Yohanna Gerges, 48, was working as a full-time Lyft and Uber driver in Albuquerque before the pandemic began. But in the spring of 2020, business dropped sharply and he developed a lung infection that wasn’t due to COVID-19, but still left him with long-term symptoms. In April, he filed for unemployment and began receiving $461 weekly under the Pandemic Unemployment Assistance program, a federal program funded with federal dollars and designed for gig economy workers, managed in New Mexico by the Department of Workforce Solutions.
All seemed well until a year later when, out of the blue, DWS notified Gerges that he had been overpaid $13,432 in PUA funds — money he was now supposed to pay back immediately. If he didn’t, DWS warned in a letter, the agency would withhold his future unemployment benefits and the state of New Mexico would “intercept” his tax refunds until he paid back every penny.
The overpayments were not Gerges’ fault. They’d been caused by DWS miscalculations and misinterpretations of federal guidance, errors the agency made with thousands of other people across New Mexico. When DWS started clawing back the overpayments by deducting money from unemployment benefits, many people were left unable to pay for rent and other necessities. Today, they’re still struggling with the repercussions.
“All I did was submit the documents that they needed,” said Gerges. “At one point, they came and said, ‘Hey, you know what, you’ve been overpaid over $13,000.’ And that was a big shock for me.”
The shocks have occurred statewide. As of Feb 18 in New Mexico, 92,371 people received at least one payment of PUA benefits, for a total of $479.3 million in payouts, DWS attorney Andrea Christman told Searchlight New Mexico by email. Of that, DWS overpaid $239.2 million, meaning that almost half of the payments were for the wrong amount.
Nearly 20 percent of PUA payment recipients — 17,136 people — have filed waivers asking to be excused from paying back the money, according to DWS.
A billion-dollar problem
New Mexico isn’t alone in this quandary. State agencies in Michigan, New Jersey, Connecticut and elsewhere have made PUA overpayments to hundreds of thousands of self-employed people, gig workers and others. In Massachusetts, more than 700,000 claimants received overpayments totaling $2.7 billion, mostly from the PUA program, the Boston Herald reported.
In acknowledgment of the problem, the U.S. Department of Labor on May 5 gave states the authority to waive overpayments for people who received them through programs like PUA, through no fault of their own. Most recently, on Feb. 7, the department outlined five circumstances — in addition to two prior ones — under which states could issue blanket waivers, sparing them the tedious and expensive process of investigating cases one by one. (States should continue to pursue overpayments that were the result of fraud, the Department of Labor said.)
At least one state, Rhode Island, recently decided to waive all unemployment overpayments caused by state errors. “That money is long gone and asking somebody to come up with that money now is probably not the best way to handle this going forward,” Matt Weldon of the Rhode Island Department of Labor and Training told WJAR-TV.
In New Mexico, of the people who applied for waivers, some 2,034 were denied but are undergoing a second review; 682 were granted, DWS said. But the vast majority of the waivers — at least 14,420 — are still pending, DWS estimates.
The agency is taking action, according to Stacy Johnston, acting public information officer at DWS. New Mexico will be granting blanket waivers per the guidance, she said, although she did not provide details about when or how this will occur. In addition, the state will be expanding the waiver eligibility for all other federal unemployment programs, Johnston said.
Felipe Guevara, a workers’ rights attorney at the New Mexico Center on Law and Poverty, said there is a public misconception that all overpayments were caused by fraud. Of all the people who have talked to him or others at the center, none are responsible for the overpayments, he said.
“They did what they were supposed to do, from certifying to giving their documents — everything,” Guevara said. “But because DWS was so overwhelmed and couldn’t manage the programs correctly, mistakes were made. Mistakes that they’re now asking those people to pay for, when in reality, it should be the government coming up with solutions to these overpayments.”
The state’s mistakes
In Gerges’ case, DWS had mistakenly used his gross income to calculate his weekly payment instead of his net income, or pay after deductions and expenses, he said. In 2021, he said the department clawed back $2,808, recouping the money by deducting it from his unemployment payments.
This left him in a difficult situation. He either had to pay back all of the money (which he couldn’t afford) or file an appeal and ask for a waiver, in hopes of getting the overpayment forgiven. But to do the latter, he’d have to dive into a bureaucratic web of phone calling, emailing and other attempts to contact DWS, an agency with some of the worst customer service in state government.
Like many people who are receiving unemployment benefits, Gerges was just scraping by: He said he barely had enough money to pay for rent, food, health care and other basic expenses. And there was no way to earn the money quickly: Uber and Lyft ridership was still depressed: “There was not really a whole lot of work going on.”
