An Indiana judge said the state must continue paying enhanced unemployment benefits until a lawsuit on the issue is decided, ruling that ending the payments could cause "irreparable harm" if out-of-work residents can't pay for housing or food.
The preliminary injunction comes as 26 states — with all but one, Louisiana, run by a Republican governor — are in the process offor millions of people. On June 19, Indiana ended the supplementary federal unemployment aid, which included an extra $300 a week in payments, rather than allowing them to expire in early September.
Indiana's Department of Workforce Development, which handles unemployment benefits, told CBS MoneyWatch that it is "determining how to proceed because the federal programs no longer exist after their termination on June 19."
Last month, Indiana Governor Eric Holcomb announced he was shutting off the extra unemployment aid before federal funding ends in early September, citing "help wanted signs posted all over Indiana" and comparing the state's economy to "an Indy 500 race car engine."
Like Holcomb, other governors have argued that the extra $300 in weekly payments are keeping workers on the sidelines at a time when businesses need employees.
But workers in those states have sued over the early cutoff, arguing that the economy hasn't yet fully recovered and that they're dealing with a complex set of issues such as insufficient childcare and ongoing concerns about the pandemic.
The ruling could give hope to unemployed workers in other states, such as in Texas where thousands of jobless residents sued Governor Greg Abbott over that state's early termination of jobless aid, alleging he overstepped his powers.
Earlier this month, Indiana Legal Services sued to halt the early termination of benefits, alleging it would violate an Indiana law requiring the state to provide all available federal insurance benefits to citizens.
Marion Superior Court Judge John Hanley on Friday ruled that Indiana must continue to provide the enhanced jobless aid until the lawsuit is decided. He added that "a preponderance of evidence" indicates that the early termination of extra federal unemployment benefits violates state law, and noted that curtailing the aid could cause hardship for some in the state.
"A loss of housing or medical care and the inability to provide food, shelter and adequate childcare for a family constitute irreparable harm pending resolution of this cause of action and are not adequately compensable by an award of damages," Hanley wrote in the ruling.
A recent study from The Century Foundation, a left-leaning think tank, found that ending the federal benefits early would impact about 286,000 people in Indiana.
"Kudos to Judge Hanley for standing up for unemployed workers and the state's legal mandate to keep the jobless out of severe hardship," said Andrew Stettner, an expert on unemployment at the Century Foundation.
A spokesman for Indiana's Department of Workforce Development said jobless workers don't need to take action at the moment. "Updated information will be provided on DWD's website," he said in an email to CBS MoneyWatch.
Gov. Holcomb's office said it plans to appeal the court order.
"The state of Indiana took the appropriate steps to terminate its participation in federal pandemic unemployment program," Holcomb's office said in an emailed statement. "The agreement ended on June 19. The Governor and Department of Workforce Development will discuss an immediate appeal of the judge's order with the Attorney General."