HOUSE BILL REPORT

HB 653

BYRepresentatives Patrick, Fisch and Wang; by request of Employment Security Department

Changing procedures and penalties related to unemployment compensation overpayments.

House Committe on Commerce & Labor

Majority Report:     The substitute bill be substituted therefor and the substitute bill do pass.  (10)

     Signed by Representatives Wang, Chair; Cole, Vice Chair; Fisch, Fisher, O'Brien, Patrick, Sanders, Sayan, C. Smith and Walker.

House Staff:Chris Cordes (786-7117)

AS REPORTED BY COMMITTEE ON COMMERCE & LABOR MARCH 5, 1987

BACKGROUND:

The Employment Security Department estimates that approximately two percent of benefit payments are overpaid each year.  The department has authority to collect these overpayments by offsetting any overpayment against future benefits.  The commissioner of the department may also waive collection of overpayments if recovery would be against equity and good conscience.

SUMMARY:

SUBSTITUTE BILL:  Unemployment compensation claimants who are disqualified from benefits for knowingly making false statements to obtain benefits are liable for a penalty of fifty percent of the overpayment obtained.

A redetermination of the amount of benefits payable may be made at anytime if a backpay award or settlement affects the allowance of benefits or if the case involves fraud or misrepresentation.

An overpayment assessment may be repaid under a deferred payment option, unless the overpayment is the result of a knowingly false statement.  The commissioner is authorized to establish procedures for deferred payment options.  The commissioner is also authorized to waive overpayment collection if all other options have been exhausted.

The commissioner's authority to collect overpayments on behalf of other jurisdictions is amended to require that reciprocal agreements with the jurisdiction provide for procedural safeguards.

Procedures are specified in cases in which awards or settlements include backpay.  If the amount of backpay is reduced by the amount of benefits received, the individual claimant is not liable for the benefits and the employer is required to pay the amount of the reduction to the unemployment compensation fund.

A penalty of one and one-half percent per month is authorized for any overpayment assessment that is not paid when due.  Penalties collected are to be used for administrative activities associated with recovery of overpayments.

Any part of the act found to be in conflict with federal law is declared inoperative.  If any provision is held invalid, the remainder of the act is not affected.

SUBSTITUTE BILL COMPARED TO ORIGINAL:  The time limit for choosing a deferred payment option after receiving notice of an overpayment is changed from ten days to the time period allowed for filing an appeal.  A provision is added authorizing the commissioner of the Employment Security Department to waive an overpayment after all other options have been exhausted.

Fiscal Note:    Attached.

Effective Date:The bill contains an emergency clause and takes effect on July 1, 1987.

House Committee ‑ Testified For:     Graeme Sackrison and Kathy Countryman, Employment Security Department; Larry Hasty, U.S. Department of Labor.

House Committee - Testified Against: Larry Kenney, Washington State Labor Council; Rebecca Smith, Evergreen Legal Services.

House Committee - Testimony For:     A department study of the unemployment compensation overpayment system determined that new procedures and clearer options were needed for overpayment collection.  The focus of the new procedures is on collecting overpayment assessments when claimants are reemployed rather than when they are receiving unemployment compensation.

House Committee - Testimony Against: The commissioner's authority to waive overpayments for good cause should be retained to protect claimants who are not at fault.  The procedures should include standards for adjudicators to use when determining whether a repayment schedule is satisfactory.