Some Washington Residents Told They Have to Repay Jobless Benefits

Last week, Sonja Knudson got some unpleasant news: The $8,350 in federal jobless benefits she'd received last spring from the state Employment Security Department (ESD) was actually an overpayment, and she'd have to pay it back.

If not, the agency warned it would garnish her paycheck or tax refund, said Knudson, 51, a longtime substitute teacher with both Seattle Public Schools and Methow Valley School District. "I really appreciated getting the benefit last spring," she added. "But this has been really frustrating."

Knudson isn't alone. Over the last several weeks, thousands of Washingtonians have been notified by ESD that their unemployment benefits were being changed, suspended or even reduced — and, in some cases, had to be repaid entirely.

ESD officials said the problems are largely temporary and stem from federal regulations requiring the agency to move some recipients from a federal relief program to the regular state unemployment program.

The agency said many of the affected workers can restart suspended benefits and avoid repayment simply by filing a new claim with ESD. The ESD also temporarily paused sending notifications to claimants about the changes "due to the confusion some claimants had," and it has clarified instructions on the ESD website, spokesperson Nick Demerice said Monday.

The agency also acknowledged that the state's recent spike in jobless claims — the biggest of any U.S. state, as reported last week — was actually due to thousands of workers filing those new claims.

But not everything is so easily fixed. Some of those frustrated claimants may have to pay back some benefits, Demerice said. And for an as-yet undetermined number of claimants, moving from the federal program to the state program "may result in a lower weekly benefit amount," Demerice said. None of which is likely to be welcome news in a job market that is still struggling to recover from the pandemic.

It's the latest complication to arise over an emergency federal program known as Pandemic Unemployment Assistance (PUA). Enacted in March, PUA covers workers who have lost work due to the pandemic but were in job categories, such as gig workers or part-timers, that typically aren't eligible for regular state unemployment.

Since March, ESD has paid more than $1 billion in PUA funds to just over 282,000 PUA claimants — or roughly one in four of all Washingtonians who've been on unemployment during the pandemic.

But PUA was meant to be temporary: If PUA beneficiaries became eligible for state unemployment insurance, they lose their eligibility under PUA and need to apply for regular unemployment. (That could happen, for example, if ESD received updated information from a former employer showing that a PUA beneficiary had actually worked enough hours to qualify for regular state benefits, Demerice said.)

In late October, ESD began notifying around 26,000 PUA claimants that they needed to file claims for regular unemployment benefits, Demerice said. Claimants who used ESD's eServices system had five days to respond, while the rest had 10 days.

But things didn't quite go according to plan. Only half the 26,000 claimants actually responded, Demerice said.

ESD isn't sure why the remainder did not. Some PUA claimants who contacted The Seattle Times or left comments on online forums said they missed the notification. Others said they ignored it because they'd found jobs and hadn't collected benefits in weeks or months. Many complained that the language in the notification was unclear. (Demerice said the agency has since added .)

Whatever the reason, because these beneficiaries were now technically ineligible for PUA benefits, but had not filed for state benefits, some saw their benefit payments stop. Others were asked to repay PUA benefits they'd already received.

Some beneficiaries who'd had their benefits frozen or received overpayment notices also complained they'd been unable to contact ESD to resolve the matter.

"I have no idea what to do," wrote one poster on Reddit last week. "I've used this money for groceries, rent, utilities, and books for college and I need to keep using this money until I get a job."

Meanwhile, some of those who did file a new claim for regular unemployment benefits found that their new state benefit would be less than they'd been getting under PUA.

Part of that, Demerice said, is that PUA benefits are simply higher than regular state benefits, especially for claimants with lower incomes. For example, the minimum PUA benefit last spring was $235 a week, compared to just $188 a week under the state program. Updated wage data from a worker's previous employer could also result in a lower benefit, Demerice said.

That difference in benefit amounts also means some beneficiaries really do have to pay back some of their PUA benefits. That's because, depending on when their eligibility changed, they may have been technically ineligible to receive those higher PUA benefits, Demerice said.

"If there ends up being a difference between their weekly benefit amount, between the [regular state unemployment] claim and the PUA claim, then they would be liable for the differential in that," Demerice said.

Demerice could not provide figures for exactly how many of the 26,000 PUA claimants had seen their benefits reduced or by how much. He also didn't have figures for the number of overpayment notices that been sent out.

But some workers say they're seeing their weekly benefit payments drop by a hundred dollars or more. On a Reddit forum on Friday, one person complained of getting "a notification that basically forced me to make a new claim, which dropped my benefit amount over 200$."

Demerice said PUA beneficiaries who did not respond in time and received overpayment notices can file an appeal with the agency to have the case reviewed.

The one upside of the episode: Last Thursday's unemployment claims report doesn't look quite as dire.

ESD initially did not provide an explanation for the spike in weekly claims, which was well above the pattern of recent weeks. Some economists, including two with ESD, suggested it might reflect a combination of factors, including seasonal layoffs and cuts by employers responding to surging cases of COVID-19.

Later, ESD was able to confirm that the "majority" of the spike was made up of "people moving between entitlements and not people who are newly unemployed," Demerice said.

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