The Joint Committee on Judiciary voted favorably on a bill that would increase the amount of money required to be stolen for felony unemployment fraud. Proponents of the bill said it would prevent workers who make honest mistakes from being charged with felonies, while one Committee member believed raising the threshold would amount to the state condoning unemployment fraud.
Currently, if a person obtains over $500 after making false statements while applying for or claiming unemployment, it is considered a Class D felony. If that person obtains less than $500, it is considered a Class A misdemeanor. The bill, originally sponsored by Rep. Travis Simms (D-Norwalk), would increase that threshold to $2,000. Class A misdemeanors carry a maximum punishment of up to one year in jail and a fine of up to $2,000, while Class D felonies carry a maximum punishment of up to five years in jail and fines of up to $5,000.
The New Haven Legal Assistance Association (NHLAA), a legal clinic that provides free legal services to impoverished residents of New Haven County and the Lower Naugatuck Valley, submitted written testimony in support of the bill and in an attempt to explain its purpose.
“For workers collecting unemployment compensation benefits who finally find a new job, it could be as long as a month before they actually get their first paycheck. Many employers pay bi-weekly and some withhold the first paycheck,” reads the NHLAA’s testimony. “During that time, the worker is without income. The continuation of unemployment compensation benefits may seem like a logical way to bridge that income gap until their first paycheck comes through.”
The NHLAA went on to cite the Department of Labor, stating that the average pre-pandemic overpayment amounted to $800 and typically occurred during the first two weeks of a claimant beginning a new job, before receiving their first paycheck. The NHLAA states that this can often be attributed to a lack of knowledge on the part of a claimant, who may not know that doing so is illegal or that they were even overpaid in the first place.
“The clients we see are working in low wage jobs and can be charged with a felony instead of a misdemeanor even though they are receiving as little as $500 in an overpayment,” reads the testimony. “Support for this proposal will mean that more individuals will remain employed and be successful in supporting their families without being labeled as a felon.”
Ed Hawthorn, President of Connecticut’s AFL-CIO, also provided written testimony in support of the bill on similar grounds.
The vast majority of unemployment overpayment cases considered fraudulent are the result of human error,” reads Hawthorn’s testimony. “HB 5270 would still require individuals receiving overpayments to repay the benefits they mistakenly received with associated penalties, but it would ensure they are charged with a misdemeanor, not a felony.”
Not every Committee member was swayed by these points, however.
“Essentially what this bill says is that one can make representations to the government and fraudulently, illegally, improperly receive money from the government and we’re increasing the amount one can do that permissibly, essentially,” said State Rep. Craig Fishbein (R-Wallingford). “It’s still a crime, but we’re raising the threshold on that.”
Fishbein went on to state that he had received an email from an unnamed organization that morning which stated the bill would work to protect low income workers.
“I really don’t understand,” said Fishbein. “As a matter of public policy, to say that it is appropriate for that activity to happen without a harsher penalty, I really have to question anything that comes from that particular organization.”
House Chair of the Committee Rep. Steven Stafstrom (D-Bridgeport) disputed Fishbein’s analysis of the bill.
“I just want to be clear, for the record, this bill does not say it’s okay to make a false statement to obtain unemployment compensation,” said Stafstrom. “What it does is it right sizes the penalty.”
Stafstrom said that to his knowledge, the threshold was originally set at $500 during the 1970’s, calling it an “arbitrary threshold.” Taking into account inflation, Stafstrom said the passage of this bill would bring the penalties inline with where they were originally. According to the United States Bureau of Labor Statistics’ inflation calculator, $500 in 1970 would be worth a little under $4,105 today.
Ultimately, the bill was voted favorably by the Committee in a 22-13 vote. It has already been tabled for the calendar, and will be voted on upon the House floor.
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