Hawaii is nearly a full year into the COVID-19 pandemic and the economic devastation that has come with it. 

Nonetheless, the state’s labor department is still struggling to pay out the more complex unemployment insurance claims in a timely manner, and officials say the bureaucracy remains hamstrung by a shortage in manpower and an obsolete computer mainframe.

These days, the main holdup has to do with so-called “overpayment issues,” which typically involve discrepancies between the wages reported by claimants and their former employers.

Sign reads ‘DLIR is Broken Fix it now! ‘ at a small demonstration held at the Capitol.
A sign from a small demonstration in front of the State Capitol last year calls for improvements to the state labor department’s handling of unemployment. The agency is still struggling to keep pace with its workload for complex claims. Cory Lum/Civil Beat/2020

Thousands of local residents, still jobless or under-employed in an economy that depends heavily on tourism and hospitality, have been trying to extend their UI claims with federally funded COVID-relief programs once their initial state benefits run out.

However, “every single claim” must be manually reviewed first to make sure it qualifies for those federal dollars, said Anne Perreira-Eustaquio, director of the Department of Labor and Industrial Relations. 

The reviews have been raising red flags on what’s still an unknown number of Hawaii’s UI claims, she said, and that’s been further delaying payments for months.

Melissa Davenport, for example, said in an email to Civil Beat that she applied for the federal Pandemic Emergency Unemployment Compensation program, or PEUC, on Oct. 20, and that she’s yet to receive payments or updates from DLIR on what’s causing the delay, despite assurances from representatives over the phone that her payments were imminent.

“Weeks passed. I was being patient because I had seen through the (Hawaii Unemployment Updates and Support Group) that the (time) average people were waiting was about 7-8 weeks to be processed,” Davenport wrote Wednesday. “That time came and went.” 

Generally, the DLIR’s reviews of claims filed earlier in the pandemic are finding discrepancies between the wages that the claimants and their former employers reported to the state, Perreira-Eustaquio said. Those discrepancies prompt further scrutiny, and it’s left to a DLIR adjudicator to decide whether the claim qualifies and can advance to PEUC. The adjudicators further have to check for fraud.

Such adjudicators, or examiners, have been in short supply throughout the pandemic, however, despite DLIR’s efforts to bolster their numbers.

Trying To Keep Workers And Catch Up

The agency put out a call in August to Hawaii’s legal community asking for pro bono help with its backlog of complex claims. That request attracted some 20 volunteers but they all eventually left, Perreira-Eustaquio said Wednesday.

“They pretty much burned out,” she said. Another 25 examiners on loan from other state agencies all returned to their home departments by the end of 2020. 

The number of in-house examiners at DLIR constantly fluctuates. In August, agency spokesman Bill Kunstman said there were 47 examiners on board, including 20 hired after the pandemic hit, and that DLIR was in the process of hiring 36 more to try and catch up on all the claims-resolution work.

On Wednesday, Perreira-Eustaquio said she couldn’t give the latest number of examiners on staff because it changes daily. “We’ve had people come and go. It’s hard to keep the staff here,” she said.

The number has generally hovered recently around 36 permanent examiners, Perreira-Eustaquio added.

Unemployment Hawaii Convention Center
DLIR uses the Hawaii Convention Center for claims examiners and an in-house call center, but retaining staff has been difficult, the agency’s director said. The facility is closed to the public. Courtesy: DLIR

DLIR also contracted 100 examiners from an outside company last year using federal CARES Act money to handle less complex claims. That money has expired, and the 50 outsourced contractors who remain will be gone by March 13, Perreira-Eustaquio said.

The state agency is in the process of hiring an additional 67 examiners to deal strictly with overpayment issues, she added on Wednesday. So far, 14 of them have started, Perreira-Eustaquio said.

DLIR has had similar challenges keeping its latest call center staffed. It recently hired 100 people for the new center but 25 people declined the offer and as many as 20 others stopped showing up after a short time, she said. 

