Unemployment benefits that looked like a lifeline can now, for many, become their ruin.
Pandemic Unemployment Assistance, a federal program that covers on-demand workers, part-time hires, seasonal workers and others who do not qualify for traditional unemployment benefits, has kept millions of people out. flow. The program, established by Congress in March as part of the CARES Act, has provided more than $ 70 billion in relief.
But by executing the hastily-designed program, states overpaid hundreds of thousands of workers – often because of administrative errors. Now the states are asking for that money back.
Reviews are popping up out of nowhere, with instructions to pay back thousands, if not tens of thousands of dollars. Those who are billed, already living on the limit, are told their benefits will be cut to compensate for mistakes – or that the state may even put a lien on their home, come after future wages, or withhold tax refunds. .
Many of those who received payments are still unemployed and unlikely to find one. Most had no idea they were overpaid.
“When someone receives a bill like this it terrifies them completely,” said Michele Evermore, senior policy analyst for the National Employment Law Project, a nonprofit workers’ rights group. Sometimes the letters themselves are wrong – citing overpayments when benefits have been paid correctly – but either way, she said, the stress “is going to cost people their lives.”
The hastily designed unemployment pandemic assistance program presented other problems, including widespread fraud and processing problems. As a result, states only recently had sufficient resources to begin sending notices of overpayments. In the meantime, people have collected – and spent – sometimes thousands of dollars on what they saw as legitimate benefits.
Olive Stewart, a 56-year-old Jamaican immigrant, worked part-time as a sous-chef in a cafeteria at a Jewish school in Philadelphia, earning $ 16 an hour for about 25 hours a week. But when the pandemic hit and schools closed, she was fired.
Ms Stewart requested assistance with an unemployment pandemic and began receiving $ 234 per week. That wasn’t quite enough to cover the $ 650 in rent, the $ 200 electric bill, and the $ 200 internet bill for the house she shares with her 12-year-old daughter, her mother at home. pensioner and his sister, who has a disability that prevents him from working. To make ends meet, Ms. Stewart began to dip into her savings.
Then, on October 6, she received a notice saying that Pennsylvania’s unemployment insurance provider, Geographic Solutions, had accidentally overpaid her. The overpayment included funds from UI pandemic assistance and a $ 600 federal UI supplement. In total, she was told, she would have to repay nearly $ 8,000.
To collect the debt, the state began withholding more than half of her unemployment benefits, leaving her only $ 105 a week. In early November, the state started taking all of her unemployment benefits, leaving her with no income. She has not yet paid her rent for December.
“The state should pay attention to what it sends,” Ms. Stewart said. “It was their mistake, and I’ve already spent all the money on food and rent. How will I repay it? “
Geographic Solutions made duplicate payments for 30,000 claims in Pennsylvania due to a system glitch, a $ 280 million error, the State Department of Labor and Industry said. (The company says the problem stems from a one-day error that was immediately reported.) Overpayments can also occur if an applicant makes a mistake on a form, as ProPublica reported, or if a State determines that a recipient should not have been eligible.
As of Sept. 30, about 27 percent of people approved for pandemic unemployment assistance in Ohio had been overpaid, or about 162,000 claims. As of mid-November, the number in Colorado was around 29,000; in Texas it was over 41,000.
Many states forgo overpayments on regular UI when there is no fraud or when repayment of the money would cause someone significant hardship. But the federal rules on unemployment assistance in the event of a pandemic prohibit forgiveness. Even if the state is at fault, the recipient is hung up.
States often begin to collect the overpayment automatically, withholding a portion – from 30 to 100 percent – of future unemployment benefits.
Many overpayments have arisen because state unemployment systems are designed to calculate benefits using W-2 forms, employer records, pay stubs, and other documents associated with traditional jobs. . But because on-demand and part-time workers had different types of documentation, states had to quickly adapt to a new way of processing and approving applications.
Mistakes in deployment were inevitable, said Behnaz Mansouri, senior counsel for the Unemployment Law Project, a Seattle-based nonprofit legal aid organization.
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“For a new system, having such a punitive response when the system itself fails seems too harsh and drastic,” Ms. Mansouri said.
Gina Jones, 29, was fired in March from her part-time job at a breakfast bar at a Quality Inn in Spokane, Wash., And began receiving $ 750 a week from the fight against the pandemic, which has enabled her to pay the rent, food and necessities for her two daughters, aged 1 and 5. She was called back to work in July and now works about 28 hours a week at $ 13.50 an hour.
Then, in mid-November, she checked her online unemployment portal and saw a message stating that she had been overpaid by almost $ 12,500. She fears that the state will start to garnish her salary to collect the debt.
“I have used this money before to support my family,” Ms. Jones said. “It’s all gone and I can’t afford to pay it back.”
Asking people to repay unemployment funds can undermine the unemployment system’s goal of stabilizing the economy, said Philip Spesshardt, branch manager of social services in the Colorado Unemployment Insurance Division.
If a person’s unemployment checks are reduced weekly due to an overpayment, the recipient will have less money to pay bills and patronize local businesses. “Ultimately, this has a cascading effect on many of these small businesses, forcing them to shut down permanently and further increasing the unemployment rate,” Spesshardt said.
While overpayments under the federal program cannot be reversed, claimants can appeal reimbursement requests after notification is issued. But the appeal period can be as short as seven days. After that, the process can be slow, confusing, and tedious.
Colorado has taken steps to address repayment difficulties. In October, after the state noted the large number of overpayments, it determined that the application form was confusing because it did not specify whether the person filing was expected to provide gross or net income. He decided to “write off” cases where beneficiaries had submitted income and tax documents that would have allowed the correct benefit to be calculated.
When asked how the policy fits with the federal pardon ban, a spokeswoman for the Colorado Department of Labor and Employment cited “the administrative burden it would create for us to collect these overpayments. taking into account competing priorities.
House Democrats have called for further pandemic relief to include a provision allowing states to waive overpayments when workers cannot pay them back without serious hardship. The provision would apply to both past and future cases. A separate House bill, with bipartisan sponsorship, provides for forgiveness if the overpayment was not the fault of the recipient and “such reimbursement would be contrary to fairness and good conscience.”
But the possibility of a cure is no great comfort to those who wonder how they are going to pay the rent and put food on the table in the meantime.
William and Diana Villafana, 55 and 34, who before the pandemic ran a car rental business in Henderson, Nevada, were told in late October that between them they had been overpaid by more than $ 7,000. To cover this debt, the state takes all of Mr. Villafana’s benefits and gives Ms. Villafana $ 73 per week. They use credit cards for their monthly rent of $ 2,000, as well as utilities, food and other necessities.
“I don’t think they understand that unemployment benefits are for survival,” Villafana said. “Or if they understand it, they don’t care.”
Mr. Villafana is concerned about how he will continue to provide for their son and daughter, aged 6 and 7. When his daughter recently asked for a set of paintbrushes and an easel, he wasn’t sure what to tell her.
“It’s a little hard to explain to them, ‘Look, you can’t do this’ or ‘I can’t buy you this,’” he said. “I have no idea what we’re going to do for Christmas.”
Sheelagh McNeill contributed to the research.