Unemployment payments that looked like a lifeline may now, for many, become their ruin.
Pandemic Unemployment Assistance, a federal program that covers gig workers, part-time hires, seasonal workers and others who do not qualify for traditional unemployment benefits, has kept millions afloat. The program, established by Congress in March as part of the CARES Act, has provided over $70 billion in relief.
But in carrying out the hastily conceived program, states have overpaid hundreds of thousands of workers — often because of administrative errors. Now states are asking for that money back.
The notices come out of the blue, with instructions to repay thousands or even tens of thousands of dollars. Those being billed, already living on the edge, are told that their benefits will be reduced to compensate for the errors — or that the state may even put a lien on their home, come after future wages or withhold tax refunds.
Many who collected payments are still out of a job, and may have little prospect of getting one. Most had no idea that they were being overpaid.
“When somebody gets a bill like this, it completely terrifies them,” said Michele Evermore, a senior policy analyst for the National Employment Law Project, a nonprofit workers’ rights group. Sometimes the letters themselves are in error — citing overpayments when benefits were correctly paid — but either way, she said, the stress “is going to cost people’s lives.”
The hastily conceived Pandemic Unemployment Assistance program has presented other troubles, including widespread fraud schemes and challenges with processing. As a result, states only recently had enough resources to start sending out overpayment notices. In the meantime, people have been collecting — and spending — sometimes thousands of dollars in what they understood to be legitimate benefits.
Olive Stewart, a 56-year-old immigrant from Jamaica, worked part time as a sous-chef at a cafeteria at a Jewish school in Philadelphia, earning $16 an hour for roughly 25 hours a week. But when the pandemic hit and schools shut down, she was laid off.
Ms. Stewart applied for Pandemic Unemployment Assistance and began receiving $234 a week. It was not quite enough to cover the $650 in rent, $200 electric bill and $200 internet bill for the house she shares with her 12-year-old daughter, her retired mother and her sister, who has a disability that prevents her from working. To make ends meet, Ms. Stewart started dipping into her savings.
Then, on Oct. 6, she got a notice saying that Pennsylvania’s unemployment insurance vendor, Geographic Solutions, had overpaid her by accident. The overpayment included funds from Pandemic Unemployment Assistance and from a $600 federal supplement to unemployment insurance. In total, she was told, she would have to pay back nearly $8,000.
To collect the debt, the state began to withhold more than half of her unemployment payments, leaving her just $105 a week. In early…
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