EDD wants his jobless money back. But some people can’t pay. • Sacramento News and Review

By Jesse Bedayn for CalMatters

A musician who lost all her unemployment papers when her house burned down in a forest fire. An arborist who filed for unemployment assistance a year before the pandemic began. A tattoo artist who can’t prove he was working because he was running a cash operation.

These are just a few Californians caught in a state net to recover money from fraudulent unemployment claims.

Late last year, California’s Department of Employment Development launched a clawback program, requiring some 1.4 million people who received federal pandemic unemployment assistance to retroactively prove that they were working or looking for work. This program, which ended in September, aimed to help people who are not usually eligible for unemployment benefits because they are self-employed or small business owners.

As of January 4, one in five recipients who received the notice had responded. The state says a majority have been deemed eligible and will not have to repay, but some are unable to provide documents, leaving them on the hook to repay benefits that could amount to tens of thousands of dollars. If they can’t pay, the state could collect the money in a variety of ways, such as wage garnishments or suing them.

“They’re going to ask me to get money back that I don’t have,” said Donna Casey, a musician who may owe EDD more than $30,000 after losing her home in the August resort fire. in 2020. “What are they going to do to me, put me in jail? At least I will have a place to live.

Policy experts had warned against the clawback program, noting it would hurt poor Californians who were already disproportionately pushed out of the workforce by the pandemic. Even former federal prosecutor McGregor Scott, hired by the state to conduct a separate investigation into large-scale unemployment fraud, expressed skepticism that the effort would recover much of the estimated $20 billion. dollars lost to fraudulent claims, including millions of dollars in state-sanctioned payments for prison inmates. Lawyers have suggested letting plaintiffs like Casey keep the money regardless of evidence, but the state is holding its ground.

This has left many Californians in a bind.

Some who were contacted by EDD said they were terrified of losing their homes. Many are furious that the responsibility falls on them after they have already received the money. And others just don’t know where to turn for help.

Casey had lost gigs and stopped selling homemade jewelery at festivals when the lockdown started. Then she lost all of her documents when her Trinity County home burned down in a wildfire, shortly after her daughter died of a lung infection.

Unemployment has been a lifeline as Casey has searched for work throughout the pandemic, including applying to an Amazon warehouse. But, at 67, she couldn’t lift enough to qualify for the job.

Casey, however, never thought she might have to pay back her benefits.

The state unemployment agency noted that the reimbursement policy is a federal requirement, passed by Congress in the Continuing Unemployed Assistance Act in 2020. The agency has pledged to offer waivers if the overpayment of benefits was not the fault of the recipient and that repayment would cause extraordinary hardship. , defined as any one-person household earning less than $1,351 per month or just over $16,000 per year.

However, none of the people CalMatters spoke to were aware of such an option or how to request a waiver. They said it was not in any of the agency’s communications with them.

Now living in Berkeley with one of her daughters, Casey has some photos of her old business cards that she will send to the agency. She also hopes EDD will talk with the bands she’s played with – but she fears that won’t be enough.

Similarly, at the start of the pandemic, Sasha Emery was living in an RV partially funded by federal emergency funds after her Paradise home burned down. After finally finding affordable housing during the pandemic, she filed for unemployment when the few available jobs failed to materialize.

When the notice arrived asking for a proof or a refund, the shock turned to tears. All Emery has to offer are records of her dire situation: food stamps, Medi-Cal documents, and potentially the federal aid she received after the fire.

If a recipient cannot provide the necessary proof and cannot repay the funds all at once or in installments that may include 3% interest, EDD can seek out the money in several ways. The agency could put a lien on the property, take up to 25% of a beneficiary’s salary, withhold state and federal tax refunds or lottery winnings, deduct benefits from future unemployment or unemployment benefits. state disability insurance, or file a lawsuit.

Prasad Krishnamurthy, debt collection expert and UC Berkeley law professor, said the state is not bound by the same rules that compel private collection agencies to pursue debtors. This makes the government, Krishnamurthy said, “a very powerful and aggressive creditor.”

Debt could push Californians further into poverty, Krishnamurthy said.

Sam, an arborist who asked not to use his full name for fear of state retaliation, filed for unemployment in late 2018 after losing his business in San Francisco. He received benefits for the next seven months. Then in August 2020, the EDD contacted him, telling him that he qualified for a federal extension. “It was automatically filed for you,” the agency wrote.

At the time, Sam was grateful for the support that enabled him to care for his mother, who suffered a heart attack at the start of the pandemic and was diagnosed with cancer.

In fact, he said, the agency held a virtual hearing to approve his eligibility. After that, he received installments of $4,000 for benefits dating back to January 2020. Now, with two sick parents and no documentation proving he lost his pay due to the pandemic, Sam could owe nearly 30 $000 in accrued benefits.

“I just feel like I’ve been set up,” he said.

For others who ran small cash businesses, there was never a paper trail.

After Martin Davalos’ tattoo work dried up, Davalos turned to unemployment, which kept him off the streets, he said. Now, however, he has no evidence to show EDD. He spent the money on bills, gas, food and rent.

“Of course I would return it,” Davalos said, “but he’s gone.”

This article is part of the California Division, a collaboration between newsrooms examining income inequality and economic survival in California.

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