Overpayments of California Unemployment Compensation Benefits

California’s Unemployment Insurance Code in Division 1, Part 1, Chapter 5, Article 4 deals with overpayments. Section 1375 provides that any person who is overpaid any amount of benefits under this part is liable for the amount overpaid unless any of the three specified conditions are applicable.

Section 1375.1 states that, if the director finds that an individual has been overpaid unemployment compensation benefits because he or she willfully, for the purpose of obtaining unemployment compensation benefits, either made a false statement or representation, with actual knowledge of the falsity thereof, or withheld a material fact, the director is required to assess against the individual an amount equal to 30% of the overpayment amount. Assessments collected under this section are required to be deposited in a specified manner.

Section 1375.3 says that no determination of overpayment can be based upon the disallowance by the Workmen’s Compensation Appeals Board of a claim of lien filed, or the allowance of the lien for less than the amount claimed as a lien, or upon the approval by the the appeals board of a compromise and release agreement providing for the allowance of the lien in an amount less than the amount claimed as a lien.

Section 1375.5 specifies that any claim of lien filed with the Workmen’s Compensation Appeals Board is to be fully discharged and satisfied by payment of the amount of the lien allowed by the appeals board or the amount specified in any compromise and release agreement filed and approved by the appeals board.

Section 1375.7 requires the director to find that an individual has been overpaid unemployment benefits where the individual was an elected official and the individual’s unemployment insurance claim was based on income solely derived from his or her employment as an elected official. An individual who is liable pursuant to this section will not be eligible for waiver of the overpayment.

Section 1376 requires the Director of Employment Development to determine the amount of the overpayment and any assessment and will notify the liable person of the basis of the overpayment determination. In the absence of fraud, misrepresentation, or willful nondisclosure, notice of the overpayment determination must be served within the latest of the two specified periods.

Section 1377 says that, within 30 days from the date of mailing or serving of the notice of overpayment, the person affected may file an appeal to an administrative law judge. The director must be an interested party to any appeal. The administrative law judge, after affording reasonable opportunity for a fair hearing, is required to, unless the appeal is withdrawn, affirm, reverse, modify, or set aside the findings set forth in the notice of overpayment.

In addition, the party and the director must be notified of the administrative law judge’s decision, together with his or her reasons, which is final unless within 30 days from the date of notification or mailing of the decision a further appeal is initiated to the appeals board. The 30-day period for an appeal to the administrative law judge or to the appeals board may be extended for good cause.

Section 1378 requires the Appeals Board to review an appeal from an overpayment determination and determine what amount, if any, must be recovered.

Section 1379 authorizes the director to do any or all of the specified actions in the recovery of overpayments of unemployment compensation benefits.

Section 1379.5 provides that an abstract of judgment obtained may be recorded with the county recorder of any county. From the time of recording, the judgment will constitute a lien against all real or personal property of the liable person in that county owned by the liable person at the time, or which the liable person may afterwards, but before the lien expires, acquire. The lien has the force, effect, and priority of a judgment lien and will continue for 10 years from the time of recording of the abstract of judgment obtained.

Section 1379.6 says that, if an abstract has been recorded, and the lien, including any interest, costs, and penalty, has been satisfied in full, the department must do all three specified actions. Also, if an acknowledgment of satisfaction of judgment is recorded, the cost of recording is an obligation of the claimant and may be collected from the claimant in any manner provided by law for the collection of benefit overpayments.

Section 1380 states that no person is to be liable for the amount of benefits received where the benefits were paid pursuant to an administrative law judge’s decision which affirmed an initial determination or in accordance with a final decision of the appeals board, regardless of any further appeal. An employer’s experience rating account is not be charged with any benefits erroneously or unlawfully paid.

Section 1381 requires the director to enforce collection of any judgment obtained by the director. Amounts collected under this section will be deposited in the fund from which the overpayment was made, except that the amounts collected to offset the costs of collections must be deposited in the Unemployment Administration Fund and the amounts collected are to be deposited as specified in that section.

Section 1382 says that no person is to be liable for the amount of benefits received for any period for which the person also received an award or settlement of backpay resulting from an action or grievance for wrongful discharge, if the amount of the backpay award or settlement was reduced by the amount of benefits received pursuant to this part.

Section 1383 requires the Franchise Tax Board to aid the department in the recovery of overpayments of unemployment compensation benefits for up to six years after the date of the service of the notice of overpayment determination.

Section 1384 says that amount collected by the Controller for benefit overpayment accounts must be deposited in the fund from which the overpayment was made, except that the amounts collected to offset the costs of collections will be deposited in the Unemployment Administration Fund.