New York overpaid $115M in unemployment benefits. Some lawmakers want it forgiven.
Some state senators and non-profit attorneys are calling on Gov. Andrew Cuomo's administration to consider waiving some unemployment benefit overpayments that occurred during the coronavirus pandemic.
Overpayment of unemployment insurance benefits became a costlier problem for state unemployment agencies throughout the country in 2020 as they coped with a wave of benefit-seekers fueled by major job losses as the virus spread.
New York paid $115 million in overpayments in 2020 while states around the country paid $2.9 billion in unemployment insurance overpayments combined, according to the U.S. Department of Labor.
While the state has continued to collect on overpayments throughout the pandemic, some state senators want the state department of labor to follow the lead from other states and offer waivers on some of them.
A letter penned to the state Department of Labor Commissioner Reardon signed by 12 senators requested the department waive or forgive repayments from people who are not at fault for receiving overpayments.
“Out of work New Yorkers have suffered enough in this pandemic — they don't need the state pounding on their door to collect debts they never even knew they had incurred in the first place," 12 New York senators wrote in a joint letter penned to the state Labor Commissioner Roberta Reardon in February.
The letter argues the federal stimulus bill passed in December allows the state to waive or forgive overpayments. And New York, like many states around the country, should opt to forgive or waive overpayments in the instance of financial hardship, the senators argued.
Among the senators who signed the letter were Sens. James Skoufis, D-Cornwall, Orange County, and Shelley Mayer, D-Yonkers.
NY unemployment was up big amid pandemic
New York has paid out approximately $70 billion in unemployment benefits through the course of the pandemic, including the roughly $115 million in overpayments.
The U.S Department of Labor reports the figure is nearly twice of what New York paid in overpayments in 2019 ($63.8 million), when far fewer people were seeking unemployment insurance benefits.
Last year, the state recovered a total of $93.4 million in unemployment benefits originally paid out in 2020 and previous years, according to the U.S. Department of Labor.
Deanna Cohen, a spokesperson for the state Labor Department, said each claim is unique and there are various reasons why claimants may be required to pay benefits back.
The state reported this week it has vetted around 521,000 fraudulent claims for unemployment insurance during the pandemic. The claims, the department said, amount to $6.4 billion in unpaid fraudulent claims.
“Throughout this pandemic New York state has paid more than $69 billion in unemployment insurance benefits to more than 4 million New Yorkers and there is a process we are bound by law to follow to protect that lifeline to New Yorkers in need,” Cohen said.
Cohen said ineligible claimants of unemployment benefits are notified, provided instructions on repayments and have the option to challenge repayment through an independent hearing.
The spokesperson said the New York Department of Labor provides waivers for some overpayments. But U.S. DOL data shows the state has not granted any waivers for overpayments in 2020 so far.
A closer look at the issue
The sentiment among state senators is resonating with public advocacy groups in New York City that say recovering overpayments during the pandemic is troublesome for some New Yorkers.
Young Lee, a labor attorney of the non-profit Legal Aid Society in New York City, said the sharp rise of unemployment last year exacerbated ongoing issues with overpayment of benefits during the coronavirus pandemic.
Some workers in the state’s education system, like substitute teachers and some professionals, were not technically eligible for unemployment benefits in the summer, he said.
“A lot of people that lost their jobs prior to the summer starting, right when the schools closed down, kept on collecting [unemployment benefits] throughout the summer because no one was aware of this rule and no one told them, and now they're being told to pay back that money… there's a variety of reasons why people need to pay back the money,” said Lee, the Legal Aid Society's supervising attorney for employment law.
Lee said the state should allow people to apply for a waiver to have their unemployment overpayments forgiven.
“Federal government at the end of last year basically changed the law and said the states now are allowed to issue waivers, so a person should be able to apply if they're in a situation where it's not their fault. ... New York has not implemented this system,” Lee said.
About 20% of all New Yorkers received unemployment benefits in 2020. The unemployment rate as of December reached 8.1% in the state — an increase of 4.4 percentage points from 2019.
Mario Marroquin covers real estate and economic development. Click here to see his latest stories. He can be reached at firstname.lastname@example.org or @mars3vega