NJ will stop recouping some overpaid COVID jobless benefits

As many as 250,000 New Jerseyans could be told they no longer have to return COVID-19 unemployment benefits that they were previously told were “overpaid” to them, the state Department of Labor and Workforce Development said on Feb. 8.

On Monday, the U.S. Department of Labor put out guidance for how states can avoid clawing back pandemic-relief jobless aid.

New Jersey labor officials warned last month that 130,000 claimants were told that they were overpaid an average of $4,000, and that a total of 250,000 people in the state could be affected.

A slew of new programs were implemented as part of the CARES Act in the early days of the pandemic in response to record-high jobless claims due to mass business closures. These new federal programs – and the surge in unemployment claims – triggered “a significant number of state errors and inaccuracies due to these fast-changing circumstances,” reads the USDOL’s 40-page guidance. 

“States did their best to pay benefits as quickly as they could during the pandemic, but implementing new programs quickly meant innocent mistakes that resulted in overpayments,” U.S. Labor Secretary Marty Walsh said in a prepared Feb. 8 statement from the New Jersey Department of Labor. “We encourage states to forgive as many honest mistakes as they can.”

Rules also gradually changed since that first round of federal relief in March 2020, the NJDOL noted. For example, claimants were no longer able to self-certify their income and employment history, but instead had to provide documentation.

New Jersey Labor Commissioner Robert Asaro-Angelo signed onto a letter last month asking Congress to waive overpayments, as long as they were not done fraudulently, warning that “to try to recover these funds … 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.”

An estimated $35 billion in jobless benefits have been paid out between March 2020 and September 2021, while 1.6 million people in the state have filed for unemployment.

The new guidance calls for five scenarios where overpayments could be waived, all stemming back to pandemic-specific benefits, such as those for freelance workers, gig workers and the self-employed. These rules apply specifically to those benefits, part of the federal Pandemic Unemployment Assistance program, as well as the Pandemic Emergency Unemployment Compensation, which extended benefits until September 2021.

For example, someone who indicated “no,” if they were not able to work, and then received PUA or PEUC benefits before the state made a formal decision could get a waiver.

A claimant that got higher PUA benefits than they were eligible for would be eligible for a waiver, too, as could a claimant whose weekly benefits were miscalculated. And someone that submitted proof of income based on incorrect state instructions – like providing gross income instead of net income, or earnings from the incorrect year – could also get the waiver.

Fraudulently obtained benefits would not be eligible for the waiver.

“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 on Tuesday.