Peter Yee, a volunteer moderator for the Hawaii unemployment updates and support Facebook group, said that payment delays stemming from the overpayment issues have been dominating the discussion among the group’s nearly 25,000 members.

Many of the overpayment problems discussed on the site have to do with separation or severance pay, Yee said. That pay doesn’t have to be declared on claims if it was received after a formal job separation, both Yee and Perreira-Eustaquio said. 

But Yee said there’s been a lot of confusion on that matter, including from the DLIR itself, and that many employers reported the pay as regular wages to the agency. That’s led to numerous claims being flagged and stuck, unable to move on to PEUC, Yee said.

How many are stuck isn’t clear, although some 70,000 Hawaii claims are in the process of moving from one extension program to another, Perreira-Eustaquio said. 

Perreira-Eustaquio said the claims dealing with separation pay don’t represent most of the overpayment issues, and that those cases should be easily resolved. Nonetheless, claimants facing that issue, such as Davenport, have been waiting months.

Complex Programs And An Aging Mainframe

It hasn’t been easy navigating the federal legislation on unemployment insurance coming out of Washington, D.C., Perreira-Eustaquio said. 

The political wrangling in the Beltway has resulted in a complicated and at times confusing mix of state and federal extension programs for UI payments, and it’s not always clear to claimants which program they should apply to first. 

In December, when it wasn’t clear whether then-President Donald Trump would sign the latest COVID-relief package into law, many Hawaii UI claimants applied for the state-level extended benefits program, or “EB20,” to ensure that their weekly payments would continue.

Trump did sign the COVID-relief package, however. Some claimants could lose out on the latest PEUC extension, which expires on March 13, if they get locked into the 13 weeks of benefits provided by EB20 instead, both Perreira-Eustaquio and Yee said. The latest PEUC package provides for 11 weeks of benefits. Yee said there’s been widespread “buyer’s remorse” among the EB20 applicants in Hawaii. 

DLIR’s offices in downtown Honolulu remain closed to the public. Cory Lum/Civil Beat/2020

Accordingly, DLIR is sending emails to any local claimants who applied for EB20 after Dec. 13 to make sure they still want to go that route, Perriera-Eustaquio said.

Leaders in Washington have signaled, however, that a $1.9 trillion economic stimulus package could be passed later this year. If signed into law, it could allow Hawaii’s jobless claimants to get all the weekly benefits they are eligible for regardless of whether they start with EB 20 or PEUC, Perreira-Eustaquio said. 

Still, it hasn’t been signed into law yet, and she doesn’t want to give claimants any guidance until then. There’s a sense that the PEUC program is going to continue, but “I could be wrong,” Perreira-Eustaquio said.

The programs’ complexity has also led to problems and delays rolling them out in Hawaii due to the state’s antiquated 1980s-era mainframe, Eustaquio said. DLIR programmers have to be able to account for multiple scenarios based on when different claims expire. “You have to be able to program every single exception,” Perreira-Eustaquio said.

The programmers also have to be careful to avoid crashing the mainframe because it’s already under heavy duress from all the pandemic-related activity, she added. 

The mainframe stores all the UI claim data on backup tapes. However, if the mainframe crashes, DLIR will be unable to process payments, she said.

The mainframe challenges stem from “how complicated these new programs are,” Perreira-Eustaquio said. If Congress had set up a federal benefits program that could continue without any gaps in the schedule for when that money is disbursed, life would have been a lot simpler for the Hawaii mainframe programmers. 

DLIR expects to start issuing payments soon on the latest 11-week PEUC extension and $300 weekly “plus-up” payments under the Federal Pandemic Unemployment Compensation program, Perreira-Eustaquio said, but she didn’t have an exact date. (The $300 plus-up is already being added to Pandemic Unemployment Assistance payments because that separate program isn’t run on the old mainframe.)

The department reports having paid out nearly $3.5 billion in UI claims since the pandemic hit Hawaii. The state also currently has the highest unemployment rate of all 50 states, at 9.3%, narrowly edging out Nevada, another state that depends heavily on tourism and hospitality.

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