State DOL defends actions

CT labor department defends effort to reclaim unemployment money

The state Department of Labor is defending its efforts to claw back $8.6 million in unemployment benefits paid out to people who may have received more than their fair share.

“Non-fraud overpayments are unintentional mistakes made during what is a complex process, and the agency makes every effort to work with claimants and employers to help them fix the issue,” Department of Labor spokeswoman Juliet Manalan said Tuesday. “Each case is a person with a specific set of circumstances that must be considered from the time they apply to the weekly certification to the adjudications and appeals process. There is no one-size-fits-all option.”

The Connecticut Mirror reported Sunday the DOL’s ongoing efforts to recoup the overpayments, with the department offering extend- ed repayment plans in cases not involving fraudulent claims. At the start of December, the labor department reported it had thwarted more than 100,000 fraudulent claims, and said attempts to siphon off funds through fraud continue.

The labor department lists a few examples of administrative circumstances online that have triggered collection efforts, including people who received unemployment checks and then got back pay from employers that received funding for payroll support under the Paycheck Protection Program.

The overpayment problem was compounded by state departments of labor becoming overwhelmed with initial claims for unemployment compensation at the outset of the COVID-19 pandemic, officials said. That delayed a more thorough vetting of claims, and many people with questions about their eligibility had difficulties getting responses from the labor department.

East Haven resident Kristina Nigro described such a circumstance to The Connecticut Mirror, saying she filed her claim under what she thought were allowable criteria, only for the DOL to order her to pay back more than

$31,000, which she had already spent for living expenses after her income evaporated as a dog trainer.

Manalan on Tuesday said that the department could not comment on specific cases. But she said the department has concluded 30,000 cases in which it issued overpayments to people, of some 1.5 million applications for benefits.

In the end, is it a question of who should pay for the economic seizure at the outset of the pandemic — individuals who saw their earnings dissipate or businesses that end up footing the bill through payroll taxes?

Connecticut and other states borrowed from the federal government to cover the upfront costs of pandemic claims, blowing holes in their unemployment trust funds. This past summer, Gov. Ned Lamont announced a restructuring of the state’s unemployment taxes to ease the burden for many small businesses as the state sets out to rebuild its trust fund for the next recession.

Under the Coronavirus Aid, Recovery and Reinvestment Act, Congress and the U.S. Department of the Treasury flooded the economy with cash to ward off a prolonged economic slump, as governors nationally ordered restrictions on workplaces and the outright closure of some business establishments.

The CARES Act included $600 in additional weekly compensation for earners who lost their jobs and hundreds of dollars more for each dependent in their household. For the first time, Congress authorized jobless aid to independent workers who did not contribute in the past to state unemployment trust funds.

In a followup stimulus bill signed into law this past January, Congress gave states the power to let some questionable payments slide if determining “such repayment would be contrary to equity and good conscience” in the text of the legislation. Manalan indicated the state Department of Labor is aware of that provision, with the entity’s regulations having identical language.

Last May, the U.S. Department of Labor issued a memo to state labor commissioners detailing specific considerations for recovering pandemic overpayments of unemployment benefits, including an allowance for “blanket waivers” as an alternative to chasing down individual cases.

The memo cites a few examples of administrative errors that could justify blanket waivers, such as switching claimants from one pandemic unemployment program to another. But it makes clear the states should consider the overall confusion for claimants at the outset of the pandemic and the need for financial stability of individuals and families to help along the economic recovery, calling the pandemic “a unique confluence of circumstances” that states were not prepared to handle.