and Economic Security — better known as the CARES Act — to address mass layoffs, business closures and soaring unemployment.

The act provided enhanced unemployment benefits, provided for cash payments to be made to qualified recipients, extended the period of eligibility for benefits, and allowed for benefits to be paid to people who wouldn’t otherwise have been eligible.

Iowans later received letters from Iowa Workforce Development stating they would be eligible for the benefits through Sept. 4, 2021. However, in a May 10, 2021, memorandum, Townsend recommended that Reynolds terminate Iowa’s participation in the federal programs effective June 12, 2021.

The next day, Reynolds officially adopted the recommendation and announced that IWD, which administers many elements of Iowa’s unemployment programs, would be withdrawing from participation in the federal, pandemic-related unemployment programs, despite the fact that they were entirely funded by the federal government.

Iowa’s participation in the programs was terminated on June 12, three months before the programs were set to expire.

At the time, the U.S. Congress Joint Economic Committee warned that Iowa and other states that pulling out of the unemployment programs stood to lose up to $13 billion in economic activity by refusing the infusion of federal money.

Plaintiffs sue over ‘life-sustaining benefits’

Like the previously filed federal lawsuit over Reynolds’ actions, the new, state-court lawsuit alleges the Iowa governor’s “refusal to ensure continued access to federal pandemic-related unemployment benefits” deprived approximately 30,000 Iowans of “life-sustaining benefits” to which they were entitled. The lawsuit also notes that the number of Iowans affected by Reynolds’ decision might exceed 55,000.

The governor’s decision to prematurely terminate Iowa’s involvement in the programs “violated clear legislative mandates and constituted an unlawful exercise of executive authority,” the lawsuit claims, adding that Iowa’s Employment Security Law specifically required the state to provide citizens with “all advantages available under the provisions of the Social Security Act that relate to unemployment compensation.”

Smith, who worked at Casey’s General Store when the pandemic hit, alleges that in mid-March 2020, her doctor told her a preexisting lung condition made it dangerous for her to continue working in a retail setting that had yet to install Plexiglas dividers at workstations and didn’t require face masks.

Smith alleges she quit her job to self-quarantine and began collecting PEUC benefits of $408 per week in addition to FPUC benefits to pay for food, housing, and other monthly expenses. Reynolds’ and Townsend’s decision to terminate Iowa’s involvement in the federal programs left Smith without a critical source of income just as the Delta variant surged, the lawsuit claims.

Bladel worked for a restaurant and gas station but was replaced after seeking time off to care for an elderly relative who was immunocompromised and at risk for COVID-19. She then began collecting PUA and FPUC benefits until Iowa terminated its involvement in the programs.

The lawsuit is one of two active cases the plaintiffs are pursuing in state court over the unemployment issue. The other case, initiated in November 2024, is basically an appeal of the administrative decisions made by the state, and seeks judicial review of those decisions.

In that case, the state is seeking dismissal of the lawsuit and has accused the plaintiffs of having “shopped their lawsuit around first to state court, then to federal court, and now they are back to state court.”

[END]
---
[1] Url: https://iowacapitaldispatch.com/2025/07/10/litigation-continues-over-reynolds-2021-decision-to-curtail-jobless-benefits/

Published and (C) by Iowa Capital Dispatch
Content appears here under this condition or license: Creative Commons CC BY-ND-NC 4.0.

via Magical.Fish Gopher News Feeds:
gopher://magical.fish/1/feeds/news/iowacapitaldispatch/