Senators grill Missouri labor director over unemployment debt actions

State Sen. Lincoln Hough, R-Springfield (photo courtesy of Missouri Senate Communications).

An angry Senate committee on Thursday dressed down the director of Missouri’s Department of Labor and Industrial Relations for aggressive collection actions to recover unemployment benefits the state mistakenly paid during the pandemic.

Sen. Lincoln Hough, R-Springfield, said he was suspicious of the timing of a notice posted Wednesday announcing the department would pause collections and angry that it did not occur weeks ago.

“My assumption is that this policy was changed as of yesterday because of a hearing this morning,” Hough told Anna Hui, the director of the labor department.

Hui said the decision to issue the notice was actually made on April 9.

The Governmental Accountability and Fiscal Oversight Committee, which Hough chairs, had just voted on a House bill directing the department to offer waivers of mistakenly paid federal benefits. And when the bill reaches the Senate floor, Hough said, expect amendments to allow waivers for state benefits and an emergency clause to make the bill effective immediately if signed by Gov. Mike Parson.

It was the second time this week Hui has been hauled before a legislative committee to answer for collection efforts that include seizing federal tax refunds and stimulus payments, letters warning of wage garnishments and liens on property filed in local courts.

The collection actions, lawmakers believe, violated an agreement GOP leaders said they had worked with Parson’s administration that kept the emergency clause off the bill as it was debated in the House.

Because of the COVID-19 pandemic, the department was inundated with hundreds of thousands of claims for unemployment benefits starting in mid-March 2020. In addition to payments for people eligible for regular unemployment benefits, federal legislation authorized supplemental payments of up to $600 a week and benefits for workers in occupations not covered by the standard program.

In all, Hui told the committee Thursday that her department has paid out more than $6 billion since the pandemic began.

Of that amount, the department estimates that about $109 million in federal benefits and about $30 million in state benefits were paid by mistake. The vast majority of overpayments are due to issues like delays in obtaining eligibility information or claims for payment made by people who had returned to work but had not received their first paycheck.

Federal guidance to states on the federal programs, issued about one week after the CARES Act was passed, said that states can waive debts if repayment is “contrary to equity and good conscience.”

The House-passed legislation will allow the department to offer waivers on a case-by-case basis. But because the bill only addressed a waiver for federal benefits, Hui said, the department has continued collection efforts for overpayments from the state fund.

That is what the law directs the department to do, she said.

“You have directed us to protect the trust fund, to collect on these overpayments,” she said.

That did not placate committee members, who said the circumstances of the COVID-19 pandemic altered priorities.

“This is a different, record-breaking kind of an event,” said Sen. Bill White, R-Joplin. “This is not business as usual, it has not been and it is not going to be.”

Families are still struggling to recover economically from job losses and the department promised it would work out payment plans, not send threatening letters, Hough said.

“Even with the consideration of legislation they are still being harassed by your department,” Hough said. “It is unbelievable to me.”

The most recent round of collection actions included 32 instances where liens were filed in local courts, Hui told the committee.

“We have sincerely apologized to those individuals who were caught in that situation,” Hui said. “It has been historic volume. We have done our best to abide by everything we need to do and to be in a position to work with those individuals.”

Lawmakers told Hui they would be watching to see if the outreach she promised to people facing collections occurs and if the long-term payment plans also promised are being offered. They warned her not to look for ways to avoid offering the waivers or to make it difficult to set up payment plans for those who do not receive a waiver.

And, they told her, the department has damaged its reputation.

“It is not just a problem for this issue, it is a problem for every issue afterwards,” said Senate Minority Leader John Rizzo, D-Independence.

One reason the House rejected an amendment that would have allowed waivers for state benefit overpayments was because of concerns that the state unemployment fund would be depleted, resulting in tax increases on employers.

Democrats pushing for the state waiver argued that the money could be replaced with aid the state received under the March 2020 CARES Act, but Republicans said during debate that they were unsure whether that was legal.

About two weeks after that debate, Parson transferred $300 million of CARES funding to the unemployment trust fund but did nothing to relieve the overpayment debt as he did so.

On Tuesday, the House approved a bill that would reduce how long any unemployed person can collect benefits depending on the unemployment rate. From a current 20 weeks, the bill would provide as few as 12 weeks of full benefits.

“If there is less unemployment, you should be able to find a job sooner,” said state Rep. Don Shaul, R-Imperial said.

Opponents of the bill said Missouri would have the shortest benefits period of any state.

“It is Missouri again,” said Rep. Peter Merideth, D-St. Louis, “racing to the bottom and how we are treating people struggling in our state.”