Alabama’s COVID-19 Unemployment Payback Woes: Residents Struggle with System Failures

For Spencer Johnson, mastering three Japanese writing systems was a breeze compared to navigating Alabama’s convoluted unemployment system.

“This has been the most baffling experience of my life,” he said, reflecting on his interactions with the Alabama Department of Labor. Their mishandling of pandemic-related unemployment benefits has escalated to a U.S. Supreme Court case scheduled for October.

Johnson, 30, is a University of Alabama student studying Japanese, with aspirations to complete his degree in Japan. He’s also launched a business bridging language gaps between English and Japanese speakers. Yet, a $4,000 unemployment debt lingers over his head, a remnant of the state's chaotic pandemic response.

Thousands of Alabamians, like Johnson, received notices demanding repayment of unemployment benefits they received during the pandemic. These demands often stem from errors in the department’s outdated computer systems, minor application mistakes, or missing information. The confusion has left many struggling to understand why they owe money.

In the spring of 2020, Johnson was preparing to transition from Coastal Alabama Community College to the University of Alabama. He had secured a summer job with the Census, but COVID-19 led to an abrupt termination. He applied for unemployment and received benefits for a few months before voluntarily stopping them once school resumed. However, two years later, the department claimed he owed back every penny.

With no family support and living paycheck to paycheck, Johnson found himself overwhelmed by the demand. “I’ve had moments of despair, wondering how I’ll ever resolve this,” he shared. “It feels like there’s no end in sight.”

The Alabama Department of Labor has remained tight-lipped on individual cases, citing ongoing litigation. However, the state’s unemployment system has been plagued with issues since the pandemic began. Staffing shortages and outdated technology led to massive delays in processing claims. By 2024, Alabama had the slowest appeal processing time in the country, averaging a 752-day delay—contrast that with states processing appeals within just 10 days. Alabama also holds the highest rate of denying unemployment claims, with a staggering 377% denial rate in 2024, a figure exacerbated by prolonged decision delays.

Governor Kay Ivey called the situation “outrageous” in 2022, yet little has changed since.

Johnson’s case is a rollercoaster of appeals and confusion. Initially, an appeal reduced his debt to $700, but soon after, he was told he owed the original $4,000. Despite assurances from department staff that the issue was resolved, the contradictory communications continued, pushing Johnson to seek legal counsel. He feels the entire process has eroded his trust in government systems.

He later discovered he could have requested a waiver for the overpayment, but his decision to appeal initially disqualified him from that option—a nuance he feels was never clearly communicated.

The broader issue is set to be addressed in a U.S. Supreme Court case, which will explore whether Alabamians must exhaust the appeals process before suing the department in state court over delays. Meanwhile, Alabama continues to demand repayment, leaving many residents stuck in a bureaucratic quagmire.

April Spivey, another Alabama resident, faced a similar struggle. Pregnant and working at Sonic when the pandemic hit, her doctor advised against working due to the unknown risks of COVID-19 on pregnancy. She applied for and received unemployment benefits, only to be told later she owed $7,000—a staggering sum for the mother of five.

Spivey’s situation has left her in a precarious position. She lives in government housing and works as a Walmart delivery driver, her income barely covering basic expenses for her family. The complexity of the appeals process has only added to her frustration and uncertainty.

“I just don’t have $7,000,” Spivey said, worried about the state potentially garnishing her tax return—a vital resource for her children’s needs. “It feels like a setup.”

C.K. Lichenstein, who lost his job with the Alabama Brewers Guild during the pandemic, also encountered the system’s flaws. After relocating to Denver, he was hit with a perplexing demand for photos of his ID—on the same day the request was due. Though he hasn’t received an overpayment notice, his interactions with the department have been anything but straightforward.

As Alabamians continue to navigate this complex and often frustrating system, many are left wondering if they will ever see resolution—or if the state will continue to demand repayment for benefits they thought they were rightfully entitled to during a time of unprecedented crisis.