South Carolina’s Cap on Weekly Unemployment Benefits Is Illegal, Class Action Contends

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A proposed class action alleges the cap placed on weekly unemployment benefits by the South Carolina Department of Employment and Workforce (SCDEW) is illegal under state law. 

The 25-page lawsuit, filed against SCDEW Executive Director Dan Ellzey, in his official capacity; SCDEW; and the state, alleges South Carolina’s $326-per-week cap on benefits, in place since at least 2007, was not implemented pursuant to any regulation and stands in direct conflict with state law, which provides that the maximum weekly benefit amount is required to be 66 and two-thirds percent of the statewide average weekly wage. 

According to the complaint, 66 and two-thirds percent of the statewide average weekly wage in South Carolina has been greater than $326 since at least 2000. In 2007, when the cap was set to $326 per week, the maximum unemployment benefit should have been $430 weekly, the case claims.

“Therefore, individuals whose weekly benefit amount was/is greater than $326 have been and continue to be illegally deprived of unemployment benefits to which they are statutorily entitled,” the suit charges, alleging that every insured worker whose average weekly wage is greater than $652 has been illegally denied benefits for years. 

When submitting a claim for benefits with the SCDEW, a claimant must provide certain identifying information and a detailed work history, including wage information, the suit says. After receiving an individual’s claim, SCDEW is responsible for reviewing the information, determining the eligibility of the claimant and benefit amount and administering weekly benefits payments, the case relays. 

Under South Carolina law, benefits for an insured worker are calculated based on 50 percent of their weekly average wage, and the weekly benefit amount, if not a multiple of one dollar, must be computed to the next lower multiple of one dollar, the lawsuit continues. By law, no insured worker’s weekly benefit amount may be less than $42 or greater than 66 and two-thirds percent of the statewide average weekly wage most recently computed before the beginning of the individual’s benefit year, according to the case.

Since 2011, the statewide average weekly wage has grown from $704.92 in that year to $903.40 in 2021, according to the complaint. Per the lawsuit, the maximum weekly benefit amount, i.e., 66 and two-thirds percent of the statewide average weekly wage, has gone from $469.94 in 2011 to $602.87 in 2021.

Under the formula provided by state law, a benefits cap of $326, which was implemented in 2007, would apply to the year 1999, when the statewide average weekly wage was roughly $489.05, the plaintiff contends. 

“Consequently, since at least 2007, SCDEW has illegally capped unemployment benefits, and every insured worker whose average weekly wage is greater than $652 has been illegally denied benefits by SCDEW,” the suit allege. 

The case goes on to state that the $326 weekly benefits cap, which came in light of the Great Recession, stems from no statute or regulation. 

Included in the proposed class are all insured workers in South Carolina who received unemployment benefits at any time between July 6, 2018 and the date the complaint was filed, July 6, 2021, and whose weekly benefit as determined by the lawful formula was greater than $326. 

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