Understand the effects an EDD overpayment can have on you by reading this guide. If you believe the department wrongfully sent you a notice of overpayment, let an experienced lawyer help you! Don’t conquer the EDD alone.
Understanding what effect an EDD overpayment has on you, how the agency classifies it, and how recovery works is critical. With the right information and timely action, you can challenge, reduce, or manage many overpayments before serious consequences arise.
What Is an Overpayment?
An overpayment is when the EDD determines that you’re not entitled to benefits that you already received. The department will send you a notice of overpayment expressing that you must repay a specific amount of money. If you don’t create a repayment plan or prove that the EDD is wrongfully targeting you, the department will collect debts in different ways.
Common Reasons EDD Overpayments Occur
Overpayments often arise due to:
- Delayed or incorrect wage reporting by employers
- Back pay, severance, or settlements paid later for covered weeks
- Changes in eligibility that were not immediately reflected
- Confusion about reporting part-time or gig income
- Administrative or calculation errors by EDD
You can review the EDD’s official explanation of overpayments directly on its website for authoritative guidance on overpayments and penalties and Benefit Overpayment Services.
How the EDD Labels Overpayment
Simply put, an overpayment is either your fault or the EDD’s fault. Sometimes, the department experiences errors while issuing funds, or fraudulent practices can occur on your part. The EDD labels overpayments as either fraud and non-fraud.
Non-Fraud Overpayment
A non-fraud overpayment occurs when benefits were paid incorrectly without intentional misrepresentation by the claimant.
Common examples include:
- Honest mistakes in weekly certifications
- Misunderstanding complex eligibility rules
- Delayed employer wage reports
- EDD processing errors
In non-fraud cases:
- You must repay the overpaid amount
- No fraud penalty is assessed
- You may qualify for a waiver if repayment would cause financial hardship
Many people are unaware that waiver requests are time-sensitive and must be properly documented to succeed.
Fraud Overpayment
A fraud overpayment is issued when EDD believes a claimant knowingly provided false information or withheld material facts to receive benefits.
Consequences can include:
- Repayment of the full overpayment
- A 30% monetary penalty
- Disqualification from future benefits for multiple weeks
- Aggressive collection activity
Fraud determinations are serious and should never be ignored. Even when intent is disputed, failing to respond can lock in penalties that are difficult to reverse later.
Ways the EDD Collects Overpayment
When you receive a notice of overpayment, you must contact the EDD to create a repayment plan. The department will collect funds through various methods if you don’t take action. An EDD overpayment can have an effect on you by jeopardizing future finances. Repayments include (but are not limited to) wage garnishments (withholding a portion of paychecks), withholding your federal income tax return, deducting disability benefits, or taking a portion of lottery winnings.
Benefit Offsets
EDD may automatically withhold money from:
- Future unemployment benefits
- Disability Insurance (DI)
- Paid Family Leave (PFL)
In many cases, benefits are reduced or entirely offset until the debt is satisfied.
Tax Refund Intercepts
One of the most common recovery tools is tax refund interception. Under California law, EDD may seize:
- State income tax refunds
- Certain federal refunds
- Lottery winnings
EDD explains this process in detail on its official page that describes when the department takes tax refunds or other funds to satisfy overpayment debts.
Wage Garnishment
EDD can issue wage garnishments directly to your employer, reducing your take-home pay until the balance is paid.
Bank Levies and Liens
If an overpayment remains unresolved, EDD may:
- Levy bank accounts
- File state tax liens
- Intercept unclaimed property
These actions can impact credit, housing applications, and financial planning long after the original benefits were paid.For deep understanding review our guide EDD’s Collection of Overpayments.
Who Can Help You?
Receiving an overpayment notice does not mean your options are gone. In many situations, claimants still have enforceable rights—but only if they act promptly and strategically.
Appeals and Waiver Requests
Claimants may be eligible to:
- Appeal the overpayment determination
- Challenge a fraud classification
- Request a waiver based on financial hardship
Claimants must file appeals within strict deadlines and submit detailed financial disclosures and supporting evidence when requesting a waiver. Did you know that the EDD issues several unjustifiable overpayments and penalties to California residents? Appealing overpayments is a complicated task that you don’t have to face alone! Let an experienced EDD overpayment lawyer help you! Here at Pershing Square Law Firm, we will work to resolve your case!