California requests Congress waive clawback for some unemployment overpayment”

(The Center Square) – Some Californians who received an overpayment of federal unemployment money may not have to pay back benefits under a request from state officials on Wednesday.

Officials from the California Employment Development Department joined other states on Wednesday in asking the federal government to waive the requirement for people to pay back unemployment money they may not have been eligible to receive if the overpayment was not the claimant’s fault.

“California is asking the federal government to waive overpayments for those who received federal benefits through no fault of their own,” said California Employment Department Director Nancy Farias. “We need to continue supporting those who struggled during this pandemic.”

Under federal law, claimants who received unemployment payments they were ineligible for must return those funds to the government. States can, however, waive the overpayments if the person was not at fault, though proving fault remains a challenge due to the “complexity of the unprecedented emergency federal programs” and their extensions, the EDD said Wednesday.

The EDD noted that some claimants may have faced some confusion about whether income verification required them to provide gross or net income, which could have led to overpaid benefits.

In response to these situations, California joined every state in the nation and the National Association of State Workforce Agencies on Wednesday to ask Congress to waive non-fraudulent unemployment overpayments.

“As a result of numerous changes in guidance from the U.S. Department of Labor since the original passage of the CARES Act, in addition to the eligibility changes brought about in the Continued Assistance Act, many individuals who received pandemic UI assistance are now seeing their benefits changed to overpayments—requiring them to repay these funds, which they received through no fault of their own,” a letter sent to federal officials states. “A current and consistent waiver process is not available in all states and federal action is necessary to prevent further hardships on these individuals.”

California’s EDD said Wednesday it would offer opportunities to waive overpayments if the claimant was not at fault for the overpaid amount and if the claim was not fraudulent. However, the department did note that it will still seek prosecution in cases involving criminal fraud.

Last year, the EDD estimated paying about $20 billion in fraudulent unemployment benefits during the pandemic to criminals.

In November, the EDD notified claimants who received federal Pandemic Unemployment Assistance that they must prove they were qualified to receive benefits or risk having to pay back benefits. The notices were sent out to about 1.4 million people, and as of last week, only one in five had responded thus far, according to the EDD.

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