A new state policy may require nearly 900,000 Californians to return their unemployment benefits because they may not have been working or looking for work. But some researchers worry the clawback campaign could force low-income individuals to pay back thousands of dollars they no longer have.
The state Employment Development Department began issuing notifications of the proof-of-work requirement last month to one-third of California鈥檚 2.9 million Pandemic Unemployment Assistance recipients. The federal program, which ran from March 2020 and ended in September, was aimed at helping people who don鈥檛 usually qualify for unemployment benefits because they are freelancers or small-business owners.
The state is asking them to prove, retroactively, that they were working, or planning to work, prior to filing their unemployment claim. If they can鈥檛 provide documentation, they would be ineligible and asked to give the benefits back.
A full repayment could be over $32,000 if a recipient received full benefits throughout the program. In addition, if a claimant offered false information, the state could impose a 30% penalty. Some experts are now suggesting giving recipients a pass even if they can鈥檛 prove their eligibility.
鈥淲e should be saying, 鈥楲ook, if you got unemployment insurance benefits during that time, you鈥檙e fine,鈥欌�� said Chris Hoene, executive director of the left-leaning California Budget & Policy Center based in Sacramento.
鈥淚f the concern is fraudulent claims,鈥� he added, 鈥渢hen do the work to fix the administration of the system鈥� instead of requiring recipients to prove they qualified for the benefits.
It鈥檚 not clear where lawmakers stand. Democratic Assemblymember Tom Daly of Anaheim, chair of the Assembly Insurance Committee, which has oversight of the EDD, did not return a request for comment. Assemblymember Chad Mayes of Yucca Valley, an independent serving as vice-chair of the committee, also didn鈥檛 respond.
The chair and vice-chair of the Senate Labor, Public Employment, and Retirement Committee 鈥� Democrat Dave Cortese of San Jose and Republican Rosilicie Ochoa Bogh of Yucaipa 鈥� did not respond to requests for comment.
The EDD noted that the repayment policy is a federal requirement, passed by Congress in the Continued Assistance for Unemployment Workers Act in 2020. EDD acknowledges it can waive repayment if the overpayment was not the recipient鈥檚 fault, not fraudulent and if repayment would cause extraordinary hardship.
The new policy is an attempt to claw back an estimated in California. But McGregor Scott, a former U.S. attorney who has been leading a state investigation into unemployment fraud,
The state鈥檚 immense loss came after EDD, inundated with unemployment claims early in the pandemic, began expediting the process by waiving a proof-of-work requirement. Investigators have said the rollback allowed organized crime and prison inmates to siphon money from the state through fraudulent claims.
Recipients who receive EDD notices must use to prove they were employed or planned to be employed in the lead up to filing their claim.
Those who filed on or after Jan. 31, have only 21 days to send documentation. Those who filed before that date, and received a payment after Dec. 27, 2020, have 90 days to comply.
鈥淲e probably need to implement this with compassion,鈥� said Jesse Rothstein, a professor of public policy and economics at UC Berkeley. 鈥淲e won鈥檛 be able to collect in every case.鈥�
鈥淚f the concern is fraudulent claims, then do the work to fix the administration of the system.鈥�CHRIS HOENE, EXECUTIVE DIRECTOR OF THE CALIFORNIA BUDGET & POLICY CENTER
Even before the pandemic, struggled to pay for basic necessities, according to the United Ways of California. During the pandemic, a report from the Ludwig Institute for Shared Economic Prosperity found that 4.8 million Californians were seeking, but unable to find, full-time work that paid a living wage.
A recent by Tipping Point Community, a nonprofit focused on alleviating poverty in the Bay Area, estimated that 200,000 of the region鈥檚 residents were kept out of poverty because of expanded support from government and charitable organizations.
鈥淲ithout further bold action, we risk a 鈥榬eturn to normal鈥� in terms of durable poverty and inequality,鈥� said Tipping Point鈥檚 chief executive, Sam Cobbs.鈥淲e cannot afford to take that step backwards.鈥�
This article is part of the , a collaboration among newsrooms examining income inequality and economic survival in California.