§ 470.5 Setoff against unemployment insurance benefits.

Established and outstanding overpaid unemployment insurance benefits shall be collected from a claimant's weekly benefit award as a setoff.

(a) Priority of liquidation. In the event that more than one overpayment is established against an individual claimant, setoff amounts will be debited to such overpayments in chronological order.

(b) Willful overpayment. A setoff of 100 percent of the weekly benefit amount will apply to one or more established and outstanding overpayments attributable to an individual claimant so long as at least one of such overpayments is determined to have been willful.

(c) Non-willful overpayment. A setoff of [50]20 percent of the weekly benefit amount will apply to one or more established and outstanding overpayments attributable to an individual claimant so long as none of such overpayments are determined to have been willful.

Statutory Authority: Labor Law, sections 21(11), 530(1); State Administrative Procedure Act, section 202(6).

Legislative Objectives: Article 18 of the N.Y. labor Law was established to ensure the payment of unemployment insurance (UI) benefits to eligible claimants in conformity and substantial compliance with the applicable federal laws and regulations, including the Federal Unemployment Tax Act (26 U.S.C. §§ 3301-3320) and the Social Security Act (42 U.S.C. §§ 501-506). As stated in Labor Law § 501, the purpose and legislative intent for the enactment of Article 18 was to alleviate the economic insecurity caused by unemployment, which is a serious menace to the health, welfare, and morale of the people of the State of New York. Finding that involuntary unemployment often falls with crushing force upon the unemployed worker and his family, on April 9, 1931 the Legislature enacted Article 18 of the Labor Law to establish the New York State UI program, and declared that in its considered judgment the public good and the well-being of the wage earners of this state require the enactment of this measure for the compulsory setting aside of financial reserves for the benefit of persons unemployed through no fault of their own.

Labor Law § 530(1) authorizes the commissioner of labor with the authority to promulgate rules and regulations for the effective administration of Article 18. In accordance with 42 U.S.C. § 503(g), proper administration of Article 18 includes requiring that benefits paid to UI claimants be offset for the repayment of benefits previously overpaid and not yet collected. In light of the public health and economic emergency created by the novel coronavirus, also known as COVID-19, a reduction in the weekly setoff to collect non-willful overpayments is necessary to public health, safety, and general welfare by ensuring that the legislative intent set forth in Labor Law § 501 is met and to prevent further injury to UI claimants who are unemployed through no fault of their own.

Needs and Benefits: This emergency regulation is necessary to prevent an additional financial burden on UI claimants who were unintentionally overpaid benefits and are experiencing a loss of employment during the public health and economic crisis caused by COVID-19. Federal law requires weekly UI benefits to be offset to recover unpaid debts caused by overpayments, including non-willful, non-fraudulent overpayments. The economic impact of COVID-19, along with the reduction in weekly benefits caused by the expiration of temporary federal programs established under the Coronavirus Aid, Relief, and Economic Security Act, has resulted in significant financial insecurity for many UI claimants. The reduction in the weekly setoff to collect non-willful overpayments is necessary to public health, safety, and general welfare by ensuring that claimants are better able to meet their weekly financial needs in the midst of the COVID-19 public health and economic crisis while still meeting federal obligations to repay the prior, non-willful overpayments.

The purpose and intent of this emergency rulemaking is to prevent an additional financial burden on UI claimants who were unintentionally overpaid benefits by reducing the existing offset percentage from 50% to 20%.

Costs: As this rule merely changes the offset percentage for overpayment collections already occurring, the Department estimates that there will be no costs to the regulated community, to the Department of Labor, or to state and local governments to implement this rulemaking.

Local Government Mandate: None. The rulemaking effects individual claimant’s weekly benefits and does not create any mandate for federal, state, or municipal governments, or any political subdivision thereof.

Paperwork: This rulemaking does not impact any reporting requirements currently required in either statute or regulation.

Duplication: This rulemaking does not duplicate, overlap, or conflict with any other state or federal requirements.

Alternatives: There were no significant alternatives considered.

