The state’s unemployment agency has noted that the repayment policy is a federal requirement, passed by Congress in the Continued Assistance for Unemployment Workers Act in 2020. The agency pledged to offer waivers if overpayment of benefits was not the recipient’s fault and repayment would cause extraordinary hardship, defined as any single-person household making under $1,351 a month or just over $16,000 a year.
None of the people CalMatters spoke with, however, were aware of such an option or how to apply for a waiver. They said it wasn’t in any of the agency’s communications to them.
Now living in Berkeley with one of her daughters, Casey has some photos of her old business cards that she’ll send to the agency. She also hopes EDD will speak with the music groups she played with – but she worries that won’t cut it.
Similarly, at the start of the pandemic, Sasha Emery was living in an RV partly paid for by federal emergency funds after her Paradise home burned down. After finally getting into affordable housing during the pandemic, she signed up for unemployment when the few available jobs didn’t pan out.
When the notice arrived asking for proof or repayment, shock turned into tears. All Emery has to offer are records of her dire situation: food stamps, Medi-Cal documentation and potentially the federal assistance she received after the fire.
If a recipient can’t offer the necessary proof, and cannot repay the funds at once or in installments that could include 3% interest, EDD may seek the money in a number of ways. The agency could put a lien on property, take up to 25% of a recipient’s wages, withhold state and federal tax refunds or lottery winnings, deduct benefits from future unemployment or state disability insurance benefits, or file a lawsuit.
Prasad Krishnamurthy, a debt collection expert and professor of law at UC Berkeley, said the state isn’t bound by the same rules that constrain private collection agencies in pursuing debtors. That makes the government, said Krishnamurthy, “a very powerful and aggressive creditor.”
The debt could push Californians further into poverty, Krishnamurthy said.
Sam, an arborist who asked not to use his full name for fear of retaliation from the state, filed for unemployment at the end of 2018 after losing his San Francisco business. He received benefits for the next seven months. Then in August 2020, the EDD contacted him, telling him that he qualified for a federal extension. “It has been automatically filed for you,” the agency wrote.
At the time, Sam was grateful for the support, which allowed him to care for his mother, who suffered a heart attack at the beginning of the pandemic and has cancer.
In fact, he said, the agency held a virtual hearing to approve his eligibility. After that, he received $4,000 installment payments for benefits going as far back as January 2020. Now, with two ailing parents and no documentation to prove that he lost pay due to the pandemic, Sam may owe close to $30,000 in accrued benefits.
“It just kinda feels like I was set up,” he said.
For others who ran small cash businesses, there was never a paper trail.
After Martin Davalos’s tattoo work dried up, Davalos turned to unemployment, which kept him off the streets, he said. Now, however, he has no proof to show EDD. He spent the money on bills, gas, food and rent.
“Sure I would give it back,” Davalos said, “but it’s gone.”
This article is part of the California Divide, a collaboration among newsrooms examining income inequality and economic survival in California.