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Hudson bill seeks to fix unemployment insurance issues
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Hudson bill seeks to fix unemployment insurance issues

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As the COVID-19 pandemic causes greater unemployment, legislation from Del. Sally Hudson, D-Charlottesville, seeks to fix several issues with the Virginia Employment Commission that have come to the fore.

Hudson, who also works as a labor economist, said most of the concerns she has heard about from constituents this past year center around unemployment insurance.

“It’s striking to me that unemployment reform hasn’t bolted to the top of more legislators’ lists because it’s hands down the No. 1 thing we’ve been hearing from constituents since March,” she said.

As it’s designed now, the unemployment insurance system benefits businesses more than workers, Hudson said, and a more ideal system would find a way to balance the needs of both. With HB 2040, Hudson hopes to bring forward this session address some of the issues facing out-of-work Virginians and make the system more equitable, she said.

“Big picture, we should like that unemployment insurance exists because it makes sure that when something big happens to the economy that all the families caught in that crisis continue to pay their bills and buy their groceries,” Hudson said. “That’s good, not just for the people who are using that money, but also for the economy at large.”

The first issue her bill seeks to fix is an issue stemming from a disagreement between employer and an employee over why a separation existed.

Currently, if a disagreement exists over whether the employee was fired or laid off without cause, the process heads to adjudication, where a deputy from the VEC decides what really happened.

The backlog for the adjudication process has grown significantly this year, Hudson said, with cases from July only now reaching some degree of resolution. This can cause a major burden for people relying on unemployment payments, she said, and so her bill would allow for payments to continue during the adjudication process.

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“I think there are a lot of problems in the mix here, and we really need a better system for both workers and employers to be able to communicate easily about this,” she said. “But in the meantime, if you’ve got someone who literally can’t pay rent or buy groceries, then we want to err on the side of continuing to pay someone who had a valid claim.”

The second issue has to do with overpayments from the VEC.

In some cases through no fault of their own, unemployed people can receive thousands of dollars in overpayments from the VEC, which the VEC can later demand be repaid, Hudson said. In many cases, especially when a payment includes additional federal money, people are faced with having to pay back thousands of dollars they have no way of coming up with because they are still out of work.

“What this bill would do is catch Virginia up to what other states are doing and say that a person only has to pay back unemployment benefits if they committed fraud by, say, pretending to be someone they weren’t or they pretended to be eligible when they knew that they weren’t,” Hudson said.

“If it’s an administrative error on the part of the agency, if it happened because of coercion on the part of the employer, then we’re going to err on the side of the worker.”

The third issue also has to do with the adjudication process that stems from a disagreement between an employer and employee over why a separation occurred.

Hudson said that she has heard from constituents who filed their paperwork in a timely fashion only for a disagreement over separation to arise and then for an employer to become non-responsive or filed paperwork incorrectly, further stalling the adjudication process. In the current state of affairs, the state code allows an employer to make a filing mistake four times in a row and only incur a $75 fee, which Hudson said is not enough of a deterrent.

“What we would like to do is modify the state code to provide a stronger incentive for the employers to respond in a timely fashion,” she said. “The bill that I have proposed would allow employers to make that mistake once but then the second time they make the mistake, they would forfeit the right to appeal that claim for that worker in the future.”

Hudson presented these ideas in late December at a meeting of the Commission for Unemployment Compensation. Given the shorter session in 2021, Hudson said it is crucial to have these early meetings to get discussions started before the session begins.

“One thing is clear: This commission’s work is going to start to get a lot more active because both building a better system for the future and recovering from the mass layoffs in the spring falls within its work,” she said.

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