Feds wants 250K Jerseyans to pay back some of their unemployment benefits — NJDOL is fighting back

It sounds like a bad dream.

You were deemed eligible for unemployment during the nightmare that was the opening months of the pandemic, received benefits — only to discover later that the eligibility rules were changed by the federal government. And, now, the government is looking for you to pay back those funds.

In New Jersey, as many as 250,000 people could be affected, a New Jersey Department of Labor & Workforce Development spokesperson said. So far, 130,000 have received overpayment notices.

That’s why the DOL recently joined the National Association of State Workforce Agencies in urging Congress to allow states to waive all non-fraudulent pandemic-related unemployment compensation overpayments.

NASWA leaders this month sent a letter to Congressional leaders highlighting the need for the overpayment waiver allowance. (Read the letter here.)

New Jersey Labor Commissioner Robert Asaro-Angelo, who serves as the board chair for NASWA, was eager to sign the letter.

“Millions of unemployed workers deemed eligible for federal pandemic unemployment benefits later found out that the rules had changed, and, through no fault of their own, were no longer considered eligible — months after they had spent the money on necessities like food and housing,” he said.

“To try to recover these funds after the fact stresses these workers and their families, strains the system of resources with little chance of success, and is counterintuitive to our mission of helping people in their time of need.”

The letter was addressed to Senate Majority Leader Chuck Schumer (D-N.Y.) and Minority Leader Mitch McConnell (R-Ky.); House Speaker Nancy Pelosi (D-Calif.) and Minority Leader Kevin McCarthy (R-Calif.); and the chairs and ranking members of the Senate Finance Committee and the House Ways and Means Committee.

In addition to Asaro-Angelo, the letter was signed by Tamika Ledbetter, commissioner of the Alaska Department of Labor and Workforce Development and NASWA board chair-elect, and Scott Sanders, the CEO of NASWA.

Here’s how the situation came about:

Congress expanded federal unemployment benefits with the CARES Act in March 2020, the Continued Assistance Act in December 2020 and the American Rescue Plan in March 2021. Evolving federal guidance after the CARES Act, and eligibility changes brought about in the Continued Assistance Act, resulted in overpayments for claimants who received Pandemic Unemployment Assistance benefits months before. The PUA program expired Sept. 4, 2021.

In the letter, the NASWA leaders request that Congress allow states to waive all non-fraudulent overpayments from federal programs to prevent further economic hardship for these recipients.

The leaders also ask that states be held harmless for unrecoverable payments under the Lost Wages Assistance program administered by the Federal Emergency Management Agency in fall 2020 as long as good-faith efforts are made to recoup improper payments.

An extension to waivers of interest payments and the accrual of interest on federal advances to state unemployment trust funds was also requested.

Asaro-Angelo has strongly and repeatedly advocated for federal reform of the UI system throughout the pandemic, as each state strained against record unemployment claims.

New Jersey has been at the forefront of UI improvements, creating innovative solutions to paying benefits during a time of unprecedented demand and consistently being at or near the top of states with the highest percentage of unemployed workers who successfully receive benefits.

Because of these accomplishments, New Jersey was recently selected by the U.S. Department of Labor and U.S. Digital Service as a pilot state for modernization and improvement of the federal unemployment insurance system.

“As evidenced by piecemeal policies we’re still trying to sort out months after their expiration, it’s clear that our federal unemployment system was not built to withstand workers’ needs of today,” Asaro-Angelo said. “With Congress and other federal partners, I’m hoping we can create a system that provides reliable support to every state and every worker.”