States Demand Refunds For Unemployment Money Paid In Error

In New Hampshire, more than 10,000 people who collected unemployment during the pandemic have received notices that they weren't entitled to benefits and had to return the money.

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MARY LOUISE KELLY, HOST:

Unemployment benefits have become a lifeline for millions of workers impacted by COVID-19. Now some recipients of benefits are receiving notices that they were overpaid and may need to return some or all of the money. New Hampshire Public Radio's Todd Bookman reports.

TODD BOOKMAN, BYLINE: For months, Stephen Ordway had March 13 circled on his calendar. It was the day he and two partners opened a Mexican restaurant in Dover, N.H. And then eight days after selling his first burrito, the pandemic forced Ordway to close down.

STEPHEN ORDWAY: It was terrible. That's an understatement.

BOOKMAN: Ordway's restaurant, Dos Mexican Eats, shut down for about six weeks. Then it reopened with limited hours. During that time, Ordway filed for and collected unemployment benefits.

ORDWAY: It wasn't just like a paid vacation or something like that. These were basic needs that were being met by these payments coming in every week.

BOOKMAN: Rent, food, college loans - the money made a difference. Then in July, after he was back working full time, he got what's called an overpayment demand letter. The state's unemployment office determined that he wasn't entitled to benefits after all. It claimed he left his previous restaurant job for personal reasons. The state wanted back $12,000.

ORDWAY: I mean, it's just - jaw dropped, literally. I think my mouth opened up pretty wide. My eyes got a little watery. I might have made kind of a shrieking sound. I'm not sure.

BOOKMAN: In New Hampshire alone, 10,000 people who collected unemployment during the pandemic have received similar notices. Colorado, Pennsylvania, Ohio - they've also begun sending out overpayment letters. Ray Burke is a legal aid attorney in New Hampshire. He says overpayments happen for a variety of reasons. Sometimes people apply for programs that they think they're eligible for but aren't, or they make honest mistakes filling out the complicated forms.

RAY BURKE: Maybe they don't have the specific earning statements they need at the time, or maybe they're limited English-proficient and they're trying to navigate an online application that's in English.

BOOKMAN: And state unemployment offices are under the gun to process applications quickly. Rich Lavers with New Hampshire Employment Security says the goal is to keep the system moving, especially during a pandemic and recession.

RICH LAVERS: And so we don't want to allow the desire to have perfect paperwork or a seemingly endless fact-finding process get in the way of getting money out the door.

BOOKMAN: So states approve benefits. But then weeks or months later, new information may come in - updated payment histories or a discrepancy from a former employer. In normal economic times, overpayments were a fairly common occurrence. Now states are trying to process a huge wave of applicants. There were also new programs launched during the pandemic to reach more people. In short, a complex system got more complex.

MICHELE EVERMORE: And naturally, there are going to be mistakes made. I mean, states are basically building the plane as they're flying it.

BOOKMAN: This is Michele Evermore with the National Employment Law Project. She says some states are still so backlogged with applications that they haven't even begun reviewing for overpayments. It's not clear how many of the more than 30 million Americans who received benefits this year may be impacted. In most states, you can appeal an overpayment. And if it's ruled that the applicant did, in fact, make an honest mistake or that person was qualified all along, the debt can be waived. That's what happened with Stephen Ordway. He was able to prove that his new restaurant had already opened when the pandemic struck.

ORDWAY: Unemployment plays a pivotal role in people's lives right now. And the last thing that you want to do to an individual that's - that needs that money is to strip it all away.

BOOKMAN: With his appeal done, he's back focused on his new restaurant.

For NPR News, I'm Todd Bookman.

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