Missouri House passes bill to halt clawback of mistaken unemployment benefits

Most of the jobless benefits mistakenly paid to 46,000 Missourians during the pandemic would not be clawed back under a bill overwhelmingly approved by the state House Thursday.

About 75% of the $150 million that the state’s Department of Labor paid to those ineligible for unemployment came from the federal government. That portion would be forgiven under the bill.

House Republicans declined to make the bill effective immediately, a concession to Gov. Mike Parson’s administration to allow Labor officials time to start processing the repayment waivers.

In exchange, said the bill’s sponsor, state Rep. John Eggleston, the Department of Labor and Industrial Relations has promised to halt recollection of the federal portion of the money.

“Frankly, we’re skeptical,” the Maysville Republican said, adding, “They have agreed to call off the dogs.”

Eggleston vowed “very ugly” public pressure for the administration if the recollection efforts continue.

The bipartisan-backed bill, which passed by 157 to 3, was fast-tracked through the House last month and now goes to the Senate, where Republican leaders indicated Thursday that it could stall behind other House bills that have piled up.

House approval came as some residents have begun seeing their money taken back. Rep. Doug Clemens, a St. Ann Democrat, said one constituent reported having their tax refund withheld.

As the COVID-19 pandemic ravaged the economy last spring, state labor departments rushed to deliver unemployment benefits to an unprecedented number of claimants. Many were applying for benefits for the first time or were only eligible under programs expanded during the crisis.

As a result, Missouri’s labor department said three percent of the money was sent out in error. Most of those recipients were later deemed ineligible because of non-fraudulent paperwork mistakes, or confusion over whether seasonal workers who traditionally don’t qualify for benefits, such as school bus drivers, were eligible during the pandemic.

The average amount overpaid to Missourians from the state’s unemployment trust fund was $990, while the average overpayment from the federal government was $3,370, Labor Director Anna Hui told a House government oversight committee last month.

Many states have grappled with how to handle overpayments. In Kansas, the state overdrafted some residents’ bank accounts while seizing the money back directly.

Parson was initially adamant that the state recollect the money, but has backed down over the past month after pushback from lawmakers.

At his weekly press conference, he said he was open to their proposal but hesitated to support a blanket forgiveness policy.

“I don’t feel comfortable doing a blanket policy for everyone in that arena ... just to be able to go out there and say, ‘OK, everybody gets to walk,’” he said. “We don’t want to punish law-abiding citizens. We don’t want to do this if somebody made a mistake. I get that.”

The issue was one of few in Missouri that has gained overwhelming support from Democrats and the most fiscally conservative Republicans alike, whose constituents have begun receiving letters from the state to garnish their wages for the debts.

Many residents have appealed the repayments, a process that could take months.

Some residents who mistakenly received unemployment benefits that came from state funds will still be required to pay that portion back. House Democrats led an unsuccessful effort this week to force the state to forgive the full amount, and replenish the state’s unemployment trust fund with federal aid.

This story was originally published March 4, 2021 at 1:23 PM.