He also felt that DWS needed to shoulder some of the responsibility for making the error to begin with. “I was like, ‘Hey, listen, it’s on you,’” he said.
Whys and waivers
In response to the pandemic — and the highest U.S. unemployment levels since the Great Depression — the federal government rolled out an alphabet soup of economic assistance programs under the CARES Act. These included PUA, Federal Pandemic Unemployment Compensation (FPUC) and Pandemic Emergency Unemployment Compensation (PEUC). Each involved different criteria and protocols. And each likely overpaid benefits, owing to honest mistakes by applicants and errors made by harried state labor departments.
“Every state has been completely overwhelmed since March of 2020,” said Michele Evermore, the U.S. Labor Department’s deputy director for policy at the Office of Unemployment Insurance Modernization.
“States entered the pandemic with a 50-year low in administrative funding,” Evermore said. Understaffed and over-stressed, they had to quickly figure out how to pay “at least 10 times the number of claims that they had to pay in the past,” while also rolling out three entirely new programs.
Guevara agreed that DWS has been under unprecedented pressure, and the state as a whole has struggled with low staffing levels.
However, “it doesn’t excuse the fact that New Mexicans are suffering right now and need DWS to be doing all of this in the most transparent and correct way possible,” he said.
‘Designed for people to fail’
Rhiannon Chavez-Ross, 38, is one of the many people struggling with DWS. She filed for unemployment in 2020 and was granted PUA benefits after she had to shut down her party-planning company due to the pandemic.
Chavez-Ross is also the administrator of a Facebook group called “Unofficial Unemployment New Mexico Information and Help,” which has almost 3,000 members. She launched it in June 2020 after she received a PUA overpayment notice and saw that scores of other people were having issues with DWS.
Approximately 30 percent of the group’s messages and complaints are about overpayments, she said. “The whole process was designed for people to fail.”
In her own case, Chavez-Ross, a mother of two, said she’s had to default on bills and has sold off the majority of her company’s inventory. She’s also struggled with long-term heart and lung issues and hospitalizations following a bout with COVID-19 in late 2020, she said.
According to Chavez-Ross, DWS sent her an overpayment notice on a Friday at the end of May 2020 and deducted $473 from her benefits the following Monday, before she could determine what happened or file an appeal. The notice announced that she’d been overpaid by $1,395; as a result, her weekly unemployment payment was reduced from $324 to $169, she said.
From the time the pandemic started, “I had no income. And I was refunding deposits to customers.” When unemployment payments arrived, “I finally had a little bit of income coming in.” She made spreadsheets of her bills and started figuring out how to regain her footing. “And even having that one payment go wrong, just threw that off. And I was in a mess again.”
Chavez-Ross said she’s filed four appeals and three waivers with DWS; her case has yet to be resolved.
Legal wrangling for waivers
Yohanna Gerges, for his part, has been battling DWS for more than 10 months. On March 4, 2021, a day before he received the overpayment notice, DWS started deducting money from his benefits: Instead of receiving $461 weekly, he got $169. He lost $1,404 in benefits in March alone, according to a DWS document he shared with Searchlight. (DWS declined to comment on the cases of Gerges or Chavez-Ross, saying it cannot comment on specific claimants.)
In March, Gerges filed an appeal with the DWS Appeals Tribunal, with legal help from Guevara. In the appeal — which involves a hearing before an administrative law judge — he requested a PUA overpayment waiver and a refund of the money that had been taken. He made an additional request for a PUA overpayment waiver through the avenues authorized by the Department of Labor.
On May 27, Gerges attended a telephonic hearing before the administrative law judge. In June, the judge ruled against him, finding that he still owed the overpayment. Forging ahead, Gerges appealed the decision to Ricky Serna, the acting cabinet secretary for DWS. (No one has been appointed to fill the top spot at the agency, left vacant when Secretary Bill McCamley abruptly resigned last April). Serna upheld the tribunal’s decision.
In July, Gerges appealed Serna’s decision to the Second Judicial District Court, represented by Guevara. He argued that the actions taken by DWS violated federal regulations. That legal effort eventually failed.
But on August 23, Gerges finally got good news: DWS had granted him the PUA waiver for the remaining $10,624 in overpayments.
The burden had been lifted, Gerges said. But it had cost him months of legal struggles and $2,808.
Now, he’s trying to recoup that money. Given what’s happened in the past, he’s not expecting it to be easy.