Oregon Department of Employment May Write Off More Debt From Unemployed Workers Over Benefit Overpayments
Oregon Governor Kate Brown this week signed a bill that could get more Oregonians off the hook if the state pays them too much unemployment benefits.
Senate Bill 172 changes the state’s approach to overpayments, which occur when people receive unemployment benefits to which they are not entitled. These overpayments turn into debts that usually need to be repaid. Overpayments have been common during the pandemic, leaving some unemployed people in front of the state thousands of dollars, sometimes through no fault of their own.
The new law gives the Oregon employment department more flexibility to waive one type of overpayment – those caused by people’s honest mistakes. The measure does not change the government’s approach to fraud.
When a lifeline becomes a bill
On January 3, Danielle Gradzki went to her mailbox. Inside was a letter from the Ministry of Employment. She read it in her car on the way to the grocery store.
The letter said she had an overpayment of $ 16,000.
“I had to go home because I had a panic attack,” she said. “I couldn’t breathe. I was crying.”
Something had gone wrong behind the scenes. Gradzki lives in Washington but had worked in Oregon. The Oregon Department of Employment paid her allowances, then told her to pay them all back.
“It was horrible,” she said. “It’s been pretty awful with it looming over my head.”
Finally, Gradzki was relieved. The Employment Department granted his request for exemption – something he has the power to do when the overpayments are his own fault. Because she had received federal benefits that she could not afford to repay, Gradzki’s debt was written off.
The new law, SB 172, gives the agency the flexibility to waive more types of overpayments. But to understand what the law might do, it’s also helpful to understand the agency’s current practices.
For the employment service, waivers have two different meanings, depending on the situation. Some waivers are permanent debt cancellations and others are just a delay in collection.
What the SB 172 does, in detail
There is three basic types of overpaymentsThose caused by fraud, those caused by honest people’s mistakes, and those that are not considered to be someone’s fault at all, such as agency or employer error.
The new law takes the second category of “honest mistakes” and treats it a bit more like the third – overpayments based on agency mistakes.
- SB 172 creates a waiver process for overpayments caused by unintentional individual errors. The law allows the Department of Employment to fully forgive these overpayments if their collection would cause economic hardship. Under the previous law, the agency could only grant waivers for overpayments that were not considered to be someone’s fault. (There is no exemption for fraud.)
- The law sets a five-year cap on the state’s ability to recover overpayments caused by people’s mistakes. This five-year limit applies to payment plans, wage garnishment, interception of state tax refunds, as well as “offsets” for future unemployment benefits. (This is when the state takes money from people’s benefits until their debt is paid off.) There is no time limit for recovering overpayments. fraudulent.
- Some temporary exemptions could become permanent later. Getting a “waiver” can make your debt look like it’s gone. But that was not the Employment Department’s interpretation of its pre-existing waiver authority. Instead, when regular unemployment overpayments weren’t someone’s fault, the agency automatically postponed recovery during the pandemic, for six months at a time. SB 172, however, describes waivers as the extinction of all debts. Thus, the temporary exemptions could potentially become permanent once the agency approves the final rules for implementing the new law. (Some federal benefit overpayments may be completely destroyed at present.)
- The new law is retroactive, thanks to a late amendment. The changes described above could apply to overpayments detected throughout the pandemic, and not just after the law comes into force.
- The measure requires that overpayment notices be written more clearly. The new law states that notices must include the reason for the overpayment, describe the consequences of the overpayment and address the possibility of obtaining a waiver.
What the SB 172 costs
The total impact on SB 172 revenues is unknown, in part because new waivers will be dealt with on a case-by-case basis.
With the five-year cap in place, the Department of Employment estimates that future overpayment recoveries will be reduced by $ 116 million from 2025 to 2029. That means less money and less interest accrued to support. the state unemployment insurance trust fund, which pays workers made redundant.
The money in the trust fund comes from employers’ taxes. And when the fund is low enough, those taxes go up. In the debate on SB 172, some lawmakers expressed concern about changes such as writing off some overpaid debt after five years.
“Keeping debt recorded, so people can repay it in a system that is paid only by employers, is important,” Daniel Bonham, R-The Dalles, said at a hearing in May, “for them. next people. who may need the benefits.
Still, Bonham voted for the passage of SB 172, with the vast majority of his colleagues.
During the pandemic, the Ministry of Employment claims to have “drastically” reduced its collection of overpayments. But the agency plans to gradually resume recovery of overpayments it caused as emergency coronavirus orders increase.
He encouraged those facing financial difficulties to continue to seek waivers.