This article was last updated on Feb. 2, 2021 at 3:40pm
After much deliberation and angst, the Consolidated Appropriations Act of 2021 was signed into law on Dec. 27, 2020. Among other things, this statute extended the Federal Pandemic Unemployment Compensation program, which expired on July 31, 2020. The extension authorizes payment of supplemental unemployment benefits to qualified individuals in the amount of $300, rather than $600 as the previous program did. The extension runs through March 2021. The enhanced benefits do not retroactively extend from the period of the program’s termination. Despite this fact, the extension of this program and its continued application to freelance workers is very good news for Local 802 members, many of whom have not worked since March 2020 and who are still relying on unemployment compensation.
Despite its great need, the Federal Pandemic Unemployment Compensation program has created a variety of legal issues for musicians that did not previously exist, particularly for those who had not previously qualified for unemployment compensation. The most prominent of these issues is its impact on all workers — including musicians — who are receiving pension payments. The law as it currently exists in New York State creates a tension between simultaneous receipt of pension benefits and unemployment compensation. In some circumstances, employees in active status as pensioners may now disqualified from receipt of unemployment compensation due to a recent amendment of the law.
Please note that employees can receive both pension and unemployment compensation simultaneously. The caveat is that the law, which was amended in 2013, may in whole or part disqualify a claimant from receiving unemployment compensation if the employer who is listed on the unemployment application contributed and maintained the pension plan that pension is currently being received from during any of the four quarters of the unemployment eligibility period.
It should be highlighted that if your employer contributes to a pension plan you are eligible for BUT does not actually maintain that plan, such as may be the case for multi-employer pension plans that are separately administered and receive contributions on your behalf from multiple employers, this may not disqualify you from receiving both pension and unemployment compensation. I am aware of several musicians who have successfully challenged a repayment determination on this basis. In the case of multi-employer pension payments that several employers have contributed to on your behalf, unemployment eligibility may be affected only if your pension benefit has increased due the contributions made by your last employer.
The New York law that details the effect retirement payments have upon unemployment compensation entitlement is Labor Law Section 600 (1)(a). It was amended in 2013 to provide for a direct reduction in unemployment compensation if pension benefits are based upon any work performed during the quarterly unemployment base period. This section of the law states: “The benefit rate of a claimant who is receiving a governmental or other pension … which is based on his previous work, shall be reduced as herein provided, if such payment is made under a plan maintained and contributed to by his base period employer.” Thus, if any work is performed during the base period that results in a pension payment greater than the unemployment compensation maximum benefit, the pensioner may be disqualified from receiving unemployment benefits.
This amendment is a substantive revision of the law which previously permitted all pensioners to receive unemployment compensation benefits provided their continued employment did not result in an increase in pension entitlement. (See my prior Allegro article on this topic here.) As a result of the amendment of Section 600, in some cases employees who previously had been qualified to receive both unemployment and pension payments may no longer be eligible for unemployment benefits. Jon Bloom of the Workers Defense League, a nonprofit organization that provides assistance to employees seeking unemployment compensation, noted that the 2013 revision was the product of a comprehensive long term overhaul of the unemployment compensation law. Given the pandemic and the fact that the amendment has had a particularly onerous impact on unemployed workers, further legislative reform may be possible and should be explored.
A significant problem may arise if ineligible employees receive both forms of payment. If that occurs, the recipient will have been overpaid and the New York State Department of Labor will likely seek recoupment of the overpayment, even if it was innocently obtained. This problem is exacerbated by the fact that unemployment benefits have been increased through the Federal Pandemic Unemployment Compensation program. Overpayments can be in the thousands of dollars before recoupment is demanded. Often the money has already been spent and repayment is impossible. Thus, every effort must be made to ward off this problem before it occurs. If a musician who is receiving unemployment compensation desires to retire and receive pension payments, notification should be given to the Department of Labor immediately, so no overpayments will occur. If notification is not given immediately and overpayments are discovered as a result of a subsequent DOL audit, the claimant could find themselves unable to pay the money back. Unfortunately, I have encountered several musicians who — through no fault of their own — now find themselves in this position.
The good news is this: If, at the time you were first eligible for unemployment compensation, it was not established that you would be receiving pension, and you subsequently apply and receive pension payments, you will not have to pay the unemployment benefits you have already received back if there is a redetermination of your unemployment benefit eligibility and it is found that you are not eligible for unemployment benefits. This will hold true so long as you received the prior unemployment benefits in good faith, and you did not make any false statements or misrepresentations on your initial unemployment benefit application. See NY Labor Law Section 597 (3) and (4). This section of the law states the following:
Whenever a new determination in accordance with the preceding subdivision or a decision by a referee, the appeal board, or a court results in a decrease or denial of benefits previously allowed, such new determination or decision, unless it shall be based upon a retroactive payment of remuneration, shall not affect the rights to any benefits already paid under the authority of the prior determination or decision provided they were accepted by the claimant in good faith and the claimant did not make any false statement or representation and did not willfully conceal any pertinent fact in connection with his or her claim for benefits
To prevent any claim of misrepresentation, it is best to notify the Department of Labor as soon as an application for pension is filed. While you may be deemed ineligible prospectively, in all likelihood repayment of already received benefits will not be pursued by the Department of Labor. Further, if you are currently receiving pension at the time you apply for unemployment, this fact must be disclosed on the application.
Even if there is an overpayment of Federal Pandemic Unemployment Assistance, Section 2104 (e)(2) of the CARES Act provides that states may waive mandatory repayment if the overpayment were not fraudulently obtained, the worker receiving it was without fault and requiring repayment would be “contrary to equity and good conscience.” Thus there is some likelihood that the musicians who are now being required to repay may qualify for a waiver. In one situation, the administrative law judge who presided over a musician’s appeal of a decision denying unemployment compensation eligibility specifically remanded the matter back to the Department of Labor to determine if a waiver was warranted. The assessment of whether a waiver is warranted depends upon the particular facts of the case. Thus, blanket waivers are not available.
A timely appeal should also be pursued in the event the waiver is denied. It must be stressed that waivers are not available if the overpayment is due to willful misconduct or fraud. An ounce of prevention is worth a pound of cure. Any musician receiving unemployment compensation must be vigilant to ensure they are not receiving overpayments.
Harvey Mars is counsel to Local 802. Legal questions from members are welcome. E-mail them to firstname.lastname@example.org. Harvey Mars’s previous articles in this series are archived at www.harveymarsattorney.com. (Click on “Publications & Articles” from the top menu.) Nothing here or in previous articles should be construed as formal legal advice given in the context of an attorney-client relationship.