Bill would erase debt payments
Unemployed New Yorkers told to give back benefits would be protected by legislation
Thousands of New Yorkers who have been told to repay unemployment or federal pandemic assistance benefits that they received improperly would see those debts wiped out under legislation being proposed by a state lawmaker from the Bronx.
Assemblywoman Latoya Joyner, who chairs the chamber’s labor committee, has introduced a bill that would erase those repayments if the benefits were paid out “through no fault” of the recipients and as long as no fraud was involved.
“Hundreds of thousands of families struggled to pay their bills last year as COVID-19 swept through our communities and New York’s unemployment rate jumped to over 16 percent,” Joyner said in a statement. “Changes in the benefit system left many out-of-work New Yorkers not knowing exactly what they were eligible for and we need to protect those who received benefits without committing fraud.”
Joyner unveiled her legislation this week as state Sen. Jim Tedisco, R-glenville, had offered an amendment on the Senate floor, supported by that chamber’s Republican Leader Rob Ortt and the Senate Republican Conference, to exclude unemployment benefits from taxable income, which they said is consistent with the federal government.
But Tedisco said Gov. Andrew M. Cuomo has refused to follow the federal government’s lead and exclude the first $10,200 of unemployment benefits from 2020 taxable income. The amendment is modeled on legislation sponsored by Democratic Sen. Simcha Felder.
The state Department of Labor last year distributed more than $114 million in unemployment and federal relief benefits to New Yorkers ineligible to receive the money — most of it between July and December, when the coronavirus pandemic had pushed millions of people out of work.
The most significant overpayments were logged in the final quarter of 2020, when the state reported more than $68.3 million in those payouts. That was up from $15.5 million during the same quarter in 2019, several months before the pandemic began paralyzing the U.S. economy.
Joyner’s legislation, the Unemployment Equity and Forgiveness Act of 2021, is framed after a new federal law that exempts nonfraudulent overpayments from repayment. “We need to make sure that the thousands of financially hardpressed and deserving families who received these earned benefits aren’t facing economic hardship through no fault of their own,” Joyner said.
Substitute teachers, artists and other “gig” workers were among the thousands who applied for or received benefits that are now being ordered repaid.
The surge in ineligible unemployment payments last year were made at a time when labor department workers warned the state had lowered its safeguards and was overpaying or approving benefits for people not entitled to receive them.
Attorneys who represent many of the individuals who learned they must repay thousands in unemployment or federal pandemic relief benefits said they often cannot afford to pay it back, nor do they have money to hire an attorney to fight their case in the state’s independent hearing process.
The state labor department previously declined to provide details on how many New Yorkers were determined to be ineligible for unemployment insurance or pandemic relief benefits last year, instead noting that the agency reports the cumulative dollar amount to the U.S. Department of Labor, which lists that information on its website.
Under state and federal laws, if it is determined someone received unemployment or pandemic-relief benefits to which they were not entitled, the recovery of all or a portion of those funds can be mandatory.
The Pandemic Unemployment Assistance program was created in response to the COVID-19 pandemic to provide benefits to individuals who lost their jobs due to the pandemic but are not eligible for traditional unemployment insurance benefits.
They could include someone who is selfemployed.
The Federal Pandemic Unemployment Compensation program provided an extra $600 per week in assistance to unemployed workers and had initially expired at the end of July. Under federal guidance, states are only allowed to recover up to 50 percent of overpayments in the FPUC program, and have the discretion to waive that recovery if the claimant was not at fault or doing so would be “contrary to equity and good conscience.”
The FPUC program was restarted under the most recent congressional coronavirus relief bill.
However, under federal law overpayments of unemployment insurance benefits and Pandemic Unemployment Assistance program benefits must be recovered by the state labor department, and cannot be waived.
The surge of benefit applications last March prompted the state labor department to begin hiring more than 2,000 “vendors” and 400 new clerks, many of whom initially received only a few days of training before being thrust into a job that involves a detailed process to ensure applicants qualify for benefits and are not committing fraud.
Cuomo’s administration has defended the agency’s efforts to get state and federal unemployment benefits to the people who lost jobs due to the pandemic.
They said their rapid response last year methodically wiped out a backlog of unemployment applications, hastened the distribution of state and federal money to people in need, and prevented about $5.5 billion in fraudulent payments — while facilitating the distribution of more than $65 billion in unemployment benefits to more than 4 million New Yorkers.