Workers overpaid in pandemic unemployment may no longer have to return the money

A volunteer prepares boxes of food assistance at the Share Your Christmas food distribution event sponsored by the Second Harvest Food Bank of Central Florida, Faith Neighborhood Center, and WESH 2 at Hope International Church on December 9, 2020 in Groveland, Florida, near Orlando.
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In recent months, hundreds of thousands of self-employed, freelance and gig workers have been notified that they've been overpaid in unemployment benefits during the pandemic and must return the funds to their state. The latest $900 billion coronavirus stimulus bill from Congress aims to overturn that effort and allow workers to keep their benefit overpayments — if their state decides it's OK.

The problem impacts people receiving Pandemic Unemployment Assistance (PUA), a CARES Act program that provides jobless aid to those who don't traditionally qualify, including self-employed, freelance and gig workers who lost income due to the coronavirus pandemic.

PUA is an entirely new program, explains Michele Evermore, senior policy analyst for the National Employment Law Project, and as state unemployment agencies rushed to get benefits out the door, they may have released funds incorrectly. At the same time, there were many people applying for unemployment for the first time who may have made errors throughout the filing process.

In some cases, if a state mistakenly overpays an unemployment recipient, they can waive the requirement that excess funds be returned. PUA wasn't set up in this way, but the latest language in the stimulus bill grants states the authority to say claimants don't have to return overpayments made in error.

According to the bill's text, state agencies may waive repayments if it determines "the payment of such pandemic unemployment assistance was without fault on the part of any such individual; and such repayment would be contrary to equity and good conscience.''

Workers who've received notice of being overpaid and believe it to be in error are entitled to an appeal and should seek out legal services or an attorney with unemployment compensation expertise in their state. People with specific legal questions concerning an overpayment notice may qualify for free or low-cost assistance from a local legal services agency.

Anyone who's already returned an overpayment likely won't be able to recoup those funds, Evermore says, "but they should talk to an attorney."

It's unclear how many people have been overpaid by PUA, as states are just now starting overpayment detection efforts, Evermore says. She adds that the overpayment rate in traditional unemployment benefits is around 10%, and "this is a new program, with new staff, new rules, changing guidance and lots of new claimants who have never been eligible. I suspect it will be at least as much as regular UI."

More than 9.2 million Americans were drawing PUA benefits as of the end of November, according to the Bureau of Labor Statistics, among 20.6 million Americans collecting jobless benefits altogether.

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