Federal Standards: 42 U.S.C. § 503(g) requires that states administering an unemployment insurance program certified by the United State Department of Labor offset, from a claimant’s weekly benefits, amounts previously overpaid but not yet recovered. States have discretion over what percentage offset from a claimant’s weekly benefit entitlement. Unemployment Insurance Program Letter 05-13 § 4(B)(i). There are no other federal standards for this rule.

Compliance Schedule: This emergency rulemaking shall become effective upon filing with the Department of State.

Effect of Rule: The purpose and intent of this emergency rulemaking is to prevent an additional financial burden on claimants who were unintentionally overpaid benefits and are experiencing a loss of employment during the public health and economic crisis caused by the novel coronavirus, also known as COVID-19 by reducing the existing offset percentage from 50% to 20%. The Department anticipates this will have no impact on small businesses or local governments.

Compliance Requirements: Small businesses and local governments will not have to undertake any new reporting, recordkeeping, or other affirmative act in order to comply with this regulation.

Professional Services: No professional services would be required to effectuate the purposes of this regulation.

Compliance Costs: As this regulation reduces an existing offset percentage associated with unemployment benefits, the Department estimates that there will be no costs to small businesses or local governments to implement this regulation.

Economic and Technological Feasibility: The regulation does not require any use of technology to comply.

Minimizing Adverse Impact: The Department does not anticipate that this regulation will adversely impact small businesses or local governments. Since no adverse impact to small businesses or local governments will be realized, it was unnecessary for the Department to consider approaches for minimizing adverse economic impacts as suggested in State Administrative Procedure Act § 202-b(1).

Small Business and Local Government Participation: The Department does not anticipate that this rule will have an adverse economic impact upon small businesses or local governments, nor will it impose new reporting, recordkeeping, or other compliance requirements upon them.

Initial review of the rule pursuant to SAPA § 207: Initial review of this regulation shall occur no later than the third calendar year in which it is adopted.

Types and estimated numbers of rural areas: The Department anticipates that this regulation will have a positive or neutral impact upon all areas of the state; there is no adverse impact anticipated upon any rural area of the state resulting from adoption of this regulation.

Reporting, recordkeeping and other compliance requirements: This regulation will not impact reporting, recordkeeping or other compliance requirements.

Professional services: No professional services will be required to comply with this regulation.

Costs: As this regulation reduces an existing offset percentage associated with unemployment benefits, the Department estimates that there will be no new or additional costs to rural areas to implement this regulation.

Minimizing adverse impact: The Department does not anticipate that this regulation will have an adverse impact upon any region of the state. As such, different requirements for rural areas were not necessary.

Rural area participation: The Department does not anticipate that the regulation will have an adverse economic impact upon rural areas nor will it impose new reporting, recordkeeping, or other compliance requirements.

Nature of Impact: The Department of Labor (hereinafter “Department”) projects there will be no adverse impact on jobs or employment opportunities in the State of New York as a result of this emergency rulemaking. Rather, this regulation will help claimants who are experiencing a job loss as a result of the economic and public health crisis caused by the novel coronavirus, also known as COVID-19, and are subject to a benefits setoff to repay unintentionally overpaid benefits for a prior benefit week(s). This regulation amends existing regulations to decrease the setoff percentage for the recovery of non-willful overpayments from 50% to 20%. The nature and purpose of this regulation is such that it will not have an adverse impact on jobs or employment opportunities.

Categories and numbers affected: The Department does not anticipate that this regulation will have an adverse impact on jobs or employment opportunities in any category of employment. This regulation will help to reduce the financial burden on unemployment insurance claimants during public health and economic crisis caused by COVID-19.

Regions of adverse impact: The Department does not anticipate that this regulation will have an adverse impact upon jobs or employment opportunities statewide or in any particular region of the state.

Minimizing adverse impact: Since the Department does not anticipate any adverse impact upon jobs or employment opportunities resulting from this regulation, no measures to minimize any unnecessary adverse impact on existing jobs or to promote the development of new employment opportunities are required.

Self-employment opportunities: The Department does not foresee a measureable impact upon opportunities for self-employment resulting from adoption of this regulation.

Initial review of the rule pursuant to SAPA § 207: Initial review of this regulation shall occur no later than the third calendar year in which it is adopted.

The agency received no public comment.