N.J. will no longer attempt to recover some overpaid unemployment payments

The state Labor Department will no longer attempt to recover some overpaid unemployment payments after the federal government updated its guidance on pandemic-related unemployment benefits.

The change could affect more than 250,000 New Jerseyans who received extra unemployment benefits through no fault of their own, Labor spokeswoman Angela Delli-Santi said. The department is working through the details and will soon notify eligible claimants of the next steps, Delli-Santi said.

Unemployment skyrocketed during the first weeks of the pandemic, leaving the Labor Department flooded with hundreds of thousands of claims as businesses suddenly shuttered. Congress expanded unemployment benefits for workers who aren’t typically eligible, like gig workers and freelancers, but those guidelines changed dozens of times as new laws were passed.

About 130,000 residents have received letters from the state asking them to repay unemployment benefits paid in error, with the state blaming the strict federal guidelines. People who owe the Labor Department money typically can’t receive more benefits until their claim is resolved.

Now, under the new guidance from the U.S. Department of Labor, there are five categories claimants must qualify for to see their overpayments waived, all related to pandemic benefits, like Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC).

The five scenarios under which New Jersey and other states can waiver overpaid claims:

• A claimant who responded “no” when asked if they were available for work and then received PUA or PEUC payments without the state adjudicating the issue;
• A claimant who received a higher PUA benefit than they were eligible for and a claimant whose PUA weekly benefit amount was miscalculated;
• A claimant who was overpaid PUA because, after initially saying they were unemployed or unable to work for COVID-related reasons, subsequently said when asked to self-certify that none of the COVID-related reasons applied to them;
• A worker who was eligible for unemployment and received a higher weekly benefit amount from the state;
• A claimant who submitted proof of self-employment to become eligible for the Mixed Earners Unemployment Compensation Program for gig workers and was overpaid because the state incorrectly processed the information.

Labor Commissioner Robert Asaro-Angelo, who also serves as the chair of the National Association of State Workforce Agencies, had been advocating for the change and wrote a letter to Congressional leaders last month urging them to allow states to waive recovery of non-fraudulent unemployment payments.

“This is great news for tens of thousands of New Jerseyans who received these benefits believing they were entitled to them, but found out when federal guidance changed that they did not meet the eligibility standards,” Asaro-Angelo said in a statement.

Asaro-Angelo told Congress the probability of recovering overpayments from millions of people nationwide is low, and the effort would be costly.

The average overpayment is around $4,400, Delli-Santi said. Any overpayments found to be fraudulent will be pursued by the Labor department. 

“While we appreciate USDOL pursuing its available statutory authority to provide relief, we remain hopeful that Congress will grant states the broader overpayment waiver authority we are seeking. Doing so would provide peace of mind to tens of thousands of New Jerseyans whose overpayments fall outside the new guidance. It would also allow us to dedicate our resources to serving unemployed workers in need rather than putting claimants in precarious financial situations,” Asaro-Angelo said.

New Jersey has said it stopped more than $5.4 billion in fraudulent unemployment claims.