Up to 4.1 million may have to repay California unemployment agency


SACRAMENTO, Calif. (KRON) – Millions of people might have to repay some or all of the jobless benefits they got during the coronavirus pandemic because California’s unemployment agency stopped enforcing some eligibility rules so it could process claims quicker, according to an audit released Tuesday.

As millions of people filed for unemployment benefits during multiple government-ordered business shutdowns, state officials decided to stop doing some of the time-consuming work necessary to ensure those who applied for benefits were eligible to get them.

Those decisions helped the agency pay claims faster, but it still had to go back later and check that people were eligible. So 10 months after the pandemic began, the Employment Development Department has amassed a massive backlog of those checks. In that total, 2.4 million people might have been ineligible for benefits at all and 1.7 million might have been overpaid. It’s likely some people fall into both categories.

State Auditor Elaine Howle said Tuesday that California has “no clear plan” to address the backlog, saying it “represents a workload never before seen by the department.”

“That could have significant consequences for claimants,” the audit said.

Once people start getting benefits, they have to check in with the unemployment agency every other week to certify they are still eligible. The audit found the agency automatically paid people for eight weeks last spring without requiring those certifications, resulting in nearly 1.7 million people getting $5.5 billion in benefits.

From March to December, the agency also stopped enforcing some rules that would have made people ineligible for benefits, including making sure people did not voluntarily quit a job or had refused a suitable job without a good reason.

As of Dec. 3, the agency has flagged at least 12.7 million eligibility issues affecting 2.4 million people. Using the agency’s estimate of an average of 30 minutes to resolve each issue, it would require more than 3 million hours of work — or more than 342 years — to resolve even half of it.

California Labor Secretary Julie Su on Monday estimated the state has paid $11.4 billion in fraudulent claims during the pandemic, representing 10% of the more than $114 billion in benefits paid since March.

But that fraud is not associated with the eligibility issues identified in the audit, Employment Development Department spokeswoman Loree Levy said.

Department Director Rita Saenz, who was appointed last month after the previous director retired, told lawmakers Tuesday that the agency has not decided how it will handle these accounts.

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