Texas reverses course, says it won’t collect overpaid unemployment benefits in instances when it was the state’s mistake

Mour Cafe in Austin closed its dining operations during the COVID-19 pandemic. (Eddie Gaspar/The Texas Tribune)

Workers who lost their jobs and received overpayments from the Texas Workforce Commission won’t have to pay back those unemployment benefits if it was the state’s mistake, commission officials now say.

That's different from the agency's previous insistence, first reported by the Houston Chronicle, that the 46,000 Texans who received overpayments in recent months would have to pay the state back — even if they were not to blame.

“Texas is prevented by court order from collecting overpayments caused solely by the commission's error,” said spokesperson Cisco Gamez on Wednesday, during a media update posted on Facebook. That court order, which Gamez said he was previously unaware of, dates back to 1978.

"I have to apologize for giving you information that was not more clear," Gamez wrote in an email to The Texas Tribune on Thursday.

The agency is seeking $32 million in unemployment benefits back. The commission is unsure how many people were overpaid because of a TWC error, but they say it’s very rare. Last year, according to a U.S. Department of Labor audit, TWC was responsible for 0.4% of incorrect payments.

“Anecdotally, there are roughly 8 to 10 of these types of errors identified each year,” Gamez said Monday.

In most cases, overpayments occur because applicants report incorrect information or are not eligible, according to the agency.

Claimants who have received notices about overpayments can appeal the process, but TWC can take legal action if they don’t recover the money. If TWC finds unemployment fraud in a case, the person has to give back the benefits and pay a 15% penalty.

“There is no statute of limitations on debts owed to the state,” according to a previous email from Gamez. “TWC cannot forgive or dismiss the overpayment and there is no exception for hardship.”

After two months of decline, unemployment claims have started to increase in Texas again. More than 117,244 people applied for unemployment claims last week, an increase of 21.4% compared to the week before. It was the second week in a row that the number of claims rose. Since mid-March, nearly 2.8 million people have filed for unemployment benefits in Texas.