Indiana House passes bill to streamline unemployment payments, provide relief on overpayment debts
Indiana’s Department of Workforce Development, which is responsible for administering unemployment, has struggled to keep up since the pandemic.
“We were really stressed tested by the pandemic in terms of the volume of unemployment claims that came into us,” Josh Richardson, DWD executive director of applied data services and legislative affairs, told lawmakers. “Our system is very complicated and most entities would not let their system become as complicated as ours.”
Lawmakers hope to streamline the process to reduce the amount of work the state has to do to give claimants their money. On Tuesday, Indiana’s House passed House Bill 1451 to simplify the process for Hoosiers receiving unemployment compensation. Though, it wouldn’t change the application process.
Richardson said the department looked 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.”
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Any savings the state was getting by not paying out or reducing benefits in some of those cases, Richardson said, are likely overtaken by the cost of “thousands of hours” it takes state employees to review those cases.
DWD worked with HB 1451’s author, Rep. Martin Carbaugh, a Republican from Fort Wayne, to find ways to reduce that workload and get payments out to claimants quicker.
“The main theme of this bill is to reduce the number of claimants for unemployment benefits, who end up with an issue that they have to wait on the department to resolve before we can pay them,” Richardson said.
One 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.
So long as the overpayment isn’t the result of fraud, HB 1451 would allow them to make “an offer in compromise” to reduce overpayment debt. Employers would also get to make such offers to reduce debt they owe the state’s unemployment fund.
It’s not clear what exactly employers and claimants would be able to “offer in compromise” for that debt reduction. The bill leaves that up to DWD.
Fewer benefit deductions
Another major change the bill would make is reducing the amount of unemployment compensation a claimant loses if they get part-time work or other income from odd jobs and such.
“There's a complicated formula and the max [unemployment compensation] you could keep if you happen to earn more money while on unemployment is $78,” Carbaugh said. “[HB 1451] raises it to $100.”
The bill also simplifies that aspect by making that a flat $100 in all cases rather than basing it on whether that money comes from the claimants' former full-time employer. The goal, Richardson said, is to encourage people to be honest with the department about getting such income while on unemployment without fear of losing all their benefits.
“So working ensures that you come out ahead, as long as you're below your weekly benefit amount and you're not full-time employed,” Richardson said.
Based on his experience after getting laid off, Rep. John Bartlett, a Democrat from Indianapolis, said that change is really valuable.
“You’re used to going to work every day, taking care of your family. All of a sudden, that ability is no longer there,” Bartlett said. “And you're afraid to go to work. And then you try to find places that will employ you and pay you under the table.”
Additionally, the bill would no longer require deductions to claimants' unemployment payments for holiday pay or pension payments, unless an employer is fully responsible for the money that went into that pension. Currently, payments pensions that are partly paid for by employers result in deductions.
Among other provisions, HB 1451 also clarifies that severance pay would be deducted from unemployment payments. DWD is already applying this rule, Richardson said, the bill just codifies it into law.
The bill now heads to the Senate.