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U.S. DEPARTMENT OF LABOR
Employment and Training Administration
Washington, D. C. 20213

CLASSIFICATION

UI

CORRESPONDENCE SYMBOL

TURL

ISSUE DATE

March 11, 1980

RESCISSIONS

None

EXPIRATION DATE

February 28, 1981

DIRECTIVE

:

UNEMPLOYMENT INSURANCE PROGRAM LETTER NO. 23-80

 

TO

:

ALL STATE EMPLOYMENT SECURITY AGENCIES

 

FROM

:

OFFICE OF THE DEPUTY ASSISTANCE SECRETARY

ROBERTS T. JONES
Administrator
Office of Management Assistance

 

SUBJECT

:

Implementation of Wavier of Overpayment Provisions in State UI Laws

 

  1. Purpose. To inform State agencies of Federal law requirements pertaining to the procedures necessary to implement State law provisions which require or allow the waiver of recovery of nonfraud overpayments of UI benefits.

  2. Reference. UIPL 1145, dated November 12, 1971,Sections 303 (a) (1) and 303 (a) (3) , Social Security Act, and the Claim Determinations Standard in Sections 6010-6013, Part V of the Employment Security Manual.

  3. Background. The policy of the Department of Labor is and has been to encourage States to enact laws to provide for the waiver of recovery of nonfraudulent overpaid benefits when such recovery would be against equity and good conscience. Although the option to adopt such a basic provision is left to the discretion of the State legislature, once a State does enact a provision for waiver of the overpaid benefits, the requirements of the Social Security Act and the Secretary of Labor's Claim Determinations Standard (as well as UIPL 1145) apply to the actual procedural implementation of such a provision. A recent action instituted in a State Court illustrates that although a State's law may provide for awaiver of the recovery of overpaid benefits, implementation of the provision may not be in accordance with applicable Federal laws and standards. Accordingly, this is to inform State agencies of the requirements involved in the implementation of such a waiver provision and to emphasize the need for States to take appropriate action to insure the administration of this type of provision in accordance with those requirements.

  4. Interpretation. The usual type of waiver provision contained in State Unemployment Compensation laws provides in essence that any individual who is liable to repay any amount of benefits to which an individual is not entitled to shall not be required to repay such benefits if the agency finds that they were received through no fault of the individual, and the recovery of same would be against equity and good conscience. A determination under the waiver provision is normally made at the same time the determination of the overpayment is made, or at a later date upon the initiation of the claimant following issuance by the State agency of a determination advising of the overpayment and the right to request a waiver. Both of these approaches are consistent with Federal requirements. In either case, however, there are important factors that must be taken into consideration to assure consistency with Sections 303(a)(1) and (3) of the Social Security Act, the Claim Determinations Standard in Sections 6010-6013, Part V of the Employment Security Manual, and the predetermination procedures set forth in UIPL 1145.

  5. Procedures and Implementation. The Secretary's Claim Determinations Standard and UIPL 1145 implemented the "methods of administration" and "fair hearing" requirements of Sections 303(a)(1) and (3) by detailing the required determination and predetermination procedures. Section 6013.C.1of the ES Manual provides that the agency must give each claimant a wtten notice of any determination which adversely affects his rights to benefits. As specified therein a determination "adversely affects"a claimant's right to benefits if it: . . . "(5) determines that an overpayment hars been made or orders repayment or recoupment of any sum paid to him/her; or . . . (7) in any other way denies claimant a right to benefits under the State law." Section 6013.C.2 states that this written notice of determination to claimants must furnish sufficient information to enable them to understand the determination, the reasons therefore, and their rights to protest, request reconsideration, or appeal. Requirements with respect to information which must be provided to the claimant in the notice of determination or in separate informational material referred to in the notice concerning the individuals' appeal rights are set forth in Section 6013.C.2.i(1) and (2) of the ES Manual. UIPL 1145 contains the minimum guidelines on predetermination procedures.

    The State may, depending upon the content and interpretation of its law choose between two basic methods of implementing the waiver provisions, they are:

      (1)  To make a determination as to applicability of the waiver provision a part of the determination process on every overpayment case; or

      (2)  Provide, as a part of each overpayment determination, information about State law provisions concerning waiver, and provide that claimants may request consideration of waiver and receive an appeal determination on the action taken. When following this method, it is important that the notice of determination provide specific information for making such a request since that information is deemed necessary for individuals to know and protect their rights under the unemployment compensation law of the State.

    We recommend that the second option be followed where State law permits, when it appears to be the more manageable and economical approach. Note that when it has been determined that claimant fault is involved, the first determination can include denial of waiver for this reason the option for the claimant to request waiver would be afforded only in nonfault cases.

    In those cases where the State leaves the initiative to the claimant to request a waiver of the overpayment the proceedings to determine the application of the waiver must accord with the predetermination factfinding hearing procedures specified by UIPL 1145. Those proceedings, identified as the "separate interview" and "investigatory proceedings" approaches in UIPL 1145, are sufficient in our opinion to meet the U.S. Supreme Court's interpretation of Section 303(a)(1), SSA, in the Java case requiring that a State's law and procedures provide for reasonable notice to both the claimant and employer of the time and place of the predetermination factfinding hearing. Following such a hearing, the State agency must issue a determination explaining the basis for its determination, and provide the necessary information with respect to the individual's appeal rights as required under Section 6013.C.2 of the ES Manual

  6. Application of Fair Hearing Requirements. The question as also been asked as to the basis under Federal law for applying the fair hearing requirements of section 303(a)(3), SSA, where an individual whose request for a waiver of overpaid benefits has not been granted. Section 303(a)(3), SSA., provides that the secretary of Labor shall not certify the unemployment insurance law of a State if he finds that such law does not provide an "opportunity for a fair hearing, before an impartial tribunal, for all individuals whose claims for unemployment compensation are denied." A denial of a claim for compensation for the purposes of the provisions of Section 303(a)(3) exists in any case in which there is an adverse determination which places an individual in a less advantageous position as to benefit entitlement. Where a State agency determines that an individual has received benefits to which he was not entitled and requires that such benefits be repaid, a decision not to waive recovery of the overpaid benefits when allowed by the State law constitutes a denial of a claim for unemployment compensation within the meaning of Section 303(a)(3). In such circumstances, the claimant must have the right to appeal such a decision and to have his or her contention for waiver considered and decided by the appellate tribunal on its merits in accordance with any evidence which bears upon the issue.

    In order to assure that the waiver provision is equitably administered under the State law, all state agencies whose laws contain such provision should develop written guidelines, preferably in the form of regulations which specifically define and set forth the conditions and circumstances under which a waiver can be granted. This will facilitate application of the waiver provision and provide a clear understanding to claimants of the basis on which they can expect a waiver to be granted. States considering the development of such regulations should refer to the Resources Handbook on Overpayment Recovery, published in 1978 by the Department of Labor, Employment and Training Administration, copies of which were issued to each State.

  7. Action Required. SESAs are requested to: a. Review the State law, rules and regulations to determine if the required procedures are provided and appropriately applied; b. Inform agency staff of the requirements spelled out above; and c. Take necessary action to assure that the State law and application thereof meet the Federal requirements and standards, if such provisions are not currently met.

  8. Inquiries. Inquiries should be directed to your Regional Office.