Labor Dept. Tells States Furloughed Feds Must Give Back Unemployment Benefits

This story has been updated. 

All states must recoup any unemployment payments made to federal employees furloughed by the shutdown, the Obama administration has advised.  

The announcement comes after a group of House Republicans called on the administration to ensure all federal employees who received unemployment insurance repay the compensation in full.

When the shutdown began, about 900,000 federal workers were placed on furlough and eligible to apply for unemployment. In Washington, D.C.; Maryland; and Virginia alone, about 42,000 requested the compensation. In those states, however, feds were required to return the payments after Congress granted the employees retroactive pay for the time they missed.

That was true in most states throughout the country, but some such as Oregon have permitted federal employees to keep both their back pay and their unemployment benefits, as originally reported by USA Today.

“This makes absolutely no sense,” wrote 19 Republican members of the House Ways and Means Committee, including its chairman Rep. Dave Camp of Michigan, in a letter to Office of Management and Budget Director Sylvia Mathews Burwell. “Since unemployment benefits are keyed to replace roughly half of an employee’s prior pay, this practice would amount to paying furloughed federal employees time and a half for not working.”

The committee members suggested federal statute permits OMB to demand that employees who receive back pay return the benefits. The lawmakers said Burwell should use that authority “so that we maintain the integrity of the unemployment insurance system for those it is intended to serve -- unemployed individuals who have been laid off through no fault of their own, and not temporarily furloughed federal employees who have already received full back pay.”

The Labor Department agreed with the letter and issued guidance stating: “Because Congress provided for full retroactive pay for furloughed federal employees and the Office of Personnel Management classified all furloughed federal employees as having been in pay status throughout the shutdown, the department believes that these employees were not ‘unemployed’ and are thus ineligible for unemployment benefits.”

The department added: “States must now take appropriate action to address the return of unemployment benefits already distributed.”

The maximum unemployment benefit varies by state, but typically ranges from $300 to $500. Most states maintain a one-week waiting period before non-working individuals become eligible to receive benefits, meaning most furloughed feds who received unemployment only did so for one week.

In Oregon, about 1,300 federal employees must return their $450 unemployment checks.