Receiving unemployment benefits can provide critical support while you are between jobs or recovering from reduced work hours. However, the Employment Development Department (EDD) expects claimants to report accurate information and follow specific rules to remain eligible.
When benefits are issued incorrectly—whether due to mistakes, miscommunication, or misunderstandings—the EDD may determine that you were overpaid. And in many cases, the EDD can impose penalties, require repayment, and even take collection actions. If you’re currently receiving extra benefits, read these five ways to avoid penalties from EDD overpayment today.
Provide Correct Information About Yourself
If the EDD believes you provided false information to receive benefits to which you were not entitled, you will get a penalty. It’s best to provide correct information about yourself to avoid issues. In addition, keep your contact information up to date so that the EDD can easily contact you or send you important documents.
Accuracy Protects Your Eligibility
Your eligibility for unemployment benefits depends on the information you provide when you file your initial application and every time you certify for benefits. According to the EDD’s Unemployment Eligibility Requirements, the agency reviews your work history, income, reason for separation, and ability to accept work.
Small errors—such as incorrect dates, inaccurate employer details, or misstating the reason you left your job—can lead to misunderstandings that affect your right to benefits. More serious discrepancies may cause the EDD to determine that your benefits were granted in error, resulting in an overpayment.
Why Accuracy Matters
The EDD’s page on Overpayments and Penalties explains that incorrect information may result in repayment requirements, penalty assessments, and disqualification from future benefits. If the EDD believes information was intentionally withheld or misrepresented, the case may be classified as fraud, carrying more severe penalties.
To ensure you are presenting your situation correctly—and in a way that aligns with EDD standards review our guide Understanding EDD Eligibility and Benefit Determination
Notify the EDD About Returning to Work
Another way to prevent penalties is to notify the EDD about returning to work. You can no longer receive unemployment benefits once you return to work, so if you’re working and still receiving benefits. The EDD will subject you to a penalty. Notify the EDD about your new employment status as soon as possible.
Why Reporting Work Changes Matters
You must report any return to work—whether full-time, part-time, temporary, or on a trial basis. When you certify for benefits, the EDD specifically asks if you worked and earned wages during the benefit period. Failing to report this accurately is one of the most common causes of overpayments.Even if you haven’t been paid yet, wages must be reported for the week they were earned, not the week you received payment.
Notify the EDD If You Earned Any Money, Whether You Were Paid or Not
EDD requires you to report all work activity, including unpaid work. Many claimants mistakenly believe they only need to report earnings once payment is received. However, EDD’s official Tips to Avoid Overpayments specifically state. That wages must be reported in the week they were earned, not when the money is deposited.
This includes:
- Self-employment or gig work
- Commission-based work
- Informal or cash work
- Contract or project-based tasks
- Training or probationary shifts
Failing to report this activity accurately is one of the most common reasons EDD declares overpayments.EDD’s Benefit Overpayment FAQ explains how these reporting issues are discovered and what evidence EDD uses to determine repayment requirements.
Track and Monitor All Payments
Track and monitor all payments while you’re receiving benefits, and notify the EDD if you’re still receiving wages from your last employer. In addition, if you get worker’s compensation or other payments, you must notify and track them. If any issue arises, you’ll have documentation of all payments throughout your period of unemployment.
The easiest way to prevent accidental overpayments is to keep track of your benefit history. EDD allows claimants to monitor payment records, review certifications, and check outstanding issues directly through UI Online — its secure digital claim system.
UI Online displays:
- Payment release dates
- Claim balance information
- Past certifications
- Pending identity or eligibility issues
Additionally, EDD’s Claim Status page allows you to confirm whether your claim is under review or if action is needed. Checking both of these tools consistently helps you respond quickly before overpayments build up.
To understand what may happen if an overpayment goes unresolved, Pershing Square Law provides a detailed explanation of how the EDD collects debts, including wage garnishment and tax refund interception procedures.
Understand Your Status With Your Last Employer
If your last employer appeals your eligibility for unemployment benefits, the EDD can give you a penalty. In California, if your employer fired you or has proof of misconduct in the workplace, it can affect your eligibility for benefits. Therefore, it’s critical to fully understand your status with your last employer and understand the reason you’re no longer at the job.
Conclusion
We hope our list of five ways to avoid penalties from EDD overpayment was helpful to you. If you’re battling the EDD for overpayment issues, consider hiring an unemployment overpayment lawyer. Here at Pershing Square Law Firm, we have a team of experienced lawyers who can help you. We’ve encountered a variety of overpayment cases, so we understand the difficulty of navigating one. You’re not alone in this type of situation. If you have any questions, contact us today.