Don’t Bite off What You Can’t Chew – Unemployment Overpayments

Mamma always said don’t bite off what you can’t chew. Apparently nobody passed this advice along to the General Assembly. In the effort to reform unemployment security law, sweeping changes have been made with the apparent intent of making benefits harder to collect and then once obtained those benefits amount to less. Depending on what side of the political aisle you stand you will have different ideas of pros and cons of such changes. One change that seems to have gone largely undiscussed however seems hard to justify regardless of what side of the aisle you are on. One effect of that change is now rearing its ugly head.

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Back in 2013 the General Assembly quietly did away with a simple provision that stated that benefits paid as a result of a decision by the Division which is ultimately reversed would not be deemed an overpayment. N.C. Gen. Stat. § 96-9(c)(2)(b). This provision for years protected individuals who were paid benefits by the Division when it was later determined that the Division had made the incorrect initial determination. If an individual claimant is paid benefits the employer is given a period of time within which to appeal, usually about 30 days. An appeal by the employer is made to the Division but notice of the appeal is not required to be given to the claimant. The claimant will usually find out that an appeal was made when they are sent notice of the hearing several weeks, if not months later. This means that the claimant will have collected and probably spent at least two months of unemployment benefits, which could easily amount to thousands of dollars, before they even know that the payment of benefits is being challenged. With the old statutory protection the Division could not then demand the unemployed individual to pay back the benefits initially paid if the appeal by the employer is successful. If the question of eligibility was a hard enough call that even the Division got it wrong at first and then allowed an unemployed individual to collect benefits for potentially several months, how could it ever be deemed just to demand repayment? If the claimant lied in order to trick the Division, fine, the statute doesn’t protect them, but if there is no other basis for overpayment, the claimant is clearly not at fault because the Division got it wrong.

Fast forward to the 2013-2014 fiscal year, the first year without this law in place. State Auditors determined that nearly one-fourth of the closed overpayment cases the Division handled lacked required documentation to support the investigation. The Audit found that the Division simply did not have necessary processes in place to track supporting documentation for overpayments. The Division responded by saying that it was putting in processes to streamline and help with data protection as they attempt to collect on overpayments. Perhaps the more fundamental question ought to be asked, whether the Division should put into place processes that help protect claimants from incurring overpayments to begin with. It is very clear that the current administration wants to minimize unemployment payments in favor of encouraging job seeking and creating new jobs. That being the case, it still doesn’t make sense that the Division would make payments to claimants, seemingly with no strings attached, only to then later recall those payments months later from financially challenged individuals whose only fault was trust the Division to make the right call on their eligibility to start with. It is really helpful to North Carolinians to have a government agency putting in processes to help seek repayment of overpayments they created? Maybe the Division of Employment Security should just take smaller bites.