Since the start of the pandemic in March 2020, Senator Anthony M. Bucco’s district office staff has assisted thousands of constituents struggling to receive unemployment benefits. One particularly troubling case, however, has occupied and frustrated the Senator and his team since June.
A Morristown resident and employee at a state university was one of thousands of state workers subject to one-week furloughs during the pandemic and eligible for unemployment compensation for the time off.
In the first full week of January 2021, she was laid off and applied for U.I. benefits. Unlike her earlier one-week furlough in 2020, however, the Department of Labor was slow to respond. It wasn’t until June, five months later, when the constituent was stunned to read an email stating that she would be receiving a direct deposit totaling more than $13,000.
“I knew that wasn’t right, and my first thought was, ‘What do I do to stop this from actually hitting my account,” the woman remembers. “You cannot get anybody to answer the phone at the unemployment office … ever. When you are dealing with people who are unresponsive it is very, very frustrating.”
Despite her immediate efforts to prevent the overpayment, the funds arrived in her account, followed by another large payment several weeks later.
Eventually, the constituent was notified she had been overpaid by more than $14,000 and was required to repay the full amount.
“Thanks for telling me that,” she said in jest. “That wasn’t a surprise. After all, I’m the one who told them, the Department of Labor, about the overpayment.”
Things would only get worse, however. This accounting did not include an additional $6,300 payment a few weeks later, bringing the total overpayment to more than $20,000.
The issue was further complicated because the Department of Labor had withheld money from the payment and sent it to the IRS.
She was told she must return all of the money, including the withholding, which she wouldn’t be able to recover from the IRS until she completed her income taxes next spring. She was facing a repayment debt that exceeded the total she received from unemployment.
“You can’t make this up. The Department of Labor made the mistake, paid out erroneous benefits for many weeks, and only discovered the error when my constituent was finally able to get somebody’s attention at the Department and advise them of the mistake,” Bucco said.
“It was a huge mistake, and now this poor woman, who had done nothing wrong, is left with the stress and the financial responsibility of paying the state back for money that never should have been sent to the federal government in the first place.”
There has been growing concern statewide with overpayments and their impact on recipients, most who of whom did nothing to generate the extra payouts.
When benefits are paid, money is withheld for federal income taxes, but when the labor department comes calling for repayment, they require the gross payment. Benefit recipients are required to wait to recover the withheld money until they file their annual taxes with the IRS.
“Residents who lost income when they were out of work are being forced to pay out-of-pocket to float the money back to New Jersey, while the federal government sits on the funds until tax season,” Bucco said. “It adds insult to injury and there’s no excuse for it.”
The Senator is considering a legislative solution that could prevent this from happening to other residents in the future.
For now, the constituent and Bucco’s staff continue to try to close the case.
“I emailed unemployment and told them I was going to go the press if this didn’t get resolved,” Bucco’s constituent said. “I even wrote a headline: ‘NJ DOL Shows Little Interest in Solving Problems.’ They called me back in 45 minutes, but they have dropped the ball again.
“All I got was a link to set up a repayment schedule.”