The Baker-Polito Administration announced plans to provide expanded relief to unemployment claimants with overpayment obligations. The announcement follows a decision by the U.S. Department of Labor (USDOL) to approve in part the Commonwealth’s request to provide certain Pandemic Unemployment Assistance (PUA) claimants with relief from overpayments that resulted from a mid-program change in Federal rules. Massachusetts had requested that USDOL provide relief for all claimants with overpayments related to a new employment substantiation requirement created midway through the program. However, USDOL only granted relief for certain weeks of overpaid benefits.
While USDOL did not grant Massachusetts’ request for complete relief, the Administration today is announcing several options to provide substantially expanded relief for claimants with non-fraudulent overpayments, including a simplified “one-click” option for people to easily request and receive a State-issued waiver. Together, the USDOL waiver and the additional state actions announced today will allow for the resolution of up to $1.6 billion in overpayments, or up to 71% of outstanding overpayments. Of these totals, $1.3 billion represents overpayments in emergency Federal programs paid for entirely with Federal dollars.
DUA will contact claimants in the coming days with information about this relief.
Relief Provided by USDOL ($349 Million)
Background: The Federal government launched the PUA program in March 2020 to support workers not covered by the traditional UI system who lost work due to the pandemic. Massachusetts was one of the first states to implement the PUA program. In early 2021, after tens of thousands of claimants had been qualified and were receiving benefits, the federal rules changed to require that claimants provide documented substantiation of prior employment or be ruled retroactively ineligible for benefits. After completing the technical changes needed to implement the employment substantiation requirement, Massachusetts sent notice to claimants on March 23, 2021 informing them of the new requirement. While the Federal employment substantiation requirement was meant to address problems with fraud that had developed in the PUA program, one unintended result was that legitimate claimants were determined to be overpaid if they failed to respond or to provide sufficient documentation. In response, Massachusetts requested in February that USDOL allow the Commonwealth to issue a blanket waiver for overpayments resulting from the change in Federal rules. Massachusetts was the first state to request such a blanket waiver from the Federal government.
USDOL’s Decision: In its notice to Massachusetts partially approving its request, USDOL noted that the Commonwealth provided proper notice for claimants to fulfill the employment substantiation requirement. Given that, USDOL said it would only allow a blanket waiver for overpayments occurring prior to the Commonwealth’s notice of the rule change. The waiver therefore covers only overpayments made for the period running from the week ending January 2, 2021 through the week ending March 20, 2021. USDOL indicated that it believes that the Commonwealth provided sufficient opportunity for claimants to meet the requirement once the notice was issued and that it would not approve a blanket waiver for overpayments after the week ending March 20, 2021.
The practical effect of USDOL’s decision is that most claimants with employment substantiation overpayments will receive partial relief because some weeks of overpayments will be waived. However, very few claimants will receive complete relief, as Massachusetts had requested. The blanket waiver approved by USDOL covers approximately $349 million and provides partial relief to 53,487 claimants with outstanding overpayments. This translates to about 41% of total dollars associated with outstanding PUA employment substantiation overpayments. Approximately 84% of claimants with outstanding PUA employment substantiation overpayments will receive at least some relief from the Federal blanket waiver.
In March 2020, Massachusetts paused overpayment collection activities for both Federal and State unemployment programs. This means that the vast majority of PUA employment substantiation overpayment dollars have not been repaid and there are currently no financial consequences for claimants who have been overpaid. In response to the new blanket waiver, the Department of Unemployment Assistance (DUA) will return any previously-repaid funds to claimants. DUA will communicate directly with claimants about this process, and no action is required by the claimant.
Further Relief from Massachusetts
Because Massachusetts advocated for complete relief for these claimants, it has also prepared new solutions to provide additional relief, with the goal of making it as easy as possible for claimants to be relieved of non-fraudulent overpayment obligations, in both the PUA and UI programs:
Simplified “One-Click” State-Issued Waivers ($782 Million): DUA will soon file emergency regulations to expand criteria for State-issued overpayment waivers for both PUA and UI overpayments to address those claims not resolved by the partial Federal blanket waiver. This will broaden the universe of people who qualify for a State-issued waiver, to provide relief for remaining PUA employment substantiation overpayments and overpayments in other categories across both State and Federal programs.
DUA is also working on operational changes to the waiver process that will make it significantly easier and faster to grant relief. DUA will pre-qualify eligible claimants for an overpayment waiver and provide an easy “one-click” option to be granted a waiver. DUA will contact eligible claimants directly about this opportunity via email and letters. A telephone option will also be available for claimants. Claimants should look out for a communication from DUA beginning next week regarding this new relief.
The Administration will be filing for funding soon to offset the impact of State-issued UI waivers on the UI Trust Fund.
Resolving Identity Verification Claims ($475 Million): Overpayments with ID verification issues exist in both Federal and State UI programs. A significant portion of these overpayments are uncollectible, as they are likely connected to a nationwide fraud scheme involving stolen identities. Claimants nominally connected to these overpayments likely did not actually receive benefits because their identities were stolen and used by criminal actors to obtain benefits illegally. To resolve, DUA will set aside overpayments involving fraudulent claims for eventual write off as provided by statute. The Administration will file for funding soon to offset the impacts of this approach on the UI Trust Fund, to ensure employers are not adversely impacted by this approach.