States Ask Workers to Repay Unemployment Benefits After Overpayments

States including Colorado and Pennsylvania accidentally overpaid thousands of workers over the spring and summer,

States including Colorado and Pennsylvania accidentally overpaid thousands of workers over the spring and summer, as they rushed to get relief to unemployed and idled Americans. Many states are now trying to recoup money or cutting current benefits to make up the difference, partly due to federal rules governing some unemployment aid.

KEY TAKEAWAYS
1. Individuals themselves often have no idea they are being overpaid.

That’s partly because the formulas for unemployment checks can be hard to decipher. Some people also waited weeks to start receiving benefits and say they believed that large checks were back payments they were owed because of delays. Many have spent the money and are still struggling with the coronavirus pandemic’s economic fallout.

2. The repayment obligations for many people hinge on a fine-print detail in the Cares Act.

States can usually waive recovery of overpayments for most unemployment insurance when there is no fraud involved, but the Pandemic Unemployment Assistance program, which allows self-employed individuals to collect aid, is administered as a form of disaster relief. The statute that guides it blocks states from forgiving the debts.

3. Complex calculations may have led to errors.

State unemployment systems were designed to calculate benefits based on traditional jobs, employer records, W-2 tax documents and verifying income with pay stubs, but the inclusion of gig workers and the self-employed has added an element of complexity. Re-engineering the systems to account for far more complicated self-employment income was bound to create problems, experts say. Meanwhile, thousands of Pennsylvania workers were overpaid because of a calculation error in the software it used.

4. Affected workers might have a chance to avoid repayments.

House Democrats’ latest version of the Heroes Act, introduced in late September, would allow states to waive PUA overpayments in cases where workers couldn’t repay them “without severe hardship.” The provision would apply to past and future overpayments.

Read the original article by Lauren Weber here.

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