Individuals who received nonfraudulent overpayment of unemployment insurance benefits during the still-ongoing pandemic may benefit from "blanket waiver" of recovery under new federal guidelines.
The U.S. Department of Labor (DOL) issued new guidance to the states earlier this month that, among other things, updated instruction about how to waive recovery of unemployment overpayments. The waivers are for individual recipients who received the overpayment through no fault of their own, according to the letter and a DOL news release, both issued Feb. 7.
"During the height of the pandemic, records were broken as millions of Americans filed claims for unemployment benefits," the DOL said in its news release, adding that "as demand soared," the department instructed states how to provide benefits under the the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
"As guidance evolved, states paid benefits – in some cases – to individuals who were not entitled to receive them, although the individuals were not at fault," the news release said.
Very early in the pandemic, the DOL expanded unemployment insurance benefits to millions of Americans thrown out of work for pandemic-related reasons under the CARES Act. The expansion included workers who were not historically eligible for unemployment benefits, include the self-employed, gig economy workers and independent contractors.
A record number of Americans filed for unemployment benefits claims during the pandemic and, in some cases, were paid benefits to which they were not entitled. The states were responsible for those mistakes, according to the DOL's new Unemployment Insurance Program Letter.
The agency's new letter advised states to address overpayments under the CARES Act's Unemployment Compensation Programs when the claimant was not at fault, "on an individual, case-by-case basis." The letter also advised expansion of blanket waivers in situations in which the claimant was not at fault for the overpayment.
The DOL now approves five new in which a blanket waiver may be applied in attempts to recover overpayments, according to the news release.
Those scenarios include when a recipient selected "no" to being able and available for work and subsequently received payment under the Pandemic Unemployment Assistance or Pandemic Emergency Unemployment Compensation. Other scenarios include individuals deemed ineligible for benefits but received them at a high rate or those who declined being unemployed, partially unemployed or unable or unavailable to work due for approved pandemic-related reasons and still received compensation.
The DOL reminded the states that recovery of overpayment in fraudulent situations has never been waived.
The letter also described required collection activities for overpayments not eligible for a recovery waiver. The updated letter is intended to augment guidance that Labor issued in May of last year.
"When states waive recovery of overpayment, collection activities cease," the news release said. "Fraudulent overpayments remain exempt from waiver and must be repaid."
