New York’s Labor Department Wants Your Unemployment Benefits Back

One unemployment recipient couldn’t read the application instructions in her native language and didn’t realize she had to report part-time working hours. Another got too much money due to a government miscalculation. A third, who has a physical disability, certified that she was available to work remotely from a hospital bed.

All three committed fraud in the eyes of the New York state Department of Labor, which has tried to claw back unemployment benefits from each of them — and hundreds of thousands of others.

No state pursues unemployment overpayment cases as zealously as New York. The state reported that it had overpaid state-funded benefits to the tune of $425 million between 2020 and 2023 — and found nearly two-thirds of that amount to be fraudulent. That’s a higher share than any other state, and five times the national average, according to data analyzed by labor researchers at the Cornell Industrial and Labor Relations School. When their claims are found fraudulent, unemployment recipients are forced to repay their benefits, even when it could send them into financial ruin.

When the Unemployment Insurance Appeals Board determined that Hameeda Bano had committed fraud, she found it “completely baffling.”

Bano, a single mother from Pakistan who lives in Flushing, Queens, doesn’t speak much English. After losing two teaching jobs at separate childcare centers during the pandemic, she filled out an English language application for unemployment benefits to the best of her ability. The Labor Department does not publish applications in Urdu or Pashto, the languages she speaks, but she managed to get approved.

There were no Urdu or Pashto instructions on the department’s website, either, nor phone operators who could speak either language. So Bano enlisted a neighbor to help her undertake the weekly process of proving her eligibility. (The Labor Department spokesperson said the department will provide a translation of any vital document using a vendor when asked.)

Shortly after Bano got her first round of benefits, one of the childcare centers offered her a few hours of work a week. She didn’t certify those hours to the Labor Department because her neighbor had told her not to report part-time work, she told New York Focus in an interview translated by her English-speaking son, Waleed. The benefits helped keep her financially afloat during a time when she lived “hand-to-mouth,” with little savings and while supporting Waleed through college.

Unlike many states, New York does not explicitly define willful misrepresentation in its statute. Instead, Labor Department employees have used decades of case law from the appeals board and longstanding norms to guide decisions.

“Where there’s no definition of fault, that’s where these more conservative and anti-claimant perspectives have crept in to deny folks who should be eligible for waivers for repayment recoupment,” Malhotra said.

The Labor Department has found fraud even in cases where the department itself was responsible for the error.

In one recent case, Labor Department employees prescribed too much federal pandemic assistance after confusing an applicant’s gross and net income.

Over six months later, the state realized the error and tried to claw back $10,000 in overpayments. The applicant, who asked to go by her initials, MS, applied for a hardship waiver. The department denied her, saying her retirement savings were too high to qualify for forgiveness — a threshold that the federal government leaves up to states to decide.

Alarmed by the flood of benefit clawbacks, a group of legal advocates began meeting regularly with Labor Department representatives. At one meeting, Reardon, the Labor Department commissioner, assured the group that language access rights, inclusivity, and equity were important to her, attendees said.

Her words rang hollow. Advocates have urged Reardon to direct her staff to take a more lenient approach to overpayment cases and to issue a formal definition of fault. She has not done so.

“If they have a commissioner who really cares about workers, they’re gonna make policy that’s pro-worker,” Salk said.

Farrell urged the importance of training unemployment program staff, whom she said are often unaware of regulations that have been on the books for nearly a decade. “We’ve had people testify on the record with no idea of what the language access rights or laws, both state and federal, are,” Farrell said.

Another change in direction could come from Governor Kathy Hochul, who appoints the members of the UI Appeals Board — three of whom are serving on expired terms and are slated to be reappointed or replaced this session.