NEW YORK-In New York, unemployment recipients can be found guilty of fraud even if they believed their information to be accurate. The state demands repayment at the highest rate in the country, putting many individuals in financially precarious situations.
One unemployment recipient couldn’t understand the application instructions in her native language and didn’t realize she had to report part-time working hours. Another received excess money due to a government miscalculation. A third, who has a physical disability, certified she was available to work remotely from a hospital bed. Despite their circumstances, all three were deemed to have committed fraud by the New York State Department of Labor, which has aggressively pursued the repayment of benefits from them and hundreds of thousands of others.
New York reported overpaying $425 million in state-funded benefits between 2020 and 2023, with nearly two-thirds of that amount classified as fraudulent—five times the national average. Unemployment recipients found guilty of fraud must repay their benefits, often leading to financial hardship.
Many recipients were unaware they were committing fraud. States can forgive certain overpayments if recipients have not “willfully misrepresented” their cases, but definitions vary. New York lacks a statutory definition, allowing investigators to deem an honest mistake as fraud.
“You can have committed fraud, according to the court, even if you believe the information you gave to be true,” said Ciara Farrel, an attorney with the New York Legal Assistance Group.
Legal advocates argue that the Department of Labor takes a punitive approach to overpayment cases. Commissioner Roberta Reardon has ignored calls for a concrete definition of fraud. Appeals to the Unemployment Insurance Appeals Board often result in aggressive, prosecutorial rulings presuming individuals are at fault.
“Wherever you can find a way not to pay the benefits, don’t pay them. Whenever you can recover an overpayment, recover it,” said Nicole Salk, an attorney with Legal Services NYC.
President Joe Biden’s administration has encouraged states to forgive erroneous pandemic-related payments. Nearby states like Massachusetts and Connecticut forgave 28% and 19% of cases, respectively, while Texas forgave 34%. New York, however, forgave just 3%, despite many repayments going directly to the federal government.
“Even though there’s not a fiscal impact in a great many of these waivers,” said Anjana Malhotra, a senior attorney with the National Center for Law and Economic Justice, the Labor Department operates like “a private insurance agency that presumes that the claimant is at fault.”
A Department of Labor spokesperson said they are in ongoing discussions with advocates regarding overpayments. “We follow the law as written and as it has been interpreted by the courts and the Unemployment Insurance Appeals Board,” they added.
When the Unemployment Insurance Appeals Board determined that Hameeda Bano had committed fraud, she found it “completely baffling.”
Bano, a single mother from Pakistan living in Flushing, Queens, doesn’t speak much English. After losing two teaching jobs during the pandemic, she filled out an English-language application for unemployment benefits to the best of her ability. Without Urdu or Pashto instructions or phone operators, Bano enlisted a neighbor’s help to prove her eligibility weekly. Shortly after receiving her first benefits, one childcare center offered her a few hours of work weekly. She did not certify those hours, leading to the fraud determination.