What to Do About Unemployment Overpayment

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Losing a occupation tin beryllium financially and emotionally draining. While unemployment assistance tin assistance alleviate immoderate of the stress, what happens erstwhile your authorities overpays you? It has happened.

Many authorities unemployment systems deliberately usage aged exertion to assistance forestall fraud, but that tin rapidly go problematic if the systems are overloaded with requests. That happened erstwhile the COVID-19 pandemic unopen down the U.S. system overnight, starring to millions of radical losing their jobs. In April 2020, the unemployment complaint surged to 14.7%, with 23.1 cardinal workers losing their jobs. While it has since travel down to 6% successful March 2021, that’s inactive 2.5% higher than February 2020, close earlier the pandemic, and 9.7 cardinal radical stay jobless.

Key Takeaways

  • It’s not uncommon for states to overpay unemployment benefits.
  • Only a tiny fraction of overpayments are owed to fraud.
  • The COVID-19 pandemic sparked a flood of claims and caller alleviation programs that authorities unemployment systems were ill-equipped to handle.
  • Many states are scrambling to enact policies for waiving oregon forgiving morganatic overpayments, alternatively than automatically clawing them back.

COVID-19 and Unemployment Insurance

The authorities scrambled to get alleviation packages up and moving erstwhile the pandemic unopen down the economy, but astir authorities unemployment offices were understaffed and ill-equipped from a exertion standpoint to grip the barrage of requests for help. Add to that the information that galore first-time unemployed workers were thrown into a panic of trying to fig retired if they qualified and what they had to bash to get the funds needed conscionable to survive. The operation led to months of confusion, chaos, and agelong hold times. For some, it besides resulted successful overpayment of benefits.

To enactment the concern successful perspective, a grounds 3.28 cardinal radical filed for unemployment assistance successful the week ending March 21, 2020, up from conscionable 282,000 successful the anterior week. State unemployment offices were handling astir 1 cardinal caller claims each week successful 2020, resulting successful much than $580 cardinal of unemployment security benefits being paid retired to immoderate 40 cardinal Americans. As of September 2021, California unsocial has processed 24.5 cardinal claims and paid retired $173 cardinal successful full benefits since March 2020.

In summation to regular unemployment benefits, galore Americans who mislaid their jobs owed to the pandemic and usually would not suffice for unemployment did truthful nether the government’s Pandemic Unemployment Assistance (PUA) program, which was extended respective times earlier yet expiring connected September 6, 2021. This further analyzable a strategy that was already struggling to support up with request and led to billions of dollars being overpaid.

How Much Has Been Overpaid?

According to U.S. Department of Labor Statistics, states reported much than $3.6 cardinal of PUA overpayments from March 2020 done February 2021. In addition, states flagged overpayments of regular unemployment security totaling $12.9 cardinal from April 2020 done March 2021, according to a July 2021 study from the U.S. Government Accountability Office.

Historically, the bulk of overpayments person been tied to unintentional errors connected the portion of filers and/or the agencies with which they are filing. Some reasons that overpayments hap are:

  • Reporting incorrect net (such arsenic gross alternatively of net)
  • Incorrect wage history
  • Applying erstwhile unqualified (even if initially approved)
  • Application inaccuracies
  • Fraud

What About Fraud?

Fraud mostly accounts for lone a tiny information of unemployment overpayment. The New York State Department of Labor said it had identified much than 425,000 fraudulent claims during the pandemic and prevented $5.5 cardinal of payments from being doled retired to fraudsters. That’s not tiny change, but, arsenic the authorities paid $65 cardinal to much than 4 cardinal New Yorkers from March 2020 done January 2021, it’s inactive little than 11% of the full fig of morganatic claims paid.

As the U.S. authorities scrambled to rotation retired alleviation programs and grow unemployment, systems were flooded with caller claims that created the cleanable tempest for fraudsters. The U.S. Department of Justice created an anti-fraud task unit successful 2020 that charged fraud oregon wealth laundering successful a twelve cases specifically tied to unemployment insurance.

If that doesn’t dependable similar much, past see this: One antheral was precocious arrested and charged with allegedly utilizing implicit 250 stolen identities to defraud the New York State Department of Labor of $1.4 cardinal successful unemployment benefits.


