A state agency has told Jim Holt to repay $19,295 in unemployment benefits he collected after being laid off in March 2010.
Jim Holt stands in front of the Wildwood unemployment office. He has been told to repay more than $19,000 in benefits.Since 2011, New Jersey has stopped more than $100 million in improperly paid unemployment benefits, according to the state’s Department of Labor and Workforce Development. Each week, an average of 1,650 invalid claims are denied.
Jim Holt’s claim was not one of them.
In March 2010, Holt lost his job as a maintenance man for Diocesan Housing Services, an entity of the Catholic Diocese of Camden. He applied for unemployment and was approved for a weekly check of $227.
Now the agency is asking him to pay it back. All $19,295 of it, thanks to a perfect storm of missteps and mistakes by the diocese and the agency.
"I figured that if I worked, paid into unemployment and then got laid off, I would be able to collect my fair share," Holt said. "I’m not looking for handouts."
THE SOURCE OF CONFUSION
Even though Diocesan Housing Services is associated with the Camden diocese, it was not a non-profit organization when Holt was hired in March 2008. That means it was required to participate in the state’s unemployment and disability programs – something non-profits don’t have to do.
Unemployment and disability taxes were taken out of Holt’s weekly paycheck. The amounts varied because he worked different hours each week, but it averaged between $5 and $7.
The contributions meant he’d be eligible for unemployment benefits should he lose his job.
When Holt did lose his job, he applied for benefits. His first claim was denied, so Holt appealed. Holt showed up. The employer didn’t, so Holt was granted benefits and even received back benefits to his initial application date.
Over the next 19 months, Holt, a former firefighter and U.S. Marine, continued to collect unemployment. He even received two notices saying he was eligible for extended benefits.
"Then all of a sudden, I stopped getting the checks," he said.
That was at the end of October 2011.
The state said he was ineligible because his employer is a non-profit religious organization and therefore exempt from paying into the unemployment system.
Holt filed an appeal and had a phone hearing on March 13.
"I produced my pay stubs that prove unemployment compensation tax was deducted from my pay," he said. "These deductions were taken out from my first check in March 2008 until the end of September 2009 – a total of 18 months."
But Diocesan Housing Services changed its status during Holt’s employ, and as a non-profit, it could opt out of the unemployment system.
Holt said he was never told his employer changed its status.
Plus, Holt’s unemployment benefits were calculated on his "base year" of employment from October 2008 through September 2009 – the time frame during which he paid into the system.
He appeal was denied.
"I don’t understand how after collecting for 19 months it is decided that I shouldn’t have gotten anything and that I have to pay everything back," Holt said. "What happened to my unemployment tax deductions?"
WHAT WENT WRONG
Diocesan Housing Services did in fact switch to non-profit status while Holt worked there, but the precise date is in question.
The diocese said it was June 2009, but other public records show a variety of different dates. If June 2009 is accurate, that means the diocese over-collected more than three months of unemployment taxes from Holt, and possibly, other employees.
Even if the diocese over-collected, Holt still paid into the system during the "base year," so shouldn’t he be eligible for the benefits?
The state said it could not comment on individual cases, but it offered some insight into how the system works.
When a worker files a claim, the state’s computer system does an initial scan and an agent reviews the information, spokesman Brian Murray said.
If information is missing, the agent will obtain the name of the employer named by the worker and a computer-generated notice would go to the employer, requesting payroll information for the 52-week period that makes up the worker’s base year.
If the employer responds, the amount of benefits is determined.
If there is no employer response, an "affidavit of wages" is accepted from the worker, including proof of wages such as a W-2 and paystubs.
When the worker receives benefits, the employer is notified.
Assuming the state followed that protocol, Diocesan Housing Services should have received several notices about Holt.
But diocese spokesman Peter Feuerherd said Housing Services never received notifications.
"The state discovered there was an error -- the state’s error. The state had put [Holt] on another diocese program," Feuerherd said.
He said the state associated Holt’s claim with a diocese-run nursing home, which is a separate non-profit.
The state couldn’t comment, but we wondered: if the nursing home received notices about Holt in error, wouldn’t it have notified the state? The diocese didn’t say.
Feuerherd also confirmed that employees were not notified in writing about the non-profit switch, but instead there was an informal meeting. He said he didn’t know if Holt – a part-timer – was in attendance.
He also said no unemployment taxes should have been taken out of Holt’s paychecks after June 2009. Feuerherd did not address reimbursing Holt for the over-collected taxes, but he did blame the state for the error.
"The issue of the $19,000? It’s obvious the state made a mistake," he said.
It’s not all that obvious.
We’re willing to bet the state could produce documentation to verify which entity was contacted about Holt per the agency’s policies.
We’re certainly not saying the state was perfect in this case. There were some significant gaffes.
The state didn’t notice the non-profit status of the employer when it first approved Holt’s benefits. (Even if Holt’s case was associated with the nursing home in error, that shouldn’t have mattered. Both entities are non-profits.)
And remember that hearing when Holt first applied for benefits? One would think a case that warrants a hearing would be scrutinized more than computer-driven evaluations.
Ah yes, those computers.
Over the course of a year-and-a-half of benefits, none of the systems picked up a problem. Holt’s employer’s non-profit status never raised a red flag. If he wasn’t eligible for benefits, it should have.
So is Holt really ineligible? We asked the state hypothetically: If a worker pays into the system during his base year – the one that benefits are calculated from – shouldn’t he qualify for benefits?
The answer is most interesting.
Eligibility for benefits is based two issues, the state said: if the individual had sufficient wages for the state to make a monetary determination and if there was a separation from employment through no fault of the claimant; and if the employer was subject to the Unemployment Compensation Law during the base year period.
Sounds like Holt has a very strong argument based on those two points. His initial hearing determined he was eligible, and Holt paid into the system throughout his base year.
Holt recently received a notice that said if he doesn’t pay the money back, the state could claim Holt’s federal and state tax refunds and put a lien on his house until the debt was paid. All this for an error that most certainly wasn’t Holt’s fault, and for benefits that may rightfully be his.
ANY RECOURSE?
Consumer law attorney Ronald LeVine said it seems the Department of Labor "messed up so it should be determined to be an ‘agency error’ case."
LeVine said in a case where a worker is supposed to repay wrongfully paid benefits, the state could go through a collections process. But if it’s deemed an "agency error," it would be limited to collecting 50 percent of any future unemployment benefits for which Holt might apply.
As for the employer’s responsibility, well, that’s the real kick in the butt.
The Unemployment Compensation Act does not require employers to notify their employees – in writing or otherwise – that the employer is no longer participating in the unemployment system.
The law also does not address what happens to taxes that are wrongly deducted from paychecks after an employer opts out of the system, though Holt could try to reclaim those funds through a complaint with Labor Standards and Safety Enforcement.
Even if he does, a few hundred dollars won’t help much with an outstanding $19,295 debt.
Holt has requested an appeal before the agency’s board of review, and he’s waiting for an answer.
"I just want what I have worked for. Nothing more," Holt said.
We’ll let you know what happens.
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