Missouri labor officials again in trouble with lawmakers over unemployment clawback

Jeanne Kuang
·4 min read

Missouri’s labor director is again in hot water with lawmakers after her department placed liens on unemployment recipients’ property in an attempt to claw back benefits the department paid in error during the pandemic.

State officials did so despite an agreement struck with lawmakers last month to halt or slow down the collections process. A bill forcing the state to forgive most of those payments is making its way through the state Capitol.

“I got on the House floor and asked my 162 fellow members to trust me, because I was trusting you,” Rep. J. Eggleston told Labor director Anna Hui on Tuesday.

Eggleston, a Maysville Republican, was among several lawmakers who berated the department during a hearing of the House Special Committee on Government Oversight.

Last month, the House passed a bill directing the state to forgive the majority of the $150 million paid in error to 46,000 jobless Missourians during the COVID-19 pandemic. None of those recipients committed fraud, Hui has said.

Lawmakers removed a measure to make the bill effective immediately, to give the labor department time to process appeals and waivers.

In exchange, Eggleston said to his colleagues on March 4, the state had “agreed to call off the dogs.”

But he and other lawmakers said Tuesday they were again receiving worried letters from constituents showing the department was still recollecting portions of the money. Close to 2,000 cases are still being appealed, and more than 30 have landed in court because the labor department has moved to garnish wages or place a lien on recipients’ property.

Hui told the committee some of the actions are automated, and the department will withdraw the court cases. Officials have fully paused the collections effort until Parson receives the bill, she said.

“In good faith, we’re going to go ahead and pause everything,” she said. “We will allow the legislative process to go forward.”

But lawmakers said they’ve lost trust in the department.

“You keep referencing that there was a miscommunication and I don’t believe that there was,” committee chair Jered Taylor, a Republic Republican, said. “I believe we were all clear on what the department was expected.”

The committee first dragged Hui’s department in to testify about the unemployment debts in February, after members received dozens of letters from constituents who were notified they owed the state thousands of dollars.

As the COVID-19 pandemic ravaged the economy last spring, state labor departments rushed to deliver unemployment benefits to an unprecedented number of claimants. Many were applying for benefits for the first time or were only eligible under programs expanded during the crisis.

As a result, Missouri’s labor department said it sent out about three percent of the money it paid in error. Most of those recipients were later deemed ineligible because of non-fraudulent paperwork mistakes, or confusion over whether seasonal workers who traditionally don’t qualify for benefits, such as school bus drivers, were eligible during the pandemic.

The average claimant now owes about $4,000 back to the state.

The bill the House passed, which awaits action in the Senate, would forgive the portion of the mistaken payments that came from federal coronavirus aid funds — roughly 75% of the money.

Gov. Mike Parson has remained adamant the state take back its own share, to protect businesses from paying higher taxes to replenish the unemployment fund, even as he moved in late March to pour $300 million in federal aid into the fund.

It is the state’s portion Hui’s department has continued trying to recover, she told lawmakers Tuesday.

On the House floor last month, Eggleston read an email from Labor officials that the department was “working to pause collections actions as you requested” on the federal money, and would work with benefits recipients on payment plans for the state portion.

Rep. Scott Cupps, a Shell Knob Republican, said with constituents losing sleep over the debts, the department had “nothing to lose” in slowing down the collections process.

“There’s not a soul in the state that has a problem with that approach and that’s why we felt like that approach is what we agreed to,” Cupps said. “I guess it turns out we were wrong.”