A list of acceptable reasons US states can “waive” accidental overpayments of employment benefits is set to be expanded by the US Department of Labor.
During the early stages of the coronavirus pandemic, new federal welfare programs were established by the CARES Act to help people who were unemployed.
Now, as the business returns to normality despite the ongoing issues with the Omicron Covid-19 variant, US states could be looking to claw back some of the money they have paid out by accident.
States made the payments to the best of their ability, but some mistakes have been made.
The US Department of Labor issued direction to states on intensifying the reasons for which they may waive an “overpayment” of CARES Act unemployment benefits paid in mistake.
But in the absence of new standards, labor authorities believe governments may seek to reclaim cash from millions of people.
However, the CARES Act does not provide a provision for states to forgive overpayments.
This ultimately meant that states would have to try to collect the funds.
Earlier in the pandemic, states attempted to recoup overpayments from hundreds of thousands of people.
In May 2021, Labor Department officials published preliminary guidelines allowing states to forego collection in specific situations and requiring states to repay any funds already collected toward the overpayment.
Agency officials are now expanding that list of circumstances to address a looming crush of overpayment notices.
Michele Evermore, a senior policy advisor for unemployment insurance at the Labor Department said: “Anecdotally, we are hearing of states beginning to establish overpayments on claims from the pandemic that amount to tens of thousands of dollars owed over innocent mistakes. “
“Otherwise, potentially millions of claimants have been or will be issued overpayment notices that will cause them to make drastic decisions with regard to how to reimburse states with money they do not necessarily have.
“Demanding repayment when the economy remains vulnerable to new waves of the virus could “create ripple effects.”
The guidance is voluntary for states to implement — though the funds at issue are federal and not state money.
The new regulations mostly relate to the Pandemic Unemployment Assistance program, which provided benefits to self-employed individuals, gig workers, and others who are normally ineligible for state assistance.
However, they do apply to other government programs, such as one that increased the number of weeks for which payments were payable.
States, for example, can now choose to waive an overpayment for certain people who answered wrongly to application questions determining eligibility.
They can also waive them where states improperly provided a bigger weekly benefit than was authorized, such as when a state underestimated weekly PUA payments based on proof of earnings individuals presented to state agencies.
Overpayments caused by fraud are not eligible for a waiver.