RICHMOND — Legislation intended to help residents who received overpayments from the Virginia Employment Commission sailed through a Senate committee Monday with bipartisan support.
“I am so strongly encouraged,” said Flannery O’Rourke, an attorney with the Virginia Poverty Law Center. “I think it reflects a real recognition that we need the system to change.”
Overpayments occur when an applicant is erroneously approved for unemployment benefits. The error may come to light months or years after the individual received payments, and often leaves recipients struggling to pay back the funds. The issue has come under the spotlight in Virginia as more applicants were mistakenly approved for benefits during the height of the pandemic.
A bill from Sen. Lamont Bagby, D-Richmond, would expand the agency’s ability to grant waivers in situations where it would go against “good conscience” to demand the money back.
“It shall be contrary to equity and good conscience if requiring repayment of an overpayment would deprive the individual of the income required to provide for basic necessities, including shelter, food, medicine, child care, or any other essential living expense,” states the proposed bill.
Under current law, the commission may only write off overpayments after seven years with good cause, or if the individual has filed for bankruptcy or died.
Another bill from Sen. Adam Ebbin, D-Alexandria, would alter that language to state that the commission “must” write off nonfraudulent overpayments after five years with good cause, or if the individual has filed for bankruptcy or died.
The bills, which are backed by the law center and the Legal Aid Justice Center, passed the Senate Commerce and Labor Committee with little debate and unanimous support. Both were referred to the Senate Finance and Appropriations Committee.
The VEC said in 2022 that it was working to collect more than $859 million in overpayments made to 366,000 Virginians during the pandemic.
O’Rourke believes the legislation could have a meaningful impact. When an individual learns they unexpectedly owe back money, she said it can create a “nightmare” situation that leaves families struggling to make car payments or put food on the table.
“It undermines the whole purpose of unemployment insurance,” she said, adding it’s supposed to be a safety net. “It really makes folks not want to apply for unemployment because they live in fear of that supposed safety net becoming a trap.”
O’Rourke added that it’s easy to see how some applicants inaccurately believed they deserved benefits.
“Unemployment law is a lot more complex than most people realize,” she said. “You can be unemployed and still not be entitled to benefits.”
COVID-19 led to a massive flood of unemployment claims nationwide. Nearly 1.4 million claims were filed in Virginia in 2020, followed by 609,772 in 2021. Those numbers dipped to 165,937 in 2022.
Katie King, katie.king@virginiamedia.com
