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The U.S. Department of Labor has directed Vermont to review the eligibility of thousands of Vermonters who received unemployment benefits over the past 13 months after the state deactivated some eligibility criteria to speed payments during the pandemic.

Jim Garner, acting administrator for the U.S. Labor Department’s Office of Unemployment Insurance, said in an April 1 letter that Vermont’s practice of paying people before establishing a person’s eligibility creates “a substantial compliance issue” under federal law and the potential for significant overpayments. VTDigger first reported the story.

Vermont’s labor commissioner and congressional delegation have asked the federal government to reverse the order.

Commissioner Michael Harrington wrote in an April 9 letter to the U.S. Labor Secretary Martin Walsh that when unemployment claims soared at the start of the pandemic, Vermont’s unemployment program “was massively ill-equipped to handle the initial surge,” because it was chronically underfunded by the federal government leading up to the pandemic.

The state took steps to relieve the pressure and expedite the process, including deactivating a “handful of eligibility triggers,” Harrington wrote. One of those was for people to attest that they are able and available to work. If the state hadn’t taken those steps, more than half the claims would have gone into the adjudications process and those people would not have gotten their first benefit check for six months or more, Harrington wrote.

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“The fact that USDOL would suggest that a state revisit the eligibility of thousands of individuals who, through no fault of their own, were paid benefits, and require the state to issue redeterminations for claims that go back more than a year, potentially placing those individuals in a significant overpayment status, is unconscionable,” Harrington wrote in the letter.

The state of emergency issued by Gov. Phil Scott satisfies the able and available requirement because most, if not all, of the claimants who became unemployed at the time would be considered able and available, he wrote. He added that the state understands the importance of properly determining eligibility and having low rates of improper payment and before the pandemic had one of the lowest rates of unemployment and improper payment in the country.

“It’s also worth noting that the legislature expanded eligibility provisions to ensure individuals who left work for a COVID related good cause reason were eligible for benefits. This was in compliance and was the reason thousands of claimants could access benefits,” Kyle Thweatt, communications and outreach coordinator for the state Labor Department said in an email on Thursday.

Vermont’s congressional delegation, in its own letter to Walsh, said the state Labor Department’s actions were consistent with Congressional intent of the pandemic unemployment legislation. The state Labor Department does not know how many claims are involved.

If the issue is not addressed, Vermont could potentially lose an administrative grant and residents may no longer be eligible for Pandemic Emergency Unemployment Assistance, Federal Pandemic Unemployment Compensation, and Mixed Earners Unemployment Compensation, Garner wrote. The U.S. Labor Department said it would offer Vermont technical assistance to help it get back in compliance. This week Harrington announced that Vermont is reinstating the work-search requirement for people getting benefits starting the week of May 9.


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