Oregon lawmakers advance bill to moderate collection of unemployment debt

By Kate Davidson (OPB)
April 13, 2021 7:26 p.m.

SB 172 would allow the Oregon Employment Department to waive benefit overpayments that result from people’s honest mistakes.

Oregon lawmakers will consider a bill that would change how the state recoups money it overpaid to people who are unemployed.

Senate Bill 172 passed out of committee Tuesday. It now heads to the full Senate.


Overpayments happen when the state gives someone more unemployment benefits than they are entitled to. The amounts can be large, especially when the state later decides someone should not have received benefits at all. Accidental overpayments have left some jobless people owing the state thousands of dollars during the pandemic.

“Those are a huge burden for our low-income clients,” said Alicia Temple of the Oregon Law Center at a public hearing earlier this month. The center pushed for the changes, which are also supported by the Oregon AFL-CIO and the Oregon Food Bank.

At the same hearing, Matt Newell-Ching of the Oregon Food Bank reminded lawmakers of the lines of cars that formed at food banks last year as people waited many weeks for unemployment benefits to arrive.

“We believe that this bill makes a very modest change … so that when unintentional mistakes do happen it does not retraumatize and cause further harm to families in our community,” Newell-Ching said.

SB 172 would give the Oregon Employment Department the ability to waive more overpayments. It would also limit how long the state can collect some debts.

Overpayments fall into three basic categories. Sometimes claimants commit fraud, willfully misrepresenting the facts to get benefits. Many other people make honest mistakes — perhaps when applying for benefits in English while struggling with a language barrier. Overpayments also happen when the state makes errors, laws change, or an employer provides bad information — not the person receiving benefits.

SB 172 would not affect how the state recoups benefits obtained fraudulently.


“We aren’t trying to make it any easier on people if they’ve committed fraud,” said Temple.

But the measure could change the state’s approach when people just make mistakes. It would allow the Employment Department to waive those overpayments in cases of economic hardship.

Right now, that’s not an option. Waivers are only granted for the third category of overpayments — those, such as agency error, that aren’t considered a person’s fault.

That’s been a concern for advocates. When the pandemic forced an historic flood of unemployment claims last spring, jammed phone lines prevented many applicants with limited English proficiency from reaching interpreters. It wasn’t until March 2021 — one year after the pandemic hit — that the Employment Department provided a Spanish form online for people to initiate regular unemployment claims.

Related: Applying for unemployment is even harder for workers with limited English

“So many people didn’t have assistance in the language they speak and were trying to fill out forms in English. And inevitably, that means there are going to be mistakes on some of these complicated forms,” said Temple.

Those mistakes can turn into serious debts, especially for low-income workers. Currently, the Employment Department seeks to recoup these overpayments by withholding future unemployment benefits. While the state often works out payment plans with people who have returned to work, it can also garnish wages and place liens on property.

SB 172 would limit collection efforts to five years when overpayments result from a person’s mistake.

The bill would also require notices of overpayments to be written more clearly and include the reason for the overpayment, the consequences of the overpayment and the possibility of getting a waiver.

Finally, the measure would allow the Employment Department to offset part of a person’s future benefits when it collects overpayments, rather than their full weekly payment. The intent is to avoid completely depriving out-of-work Oregonians of income when they are most in need.

The Employment Department has paid out more than $8.5 billion in benefits during the pandemic — a staggering increase from prior years. The detection of overpayments is expected to rise as well. One indication — in the last quarter of 2020, the state confirmed 2,050 overpayments due to agency error. That’s ten times the number from the same quarter in 2019.


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