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Business owner challenges state's decision rescinding unemployment benefits


The South Dakota Supreme Court is considering whether a Black Hills bed and breakfast owner needs to pay back unemployment benefits she received when her business slowed in the early months of the pandemic.

Darcy Bracken owns the White Tail Ridge Bed and Breakfast in Hermosa. When COVID-19 arrived in 2020, bookings dried up for months.

She applied for unemployment benefits. The South Dakota Department of Labor approved her application and paid her over $14,000 from CARES Act funding.

About a year later, the department determined she was not eligible and told her to return the payments.

“The determination notice that is initially issued to claimants that are seeking CARES Act funds is a monetary determination," said Seth Lopour, an attorney representing the Department of Labor. "That determination tells them that they are monetarily eligible, but that the state reserves the right to claw back those funds if they receive new information, or if there’s error."

Lopour argued Bracken did not provide evidence her business was directly impacted by the pandemic. He also said Bracken's business never actually closed.

"In a state where we stayed open, and in a state where we advertised our tourism, there is a significant question as to whether or not this bed and breakfast was impacted, to a specific degree, by COVID-19," Lopour said.

Attorney Eric Schulte represented Bracken. He said the state ignored federal guidelines on administering CARES funding. He said they also ignored common sense.

“I think a predicate fact for understanding this is the devastation the pandemic caused not only in South Dakota, but across the world," Schulte said. "And applying common sense to that test, I think it is a direct result, your honor.”

Schulte argued Congress was clear in its intent that these funds were meant to support people facing circumstances like Bracken’s.

“If a self-employed person has a significant diminution in their business, they’re eligible for benefits," Schulte said. "And frankly, that’s why the DOL approved her application in the first place.”

Bracken challenged the Department of Labor's decision in a circuit court, but lost. She appealed to the South Dakota Supreme Court, which heard her case Wednesday.

The court is expected to rule on the case in the coming months.

Listen to the full arguments in the audio player above.

Josh Chilson is the news director at South Dakota Public Broadcasting. A Florence, S.D. native, Josh graduated with a journalism degree from South Dakota State University. He has worked as a newspaper reporter and videographer, and most recently as managing editor for Dakota News Now. Josh is based out of SDPB's Sioux Falls studio.