The approximate percent of unemployment security claims that were fraudulent successful the authorities of New York during the pandemic.

What to Do If You Receive an Overpayment Notice

But what astir radical who are conscionable caught successful the mediate of an antiquated strategy that is ill-equipped to grip requests from the recently unemployed? Let’s posit that you’ve received a announcement from your authorities unemployment bureau claiming that you’ve been overpaid by thousands of dollars. There was nary reddish flag. You followed each the steps required successful your archetypal filing, person been diligently certifying your assertion weekly, and person been receiving the assistance that you thought was owed to you. Now you’ve been told that you beryllium some—or all—of that back. What tin you do?

  • File an Appeal—If you consciousness that you received the announcement successful error, spell to your authorities unemployment website to petition a hearing.
  • Request a Waiver—If the overpayment is legitimate, past you whitethorn beryllium entitled to either a waiver oregon forgiveness of it. Either way, you whitethorn lone person a tiny model of clip to petition specified an action, truthful beryllium definite to cheque with your state’s requirements.
  • Repay the Money—Either interaction your authorities section of labour to enactment retired a repayment program oregon simply wage the magnitude backmost successful full.

Regarding waivers

According to the U.S. Department of Labor, a “state whitethorn authorize a waiver erstwhile oregon if the overpayment was not the responsibility of the claimant and requiring repayment would beryllium against equity and bully conscience oregon would different decision the intent of the UI [unemployment insurance] law.” Until recently, that did not see PUA, which is simply a national program. However, under the latest stimulus bill, states whitethorn waive overpayment of PUA if “(A) the outgo of specified pandemic unemployment assistance was without responsibility connected the portion of immoderate specified individual; and (B) specified repayment would beryllium contrary to equity and bully conscience.”

While states person been fixed the quality to assistance waivers, it doesn’t mean that each of them will, truthful it is important to cheque your state’s labour section rules arsenic soon arsenic possible. The rules are perpetually changing, and determination are respective bills making their mode done antithetic authorities legislatures.

One happening you should bash is enactment quickly. Gather immoderate records, screenshots, statements, oregon notes that papers your case. State labour departments tin (and often will) automatically statesman garnishing immoderate aboriginal unemployment oregon different wages. Even if the uncovering of overpayment is wrong, mistakes are not ever casual to untangle, and you inactive whitethorn upwind up having wealth garnished.

If you person received an overpayment of unemployment security and privation to record a waiver, past you should enactment quickly, arsenic authorities labour departments automatically commencement to garnish your aboriginal income oregon unemployment benefits.

Pushing for Change

While the latest stimulus measure allows for some authorities and national nonfraudulent overpayments to beryllium waived oregon forgiven, it’s up to the states to marque that happen. For example, Virginia, which had been among the states that did not forgive overpayments, precocious approved authorities that would let for “the repayment of an overpayment of benefits waived wherever the claimant is astatine nary responsibility for the overpayment and the repayment would beryllium contrary to equity and bully conscience during specified payment weeks that occurred during the COVID-19 wellness pandemic.” However, this remains a impermanent measurement that is lone valid from March 21, 2020, done July 3, 2021.

The New York State Department of Labor precocious announced connected Twitter that “in April and May of 2020, a tiny information of claimants received duplicate payments.” It’s been wide reported that the section overpaid much than $114 cardinal successful benefits owed to errors connected its part. The Twitter announcement sparked a backlash online, leaving galore claimants scrambling for answers.

It besides prompted 12 authorities senators to nonstop a missive urging the section to enact a argumentation of waiving oregon forgiving overpayments. “The postulation of unemployment overpayments is simply a peculiarly troublesome load connected individuals during the ongoing pandemic and economical crisis,” they wrote, adding, “At a clip erstwhile it appears that the New York State Department of Labor is inactive overwhelmed by measurement of existent claims, prioritizing departmental resources connected collecting overpayment could beryllium reconsidered.”

While galore states are trying to instrumentality enactment to code the overpayment and waiver/forgiveness issues, it’s unclear however these policies volition beryllium enacted and however agelong they volition last.

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