St. Paul (CN) — The Minnesota Supreme Court appeared skeptical of a man’s claim that the penalty he must pay for unemployment benefits is unconstitutional.
Christopher Thigpen left his job at Target in March 2020. Between then and March 2022, he received unemployment benefits while working for Best Home Care as a home health aide for his grandmother.
Each week he applied for benefits, he stated that he was not working, which resulted in an additional $24,005 over two years.
The Minnesota Department of Employment and Economic Development (DEED) conducted an audit and determined that Thigpen was not eligible for benefits. An unemployment law judge determined that Thigpen was dishonest when applying for benefits and ordered him to repay the money plus a penalty, a decision upheld by the Minnesota Court of Appeals.
Thigpen claims that he simply misunderstood the question, assuming that he was being asked if he worked at Target rather than if he worked at all.
Minnesota’s penalty for misrepresenting information when applying for unemployment benefits is 40% of the overpayment plus 12% annual interest. The penalty also includes a 10-year ban on applying for benefits until the penalty is paid. It is erased if the debt is not paid off within 10 years.
The federally mandated penalty is a minimum of 15% of the overpayment, no interest.
Thigpen claims that the penalty is facially unconstitutional under the excessive fines clause and is requesting that the court strike it down in its entirety and instruct the legislature to reconsider.
According to Russell Squire of Southern Minnesota Regional Legal Services, who represented Thigpen during Monday’s arguments, having to repay not only the overpayment but also a 40% penalty plus 12% interest means he is being punished for not having the funds to pay his fine up front.
“The consequences of DEED’s punishments could be catastrophic for Mr. Thigpen,” Squire warned the court. “Collection actions could push him deeper into poverty or homelessness.”
Because of the 10-year ban and his inability to pay off the debt, if Thigpen loses his job again, he will be unable to access the safety net of unemployment benefits, which he continues to pay into and is intended to prevent poverty, according to Squires.
“These penalties turn that system on its head, turning a misrepresentation finding into a poverty trap,” the lawyer told the jury.
According to Keri Phillips, who represented DEED during Monday’s arguments, the excessive fines clause only applies to payments or in-kind payments, not ineligibility.
She stated that even if the court considers the 10-year ban in its opinion, it would be reasonable.
“Unlike in many states with mandatory periods of disqualification or cancellation, appellant here can become eligible for benefits by paying back the overpayment and penalty,” Phillips told the jury.
Thigpen’s overpayments are typically higher than those in most unemployment cases because special pandemic-related programs, such as the CARES Act, allowed Thigpen to collect payments for 104 weeks rather than the 26 weeks specified by state statute. During this time, additional federal unemployment benefits were used to provide higher payments.
While the justices debated how a ruling in Thigpen’s favor would work, whether to overturn the entire law or just the Thigpen case, they appeared to be opposed to undoing something the legislature had already considered several times.
Over the past few years, the state legislature has made changes to the statute. Last year, a committee heard arguments about reducing administrative penalties for misrepresenting information when applying for unemployment benefits.
At the time, a DEED representative testified against lowering the penalties, and the idea was never passed out of committee.
“This is the legislature doing what legislatures do,” Chief Justice Natalie Hudson explained in court on Monday.
She expressed concern about Thigpen’s argument because, even if the court agrees, it will not return to the legislature immediately, leaving no penalty for misrepresentation as it applies to unemployment benefits.
“The excessive fines clause is a blunt tool,” Squire responded, adding that while the judiciary should not be involved in direct policy-making, it is the court’s responsibility to point out when legislators have gone too far.
Squire attempted to bolster his argument Monday, claiming that Thigpen would be financially better off if he were facing criminal charges instead. The fine would be around $4,000, and a 12-month sentence would be suspended for those with no criminal history.
“We do want to leave things up to the legislature, but we don’t want to let the legislature do things that go too far or grossly disproportionate or, in this case, impose administrative penalties that exceed criminal ones,” Squire, the judge, said.
