Chicago, IL

Demand that Chicago Residents Repay Unemployment Overpayments Could be Relieved by New COVID Bill

Natalie Frank, Ph.D.

The State will determine whether or not people are required to pay back IDES overpayments

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Source: Sagacious News

Unemployment for gig workers has always been a problem. Often those who are independent contractors have an insufficient work history to claim unemployment if they lose clients or they have difficulty finding work after a short-term job has been completed.

For gig workers in Chicago, this can be particularly daunting because of the high cost of living. We pay a 10.25 percent state and local sales tax, a 2.25 percent sales tax on groceries, and a .25 percent restaurant tax. Chicago also has the second-highest property tax in the country. So when a job goes south for those working in Chicago, unless you have large savings built up you can quickly go into debt before finding your next job.

When it was announced that there would be unemployment for gig workers through the Pandemic Unemployment Assistance (PUA) who couldn’t work because of COVID-19 but were not eligible for traditional unemployment there was a lot of rejoicing in Chicago. Chicago had been hard hit by the pandemic, and like other large cities in the country, the unemployment rate had shot up because of it. Unemployment went from 5 percent in March to 18.7 percent in April.

The bill allowed for 39 weeks of benefits. Additionally, there was a supplemental benefit of $600 from the federal government for several weeks and when those ran out the State added a $300 supplement for several weeks. This allowed many of us to continue paying our bills when jobs that we’d gotten prior to the pandemic didn’t start or customers who had contracted for our services dried up due to their own financial difficulties.

Then the year which had already been financially challenging became even more difficult for many unemployment recipients in the state. Emails and letters started being sent out stating that the recipients had been overpaid and were now required to pay back the extra money sent to them as part of their PUA benefit.

The letter from the Illinois Department of Employment Security said, “You are receiving this notice because you were paid more in federal Pandemic Unemployment Assistance (PUA) than you were eligible to receive. Upon review of recent information, a monetary redetermination was made. Federal guidance requires that this money be paid back in full. We understand this may cause additional economic hardship, but we do not have the authority to waive repayment per federal law.”

This has caused panic for those receiving the letters and others fearing that they too will be told to pay back a portion of their benefit. Many say they don’t have the money to pay back, having used it to pay their bills while others say what is being asked for is more than the total amount they have received. For gig workers that are barely hanging on financially during this pandemic the mistakes made by the government could result in many filing for bankruptcy if required to repay a portion or all of their unemployment benefit.

Workers across the city and state asked Governor Pritzker to step in and help. The governor put the blame as well as the responsibility for a remedy on the federal government stating: "The program itself was created quickly without a lot of thought by the federal government and Congress, and I do think that only Congress can act to remedy the situation that the system itself created."

There is some indication that being a brand new program that was desperately needed for a lot of unemployed individuals, state unemployment agencies rushing to disperse benefits, may have issued funds incorrectly. There were also many people who had never applied for unemployment before who could have made mistakes when completing their applications.

Now, as part of the new stimulus bill just passed, states are allowed to determine that these overpayments can be kept by recipients. According to the text, state agencies can waive repayments if they decide that “the payment of such pandemic unemployment assistance was without fault on the part of any such individual; and such repayment would be contrary to equity and good conscience,” meaning it would cause extreme financial hardship.

While this has provided some hope for unemployed workers who received the letters stating they were responsible for repayment, many in Chicago continue to worry. This is because of the language of the bill. It doesn’t say that the requirement for repayment will be waived, just that the federal statute that required repayment is no longer in place. So, each state decides whether to waive repayment.

Lawmakers say it isn’t clear how IDES will enforce these overpayments waivers. It could be on a case-by-case basis or a waiver for everyone. It isn’t even clear at this time whether each state will take advantage of the removal of the federal requirement that this money be repaid.

Currently, it appears that it is being thrown back to the federal government with states waiting on guidelines issued by the Department of Labor. A statement provided by Rebecca Cisco, IDES Public Information Office read:

While there is language in the new federal stimulus law that allows states to waive certain PUA overpayments, how that new federal law should be applied is unclear and contingent on USDOL issuing guidance to unemployment agencies. USDOL has indicated that guidance of this type could days or weeks to materialize. IDES is monitoring this situation closely.”

Those who have gotten overpayment notices and believe them to be incorrect should obtain legal advice about how to file the appeal they are entitled to. Those who have already paid back the money will not likely be able to reclaim it but they should also consult an attorney regarding their situation as states may address this issue differently.

It is unclear how many people have received repayment notices in Chicago but it is likely that more people will receive them in coming weeks as the state has just begun a formal investigation to detect overpayments.

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Chicago, IL
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