Opinion: Another problem with strike pay from the UI fund – Potential double-dipping, overpayments

Elizabeth New (Hovde) argues that Washington’s new strike pay law risks overpayments and double-dipping unless workers are clearly warned at the point of applying for unemployment benefits.

Elizabeth New (Hovde) believes transparency at the point of application is responsible governance

Elizabeth New (Hovde)
Washington Policy Center

When Senate Bill 5041 takes effect in January 2026, Washington state will become one of the few states allowing striking workers to collect unemployment insurance (UI) benefits. I’ve written extensively about why this is a misguided expansion of a system financed by employers and meant for workers who lose jobs through no fault of their own. But even accepting SB 5041 as settled law, the state still faces a serious and preventable problem: double-dipping and overpayments that could further strain the UI trust fund and the Employment Security Department (ESD).

Washington state residents have seen several strikes long enough that, under SB 5041, workers would have been eligible for unemployment benefits — never mind that union-favoring lawmakers insisted this allowance won’t make a difference to the fund. It could. Many of those strikes ended with negotiated settlements that included back pay.

The 2024 Boeing machinists strike stretched on for weeks and was followed by layoffs and restructuring that affected both union and non-union workers. Large public-sector strikes are fairly common and some are lengthy. Recently, Evergreen Public Schools and Moses Lake School District kept students out of classrooms long enough to meet SB 5041’s eligibility window. Health care worker strikes have also lasted weeks and were resolved through negotiated agreements.

Overpayment warning needed

ESD has responsibly crafted a webpage informing workers about the new law, including a section on overpayments, but unless striking workers are seeking it out, they won’t necessarily see it.

Under current ESD procedures, workers applying for unemployment benefits will not be informed at the point of application that if they later receive back pay, any UI benefits collected during the strike become an overpayment that must be repaid. After they apply and are approved for benefits, they are then only reminded to report any earnings when filing weekly claims.

Striking workers could reasonably believe unemployment benefits received during a strike are final. Months later, when a strike settlement includes retroactive pay, those workers may suddenly owe thousands of dollars to ESD. Many will not have the savings to repay it. Some overpayments will never be recovered. (ESD estimates show the state recoups less than 50 percent of overpayments. Recent experience with federal workers will add to our knowledge.)

Taxpayers (employers and employees) will be left footing the bill — not just for the strike pay, but for the administrative cost of tracking, notifying and attempting to recover overpayments. This matters even more now, as the UI fund is already under pressure and employer contribution rates are expected to rise. Expanding benefit eligibility to striking workers only increases demand on a fund financed entirely by employers — many of whom are already struggling to operate in Washington state’s high-cost environment.

The fix is straightforward and should be made before the next strike. Information should be supplied at the point of application. Before benefits are approved, workers should be clearly told that UI benefits received during a strike may become an overpayment, if back pay is later awarded. They should also be made aware that those benefits must be repaid to ESD and that failure to plan for repayment could cause financial hardship.

This could be implemented through a required acknowledgment checkbox in the online application system, a revised letter to applicants (one already goes out), or another clear, unavoidable disclosure mechanism. The cost should be minimal. The savings — to the UI trust fund, to ESD staff time, and to workers caught off guard — could be substantial.

I’m unsure if ESD would be able to do this through rulemaking. If not, lawmakers should clarify the requirement in statute. A narrow amendment focused on disclosure would not reopen the broader policy debate, it would simply prevent avoidable damage.

That broader debate still matters. As I testified before the Senate Labor and Commerce Committee, unemployment insurance is meant for workers who lose jobs through no fault of their own. SB 5041 is a union favor that risks harming workers, businesses and the integrity of the UI system itself.

Since the state insists on moving forward with this policy, it should provide adequate information to workers from the very start. Transparency at the point of application is responsible governance.

Elizabeth New (Hovde) is a policy analyst and the director of the Centers for Health Care and Worker Rights at the Washington Policy Center. She is a Clark County resident.

Elizabeth New (Hovde) believes transparency at the point of application is responsible governance

Overpayment warning needed

Also read:

share