Unemployment overpayments create a recovery crisis
BOSTON (State House News Service) – As many families in Massachusetts emerge from a financial hole created by COVID-19, Representative Joan Meschino said on Tuesday that the state’s efforts to recover the overpayment of Unemployment during the pandemic created anxiety and hardship for untold workers who spent the money to cover the expenses of daily living.
“Everything was in good faith. People spent the money. They don’t have it. And now (the Unemployed Assistance Ministry) is looking for it and it causes a lot of stress and anxiety, ”Meschino said.
While the extent of the problem has not been clearly defined, it is not unique to Massachusetts. According to lawmakers and lawyers, many states are facing overpayments due to the speed with which states and the federal government have rolled out emergency programs that provide workers with improved payments for longer periods of time.
Meschino said she and virtually every House colleague she spoke to about it could point to voters who were concerned about being able to repay the excess benefits they received through no fault of their own.
The Hull Democrat introduced a law (H 4202) backed by the AFL-CIO and others that would clarify the standards used to determine whether an unemployment benefit recipient qualifies for a waiver from having to repay excess benefits. These exemptions do not apply to cases of fraud.
One of the stated criteria that would qualify someone for a waiver would be if the money was used to cover ordinary living expenses. Another would be if the DUA took too long to request the refund or made a mistake during the request process that led to the overpayment.
Meschino tabled the bill at the end of September on the basis of the constituent cases handled by his office and thanked the Labor and Workforce Development Committee for scheduling a hearing quickly so that the legislature could consider solutions.
“We recognize that there is a problem and DUA recognizes that there is a problem and we certainly want to work with everyone on this,” said Rep. Josh Cutler, Co-Chair of the Labor and Development Committee of Workforce.
Meschino said many of the overpayments were made during a time when the DUA was processing huge volumes of unemployment benefit claims and trying to enforce changing rules and administer new programs authorized by Congress. to support the unemployed during the pandemic.
One such program, the Pandemic Unemployment Assistance Program, qualified a whole new category of workers – the self-employed in the labor economy – for unemployment benefits that were never eligible in the past.
Meschino said voters who called his office asking for help came from all sectors, including the odd-job economy, tourism and hospitality. His bill would also seek to remove language, technology and other barriers preventing workers from requesting an overpayment waiver.
John Drinkwater, of the AFL-CIO, said the union had helped hundreds of workers navigate the unemployment insurance system and resolve eligibility issues, but said all cases involving Overpayment waivers cannot be easily tried.
“They don’t have the money to pay it back because they spent it on their family,” Drinkwater said.
Meschino said she had met with the Unemployment Assistance Department to discuss the matter, but she and Greater Boston Legal Services told the News Service that they were unable to obtain detailed information from agency on the number of waiver requests processed by DUA, the extent of overpayments and the number of people who may have been affected.
The department did not respond to Meschino’s bill or provide details of the extent of the problem, but Greater Boston Legal Services estimated that up to 72% of the overpayments were made through programs. federal funds without impact on the state budget.
If this were true, a large portion of the clawed back benefits would accrue to the federal government and would not affect the solvency of the state unemployment trust fund. Faced with a fund quickly depleted as unemployment rose, the Legislature authorized $ 7 billion in borrowing to replenish the UI fund, allowing employers who contribute to the system to spread the cost over 20 years , but business groups have urged the use of the American Rescue Plan Act Fund to reduce the burden.
“Criminal fraud and uncollectible overpayments have been a problem in all states, including Massachusetts,” said Jon Hurst, president of the Retailers Association of Massachusetts. “Employers should not be charged with criminal fraud or administrative overpayment. All of these sunk costs are to be considered ARPA and surplus funds for fiscal year ’21 are earmarked.
Based on research by the National Conference of State Legislatures and the U.S. Department of Labor, Hurst said there could be as much as $ 1.6 billion in overpayments and fraud in Massachusetts.
Greater Boston Legal Services, also using data from the Department of Labor, estimates the total value of overpayments could be between $ 1.58 billion and $ 1.92 billion, with $ 531 million coming from the state. .
Hannah Tanabe, a lawyer with Greater Boston Legal Services, said the Meschino Bill would “make it clear” when the overpayment recovery should be reversed and ensure that DUA communicates in “plain language” with claimants regarding their options for requesting a waiver.
“The current standards for overpayment exemption are insufficient,” Tanabe said.
Tanabe referred to a client referred to her by the China Progressive Association who was told she owed $ 7,000, but did not understand why. Due to DUA’s misapplication of her employment and salary history at her request, the client received $ 193 in weekly benefits in addition to what she was entitled to.
Even though the mistake was not the woman’s fault, Tanabe said it was unlikely that she would qualify for a waiver as she and her husband have since returned to work and their income slightly exceeds their expenses. And, again, their family would struggle to repay the $ 7,000 that was spent to get through the pandemic.
“She would greatly benefit from the relief provided by this bill,” Tanabe said.
The current process allows DUA to forgo reimbursement if it “defeats the purpose of the benefits” or if it goes against “fairness and good conscience”. Experts said these criteria apply in cases where reimbursement results in a family spending more than their income, or if a family foregoes their right to seek other assistance, such as food stamps, because they are receiving unemployment benefits.
The federal government allows states to set their own standards for what goes against fairness and good conscience when considering claims for exemption.