Senate sends bill to simplify unemployment pay deductions, allow overpayment debt relief to governor

State officials say some of the tight rules on unemployment benefits end up clogging up the system, preventing people from quickly getting paid and costing the state a lot of money – especially during economic downturns.

“[During the pandemic] our claims volume increased massively to levels that the agency had never seen before,” said Josh Richardson to Senate lawmakers. He testified on behalf of the Department of Workforce Development as executive director of applied data services and legislative affairs. “And that caused our resources to be strained and some individuals to wait longer than we would have liked to have claims processed.”

A bill to alleviate some of DWD’s administrative burden and expedite the process of getting more money to beneficiaries heads to the governor’s desk after passing the Senate Tuesday. House Bill 1451 received unanimous, bipartisan support in both chambers. The bill wouldn’t affect the application process or base benefit amounts.

READ MORE: House passes bill to streamline unemployment payments, provide relief on overpayment debts

Richardson said the department proposed the bill after looking at the various reasons DWD puts a hold on people’s unemployment payments until someone from the agency could review the account. These holds are intended to ensure a claimant isn’t receiving payments from the unemployment fund that they aren’t supposed to.

Several issues that came up often were pretty low-stakes in terms of costs to the state’s unemployment fund, he said. Some result in deductions from someone’s weekly payouts “as low as $2.”

One of the bill’s most major changes affects to how deductions for part-time work is calculated. The bill’s author, Rep. Martin Carbaugh (R-Fort Wayne), said the current “complicated formula” could reduce a person's benefits from the $390 maximum to $78 or less for weeks they work part-time.

“This gets rid of the formula, which frees up time for [DWD], and then makes it $100 per week that [claimants] can keep,” he said.

The part-time work deduction being changed to a flat $100 puts Indiana in line with many other states, DWD’s Richardson said.

“The individual who calls our call center and says, ‘I've been offered some part time work. How will it impact my unemployment benefits if I take these hours?’ It allows us, I think, to make them much more confident that working those part-time hours benefits them,” he said. “That they come out ahead, that it's not a dollar-for-dollar deduction from their benefits.”

The bill also excludes holiday pay from deductions.

“Sometimes that can be as little as $60 or $70,” Richardson said. “And yet an individual that reports that may wait multiple weeks, while an adjudicator gets assigned to resolve these simple issues; very low cost, high volume-type issues during an economic downturn.”

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Under current Indiana law, payments from pensions that are partly funded by an employer would lead to deductions. The bill would no longer deduct for payments from those pensions, but deductions would still be required for payments from pensions fully funded by employers due to federal law.

Richardson told lawmakers any money the existing, more complex deduction system saves is overtaken by the cost of processing those deductions.

“We will continue to look for ways where we can, in a smart way, make it easier to understand the rules of the system. Because it's better for the public,” he said. “But also because it makes it easier for us to administer.”

Another of the bill’s biggest proposed changes could help people reduce the amount of debt they owe DWD for overpayments. During the pandemic, the state accidentally overpaid benefits in more than 30,000 cases.

Under HB 1451, people would be able make an offer to negotiate down debt for overpaid benefits unless the overpayment is the result of fraud.

It's unclear what these “offers” would involve at this point because the bill does not specify and that was not detailed in any testimony. Carbaugh did not respond to a request to clarify that in time for publication and DWD declined to comment because of policy prohibiting the department from commenting on pending legislation.

Employers would also get to make such offers to reduce debt they owe the state’s unemployment fund.

The bill passed the Senate Tuesday without any changes, meaning the governor can now sign the bill, veto it or let it become law without his signature.

Adam is our labor and employment reporter. Contact him at arayes@wvpe.org or follow him on Twitter at @arayesIPB.

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