Under existing law, except as specified, any person who receives an overpayment of unemployment compensation benefits is liable for the amount overpaid. Exceptions to liability include if the overpayment was not due to fraud, misrepresentation, or willful nondisclosure on the part of the recipient, the overpayment was received without fault on the part of the recipient, and its recovery would be against equity and good conscience. Under existing law, if the Director of Employment Development finds that an individual has been overpaid unemployment compensation benefits because the individual, for the purpose of obtaining those benefits, either made a false statement or representation with actual knowledge of the falsity or withheld a material fact, then the director is required to assess against the individual an amount equal to 30% of the overpayment amount. Existing law requires 50% of the overpayment assessment amount to be deposited into the Unemployment Trust Fund and 50% into the Employment Development Department Benefit Audit Fund, both of which are continuously appropriated funds, and requires that all interest collected is deposited into the Employment Development Department Benefit Audit Fund. Existing law authorizes the director to take specified steps to recover overpayment of unemployment compensation benefits including, among others, initiating proceedings for a summary judgment against the liable person if the director finds that overpayment may not be waived due to specified circumstances. Existing law authorizes the director, not later than 3 years after the overpayment became final, to file with the clerk of the proper court in the county from which the overpayment of benefits was paid or in the county in which the claimant resides, a certificate containing specified provisions, including a statement of the amount due, including any assessment, plus interest from the date that the initial determination of overpayment was made. Existing law also authorizes the director to offset the amount of the overpayment received by the liable person against any amount of benefits to which the person becomes entitled within 6 years of notice of overpayment determination.

This bill would delete modify the 30% penalty assessment and to be a one-time penalty, to the extent required by federal law. The bill, with regard to the director’s findings regarding overpayment, would additionally require the director to find that a false statement or representation, or the withholding of a material fact, was made with fraudulent intent. The bill would make conforming changes. changes relating to the one-time penalty. The bill, with regard to summary judgment proceedings, would delete the authorization for interest on the amount of overpayment. The bill would authorize interest to be charged and collected on overpayments, to be calculated at a specified rate, if an individual has been charged an overpayment penalty for Pandemic Unemployment Assistance benefits. The bill would require revenues of that interest to be deposited 50% into the Unemployment Trust Fund and 50% into the Employment Development Department Benefit Audit Fund. Under the bill, the moneys in those funds attributable to those revenues would not be continuously appropriated and would only be available for expenditure upon appropriation by the Legislature. The bill would limit offsets as prescribed. The bill would require the director, to the extent authorized by applicable federal law, to waive any overpayment for which the director determines the person to whom the overpayment was made is not at fault. The bill would require the director to seek waivers of federal law for any overpayment recovery required by federal law for overpayment for which the director determines the person to whom the overpayment was made is not at fault.

The bill would prohibit the director from commencing recovery of overpayments of unemployment compensation benefits until the latest of the following dates: March 1, 2022; the end termination of the declared COVID-19 state of emergency on COVID-19; or the date on which the liable person is first reemployed after receiving overpayment. emergency, as prescribed.

The bill would require the Employment Development Department, commencing July 1, 2022, to post on its internet website prescribed information on overpayment and repayment for benefit payments for the period from March 1, 2020, to the date the department resumes eligibility determinations, until the repayment period for all overpayment notices to be included in the posted information has elapsed.