Committee delays decision on bill that would let state claw back past UI overpayments from future benefits

The House Committee on Consumer Protection & Commerce on March 3 delayed action on HB 2165 HD1, a proposal to let the state use future unemployment insurance (UI) payments to recoup overpayments that occurred more than two years earlier.

The Department of Labor and Industrial Relations (DLIR) said the change aims to align state practice with federal interpretations and to protect the integrity of the UI trust fund. "The individual who's owed the overpayments ... still is legally binding to make that payment for life," said Ed Pereira, the UI administrator, explaining how offsets would work and why the department asked for a longer recoupment window and operational changes timed to a planned 2027 modernization of DLIR's mainframe.

Unite Here Local 5 and other labor speakers opposed the proposal, arguing it would further punish workers already facing financial hardship. "It's already hard to go on strike and it's already hard to qualify to get unemployment benefits," said Jolie Tokusato of Unite Here Local 5, urging lawmakers not to reduce workers' access to benefits during disputes.

Members pressed DLIR on implementation details, including whether the agency would withhold a fixed percentage of future benefits rather than taking the full amount until the debt is paid. DLIR asked the committee to insert a blank in the draft so the department can propose a specific percentage and an effective date that lines up with the department's modernization timeline. Committee members accepted that approach and pushed decision-making to the next day's agenda to allow DLIR to return with a proposed withholding percentage and an implementation date.

The debate also touched on federal compliance: DLIR officials said the state risks losing federal UI administrative grants and employers could lose federal tax credits if the state is determined out of conformity with federal rules. Committee members acknowledged the trade-offs between preserving program integrity and avoiding undue harm to claimants. The committee did not vote on the bill and will revisit it when DLIR supplies the requested details.