A federal judge has ordered Wisconsin to stop denying unemployment insurance to applicants who are also on Social Security Disability Insurance. (Getty Images creative)

Wisconsin residents who receive federal disability benefits and also work will no longer be denied unemployment compensation if they get laid off under a federal court order issued this week.

The order effectively ends enforcement of a 12-year-old state law that disqualifies people from unemployment insurance coverage if they collect Social Security Disability Insurance (SSDI) payments.

The order, released late Monday, comes a year after U.S. District Judge William Conley found that the Wisconsin law barring unemployment insurance for SSDI recipients unlawfully discriminates against people with disabilities.

The Department of Workforce Development (DWD) did not respond Tuesday to requests for comment on the order. 

The law was passed in 2013 with only Republican support in the Legislature and signed by then-Gov. Scott Walker. It was based on the premise that most SSDI recipients didn’t work and that when they filed UI claims they were “double-dipping” and probably committing “fraud.”

That impression is false, according to Victor Forberger, whose legal practice is almost exclusively focused on unemployment insurance claims.

Many people with disabilities who qualify for SSDI are still able to do some kinds of work, and they often want and need to, Forberger said Tuesday.

“They need to do this work to support themselves,” Forberger said. The typical monthly SSDI benefit “is a bare minimum, and in some cases not even that.”

Forberger, working with two other law firms, filed a lawsuit in 2021 against Amy Pechacek, secretary-designee at the Wisconsin Department of Workforce Development (DWD). The suit charged that banning SSDI recipients from filing for unemployment compensation when they lose work violates the federal Americans with Disabilities Act (ADA).

In a ruling July 17, 2024, Conley sided with the plaintiffs. Despite that ruling, DWD continued to reject unemployment insurance claims made by people receiving SSDI payments.

Conley’s new order, filed late Monday, instructs Pechacek and DWD to stop enforcing the UI ban for people on SSDI.

The lawsuit was filed as a class action. In an order June 11, Conley certified two classes of people with claims under the litigation: Those who applied for unemployment benefits in Wisconsin after Sept. 7, 2015 and were denied because they received SSDI benefits; and those who had received UI benefits after that date, but then were ordered to pay them back because they also were on SSDI.

The plaintiffs and DWD still differ on how to handle remedies for the two classes of people.

DWD wants to reprocess their claims from the start, and argues in a court brief that some of them might still not qualify for unemployment insurance for other reasons. The plaintiffs want the order to include a provision for supplemental filings and hearings.

Conley’s order requires both sides to work out a remedy agreement by Aug. 18, and if they can’t, to each submit a proposed order and identify their differences.

The judge rejected two other proposed classes: UI claimants who were penalized after failing to report their SSDI income, and SSDI recipients who never filed for unemployment insurance after losing a job.

The penalties in the law were not part of the lawsuit, Conley wrote. Identifying who might have applied for UI and did not was “unknown and unknowable,” he added.

Forberger said Tuesday that there may be several thousand people who were on SSDI and were denied unemployment compensation as a result. Once the remedy details are resolved, he expects that notifying everyone who qualifies for payment will be a complicated and time-consuming task.

“We’ve got to do a lot of outreach and a lot of explanation,” Forberger said.