Commentary: State should ease up on collection of overpaid pandemic unemployment benefits

This article was originally published in Times Union. Read it here.

New Yorkers who lost work because of the pandemic now face thousands of dollars of debt because the state is trying to collect pandemic-era benefits overpaid to workers – an effort that is disproportionately harming workers of color.

The U.S Department of Labor urged a more generous approach, requesting that states forgive accidental unemployment insurance payments. Instead, New York has become one of the most restrictive states in the country. This session, there’s an opportunity to fix this by passing overpayment waiver bills (S549BLA8928B).

During the pandemic, unemployed workers who turned to the unemployment insurance system encountered chaos: The long underfunded and neglected system was inaccessible for a myriad of well-documented reasons. Ever-changing Trump-era federal guidance and language access barriers resulted in state Department of Labor paying UI benefits to unemployed workers who were later decided ineligible. Most New Yorkers who received pandemic-related overpayments spent the money on basic needs and were notified they had been overpaid only after their benefits were spent, sometimes years later.

New York estimates it made 458,000 UI overpayments, meaning tens of thousands of workers are burdened with overpayment debt, which the DOL has moved aggressively to collect.

The bills before the Legislature require the creation of a waiver process for overpayments of state benefits and an expansion of waiver access for overpaid federal benefits. Following federal guidance, nonfraudulent overpayments will be waived where recovery is “against equity and good conscience,” Massachusetts, Michigan, California, Rhode Island, Virginia and other states have waived overpayments for hundreds of thousands of workers, while New York has approved only about 14,000 waivers, or 3% of all overpayments. New York is one of only 11 states without a permanent state UI overpayment waiver provision.

The bills also refocus overpayment recovery on cases of intentional fraud. Currently, DOL can find fault even when a worker makes a misstatement in good faith, due to confusion or changing guidance. New York finds a very high percentage of UI overpayments fraudulent, the highest in the country. From 2020 to 2023, about 63% of the amount overpaid was considered fraud, compared to 30% in Connecticut, 5.3% in Pennsylvania and 2.1% in Massachusetts.

The cost of these changes is minimal. Waiving overpayments of federal benefits doesn’t affect the UI Trust Fund, and the federal government doesn’t seek the money back. Waiving state UI overpayments would cost less than $3 million annually, perhaps far less than the time and resources spent pursuing collections.

As workers, their families, and communities struggle to recover from pandemic unemployment and “greedflation,” New York is taking money out of their pockets. The commonsense legislation will provide struggling workers – disproportionately people of color – a path to recover from the pandemic. New York should pass this legislation to shield workers from further harm and move our state closer in line with the just policies of the rest of the country.

Alexa Tapia is an unemployment insurance campaign coordinator at the National Employment Law Project. Ian Greer is a research professor at Cornell University’s School of Industrial and Labor Relations. Also contributing to this article were Michael Diller, an attorney with The Legal Aid Society, and Anjana Malhotra, a senior staff attorney at the National Center for Law and Economic justice.