Fix New York's Broken Unemployment System

ALBANY – 05/04/21 – Senator Peter Oberacker (R/C-Schenevus) along with members of the Senate Republican Conference today called on the legislature and Governor Cuomo’s administration to fix multiple problems and issues that continue to plague New York’s broken unemployment system.

Among the bills highlighted, legislation (S.6205) introduced by Senator Oberacker calling for a full forensic audit and evaluation of New York State’s information technology infrastructure, data use and management, policies, and procedures.

 “Over a year into the pandemic and I still hear from constituents who are shut out by an ineffective, failing unemployment system,” said Senator Oberacker.  “Additionally, many who never applied for assistance are now the victims of fraud.  Individuals and families hanging on by a thread are not receiving crucial help, and crooks are taking advantage of a shoddy, vulnerable network.”

In addition, Senator Oberacker and the Senate Republican Conference are also calling for:

  • An accurate and honest assessment of potential fraud and efforts to recoup it, particularly as the state’s unemployment insurance fund is facing a $10 billion deficit, leading to dramatic increases in costs to our small businesses;
  • A state tax break of up to $10,200 on unemployment benefits collected during the pandemic last year, which would be in line with recently enacted federal exemption;
  • A one-time forgiveness for unemployment overpayments which the state Department of Labor is currently trying to claw back from struggling New Yorkers.


“Along with providing immediate assistance to those currently suffering we must reinforce the overall effectiveness and security of our unemployment system – which is what my legislation and these Senate Republican initiatives will accomplish,” added Senator Oberacker.

In the last COVID stimulus package, the federal government waived federal tax on up to $10,200 of 2020 unemployment benefits for households earning up to $150,000. Although states were afforded the same option to exclude unemployment benefits from taxable income, New York has so far declined, and is one of only 11 states to not take advantage of this significant tax break as the May 17 filing date fast approaches.

To add to the uncertainty of many New Yorkers who collected unemployment, recent reports and constituent calls from around the state signify the state Department of Labor is in the process of clawing back thousands of dollars in “overpayments.” One email provided by a constituent suggested the Department of Labor’s “internal review process identified a group of roughly 166,000 New Yorkers who received one or two duplicate payments, which total approximately $145 million.”

New York’s broken unemployment system has also negatively affected the small business community throughout the state, as the current $10 billion hole in the unemployment insurance fund has already sent premiums skyrocketing, furthering the closure and/or relocation of even more jobs and job creators. The substantial increase in unemployment insurance rate hikes for New York businesses comes after the state legislature and governor passed into law a measure that was supposed to keep COVID-related closures from affecting a business owner’s experience rating. Unfortunately, the bill did not prevent the state from raising rates to replenish the fund.

“Throughout the pandemic, New Yorkers have been hyper-reliant on technology to connect with critical services and benefits and the state has let down those most in need.  Let’s help make people whole now and fix the system to protect against future failures,” Senator Oberacker concluded.