Lawmakers push bill to forgive unemployment ‘overpayments’

Connecticut lawmakers are set to consider a bill this session that would provide financial relief to individuals who received unemployment benefits during the pandemic but were later ordered to repay all, or part, of that money to the state.

The proposed legislation would allow thousands of additional people to qualify for forgiveness from what the state describes as “overpayments,” which occur when someone republished ceives jobless benefits that they are later found to be ineligible for.

Overpayments are a normal part of running a state unemployment program. The federal government requires states to identify instances where money was improperly issued to people.

But the problem became more pronounced during the coronavirus pandemic as millions of Americans lost their jobs and state labor departments were inundated by a historic number of jobless claims.

The Connecticut Mirror a story last year highlighting the millions of dollars in overpayments that the state Department of Labor identified in early 2021 and the growing number of people who were receiving demands to return that money.

But the problem has only grown since then.

Connecticut’s Department of Labor identified more than $25.7 million in overpayments in 2021, which is more than the previous two years combined. And that doesn’t include all of the federal unemployment programs that people collected money from during the pandemic.

An unspecified portion of those overpayments are tied to fraud. But many others are the result of unintentional mistakes on the part of unemployment applicants or the state.

It’s the latter cases that state Democratic lawmakers want to remedy with the legislation this year, which they refer to as unemployment “amnesty.”

Sen. Julie Kushner, DDanbury, said it is unfair to ask workers who honestly submitted an unemployment application to repay money because of filing errors or other mistakes that were outside of their control.

The concern among lawmakers, Kushner said, is that households that are just starting to recover from the recession will be forced to repay a significant amount of money — in some cases, tens of thousands of dollars.

“Too frequently, the money has already been spent, and the person isn’t earning enough to repay,” said Kushner, who chairs the legislature’s Labor and Public Employee Committee.

The bill that Kushner and her colleagues introduced did not get much attention during a busy public hearing this week, but several groups, including the state’s most prominent labor organization, submitted written testimony in support of the legislation.

Ed Hawthorne, the president of the Connecticut AFL-CIO, which represents roughly 200,000 unionized workers in the state, argued the legislation was needed to protect the tens of thousands of people who filed for unemployment assistance during the pandemic.

“Unemployment insurance should have provided them some assistance and helped quiet their fears until they could return to work,” Hawthorne wrote in his testimony. “Unfortunately for some workers, their unemployment applications may have contained mistakes, were mishandled, or not adequately reviewed for months.”

“They received weekly payments to help survive the downturn, but now, months later, the state has deemed them ineligible and wants that money back,” he added, citing the CT Mirror’s story last year.

Seeking forgiveness

There is already a process in place for people to apply for forgiveness of overpayments as long as state officials don’t allege any fraudulent behavior on behalf of the unemployment applicant.

Data that is submitted to the federal government shows Connecticut used that process to waive more than $5.4 million last year — or roughly 21% of the overpayments the state identified in that time frame.

Eligibility for the waivers requires certain findings by the state. The overpayment, for instance, needs to be caused by “unintentional error” or the state overturning someone’s benefits after an appeal hearing.

It’s ultimately up to state officials in the Department of Labor to make the determination in each case.

The agency also takes into account things like whether someone filed for bankruptcy or whether the person has a mental or physical disability that limits their chances of finding a new job. The applicant’s death can also guarantee them a waiver.

But Democratic lawmakers are concerned that a significant number of people may have missed their chance to apply for that forgiveness during the pandemic.