Texas unemployment agency illegally claws back COVID unemployment benefits, lawsuit says

A group of Texans who have been left jobless because of the COVID-19 pandemic have filed a lawsuit alleging the state unemployment agency illegally demanded they return benefits or charged them with fraud without give them the opportunity to appeal their case.

In the lawsuit filed in federal court in Austin, the Texas Association for the Rights of the Unemployed accuses the Texas Workforce Commission of denying Texans due process by demanding that they repay benefits, often without explanation and more than a year after they enrolled in pandemic relief programs.

The Labor Commission declined to comment on ongoing litigation.

The lawsuit specifically cites those who received unemployment benefits under the CARES Act, the massive federal stimulus bill that lawmakers passed in March 2020, as mass shutdown orders took effect and millions of Americans were left jobless almost overnight.

The legislation temporarily expanded unemployment eligibility and increased benefits for those who qualified. Texans have filed more than 7 million claims worth about $42 billion that have been paid by the labor commission in the first 10 months of the pandemic.

Months later, the Workforce Commission began notifying some recipients that benefits had been approved in error and that they were required to repay them, even though they had long since been spent.

One of the plaintiffs said in court documents that she received two separate notices from the Workforce Commission nearly a year after receiving benefits. One notice said she owed the state $7,582, the other $4,680, according to the suit.

The lawsuit also alleges that Workfore Commission falsely accused other recipients of fraud, seeking reimbursement of benefits but subjecting them to long delays when they attempt to appeal.

In 2020, the agency reported that it reported about 276,000 suspicious activity claims, compared to just 1,210 in 2019. No claims were paid in 75% of those cases. The remaining 25% had money deposited in accounts, but the legitimate recipients could have been flagged for fraud, officials acknowledged.

“This is a challenge to what we believe are major systemic issues with the way the (Labour Board) says job seekers, who relied on unemployment benefits for the pandemic, were either ineligible or committed fraud,” said David Mauch, who represents the plaintiffs. “And the (Labour Board) is now trying to claw back those benefits from those people.”

The plaintiffs asked the court to declare that the Labor Commission violated the law and that the agency end its attempts to recover the money without proper audits and due process for investigations.

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