Updated on October 10, 2023.

Montpelier businesses that have struggled to reopen following the catastrophic July flooding say they’ve also been waging an infuriating bureaucratic battle to keep unemployment benefits flowing to their workers.

The owners of Three Penny Taproom and Capitol Grounds Café say they've had difficulty securing work-search exemptions for their unemployed staff, an added headache during a difficult rebuilding process.

“We want to take care of what is essentially our family at Three Penny, and [the state] made it exceptionally difficult,” said Dani Hersham, general manager of the popular Main Street watering hole.



The state Department of Labor typically requires people to search for a new job in order to receive unemployment benefits. But the state waives that requirement for up to 10 weeks if a business knows when it will reopen, such as when a manufacturer temporarily shuts down for maintenance, explained Michael Harrington, the labor department's commissioner.

In that case, it doesn’t make sense to require workers to run around looking for other work since they’ll be reemployed again soon, Harrington said.

The state granted employees at some flood-damaged businesses that 10-week exemption — but then reinstated the work-search requirement once those 10 weeks had gone by. There have been examples of businesses that "strung their employees along" while doing little to reopen, which does a disservice to the employees, too, Harrington said.

Ultimately, after the owners protested, the state offered Three Penny and Capitol Grounds extensions, which means that their workers will continue to receive benefits without having to look for other jobs.



Three Penny had hoped to reopen on September 15, but renovating the place — which was inundated with three feet of water on July 11 — has gone slower than expected. While the business has figured out a way to serve burgers and cans of beer in an outdoor seating area, the inside remained a cluttered construction zone populated by a small army of contractors last week.

Now, Three Penny hopes to reopen by the end of October, but it's largely at the mercy of contractors, health inspectors and other forces. The business, which opened in 2009 and expanded into a neighboring space earlier this year, employed 38 people before the flood.

Hersham and Hamilton say they have tried to help their employees navigate the state’s complex unemployment benefits process to ensure they get the financial support they need to survive and to ensure the business still has a workforce once it can reopen.

Workers receiving unemployment benefits normally have to show that they’ve been actively looking for a new job. They do so by documenting the contacts they’ve made with prospective employers.

“It’s a challenging position to be in when you know that there are good workers out there who are simply waiting for their employers to reopen when there are plenty of other jobs they could be looking at,” Harrington said.

Getting an extension feels like a Pyrrhic victory for Julia Watson, owner of Capitol Grounds. She had about 24 employees before the flood; by mid-September, 15 had gotten other jobs.

The Department of Labor told the remaining nine, who were still on unemployment, to start looking for work elsewhere. Many did, Watson said.

“Now I maybe have three employees on unemployment because everyone else was like ‘Screw this,’” Watson said.
Now, if she can actually get her popular coffee shop back open by November 1, she predicts she’ll be “working 95 hours a week” and under intense pressure to recruit and train new staff. Several employees who've landed other jobs say they probably won't return.

Watson said she doesn’t understand why flood-ravaged businesses had to fight for the extensions that should have been granted automatically, as was the case during the pandemic. Instead, she said, she couldn’t get anyone to pay attention to her concerns until she sent an angry letter to various elected officials.

“I was like, ‘This is what’s happening. Fix it! I don’t have time to deal with this!’” Watson said.

Hamilton, of Three Penny Taproon, had his hands full orchestrating the renovations but got involved when Hersham expressed exasperation at the roadblocks. He realized that something was broken when he, co-owner Kevin Kerner and Hersham all got different answers to the same question on the same day, "which is insane!" Hamilton said.

That level of dysfunction tells Hamilton that the state didn't learn much from the pandemic about how to adapt during a disaster.




Ultimately, the issue was elevated to the desk of Cameron Wood, director of the state's unemployment program, who granted extensions to businesses that were able to demonstrate that they were making progress toward reopening.

The state initially imposed the work-search requirement to make sure federal program guidelines were met and there was accountability in how the trust fund resources were spent, Wood said.


Wood said suggesting the state had not learned from the pandemic is unfair because the situations are starkly different. During COVID-19, the state ordered businesses to shut down and people to stay home.

So far, the state has granted five businesses and extension.

"These entities are asking us to so something that is outside the course of how we operate the program," Wood said. "Just by nature, there isn't a process for that."

After the extensions were granted for the businesses, staff had to manually enter the new information for individual employees into an antiquated computer system, which added to the delays, Wood said.
The deficiencies in that 1980s-era computer system have been well documented for years. A $33 million fix is under way but could take two years or more to implement, Harrington said. The new system should provide a vast improvement not only for businesses and workers but also for the program's administration as well, he said.

While Wood said he understands business owners' frustrations, he pointed out that the two businesses eventually got the extensions they requested and their workers have received benefits with fewer restrictions.