Overpayments and Penalties
A Notice of Overpayment is mailed to you when you have been paid UI benefits that you were not eligible to receive. The Notice shows the amount of the overpayment and penalties, if any. It explains why you were overpaid and gives you information about your appeal rights.
The EDD classifies overpayments into two categories: non-fraud or fraud.
Non-Fraud: When you have received benefits to which you were not entitled and you are not at fault, the overpayment is considered non-fraud. In some cases, you may not have to repay a non-fraud overpayment. You will receive a notice telling you if the overpayment must be repaid.
Fraud: A fraud overpayment occurs when you knowingly give false information or withhold information and as a result receive benefits that you should not have received. Withholding or giving false information to obtain unemployment insurance benefits is a serious offense that can result in criminal prosecution. With a fraud overpayment, you are assessed a penalty in the amount of 30 percent of the amount of the overpayment and a false statement disqualification of 5 to 23 weeks. Fraud overpayments and penalties must be repaid.
If you do not repay your overpayment promptly, EDD can deduct the money owed from your future weekly unemployment or state insurance benefits. This process is referred to as an offset. EDD may also:
- Reduce or totally withhold your state income tax refunds, lottery winnings, or any other money owed to you by the state.
- File a claim against you in court, charge you court costs and interest, and record a lien on your property.
For more information about repaying overpayments and the EDD deducting money owed to you, visit the Your Tax Return or Lottery Money page.
If you have an UI overpayment and would like more information on the overpayment balance and how to pay benefit overpayments, call the EDD Benefit Overpayment Collection Section at 1-800-676-5737.
NOTE: Repaying an overpayment does not remove a disqualification. Call the EDD at one of the UI Phone Numbers for more information about disqualifications and penalties.
As a federally funded and mandated program, the EDD is required to follow Benefit Payment Control (BPC) regulations. The overpayment function is a component of the BPC program.
The purpose of the BPC program is to:
- Prevent improper payment of benefits which involves determining the causes of overpayments and developing ways to prevent them.
- Detect improper payments. Each state is required to have provisions in their laws to detect improper UI payments caused by:
- agency error
- willful misrepresentation
- error by the claimant and/or employer
- Recover potential overpayments which involves conducting investigations to determine whether an overpayment has occurred, notifying the claimant that the overpayment exists, requesting repayment, and collecting the overpayment by cash repayment, benefits offset, or other methods such as civil or other legal action.
- Prosecute cases involving fraud committed by claimants, employers or agency employees, and ensure program integrity.
The legal authority for the BPC program can be found in the provisions of the Social Security Act (Title III) and the Internal Revenue Code. The interpretation of the Social Security Act for federal and state requirements is contained in the following codes and regulations:
- Code of Federal Regulations (CFR) - Specifically, view Title 20, Chapters III and V, and Title 29. There are also other Titles and Chapters or Parts on this subject within these regulations.
- California Unemployment Insurance Code (CUIC), 1375
- California Unemployment Insurance Code (CUIC), 1376
- California Code of Regulations, Title 22, 1375 1
- California Code of Civil Procedure, Section 337