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Patrick, Esq.
Patrick, Esq., Lawyer
Category: California Employment Law
Satisfied Customers: 6693
Experience:  Significant experience in all areas of employment law.
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i began to receive umemployment in may 2011. At the time I

Customer Question

i began to receive umemployment in may 2011. At the time I filled out the request for unemployment benefits, I mentioned that I was receivng 1099 income of 1500.00. I was told that this did not disqualify me from receving benefits. during the time I was receving unemployment, my 1099 income increased and I continued to report that I was not receiving income.

When I meet with my accountant he told me that I should not have received unemployment benefits when my 1009 income began to increase. I immediately called unemployment and told them that I made a mistake. I have an interview this Monday and am concerned of the consequences. I honestly made a mistake and when I found out about the mistake, I called th eunemployment office to report the mistake. I know Iwill have to pay back some of the monies and probably penalities. I am most concerned how this will be reported and was my activity fraudulant.

Please help
Submitted: 2 years ago.
Category: California Employment Law
Expert:  Patrick, Esq. replied 2 years ago.
Hello and thank you for entrusting me to answer your question. I am very sorry to hear about this misunderstanding regarding your unemployment benefits.

First, you should know that the EDD classifies overpayments of UE benefits as either fraudulent or non-fraudulent.

A fraudulent overpayment occurs only when a claimant knowingly gives false information or withholds information and receive benefits that they should not have received. Withholding or giving false information to obtain unemployment insurance benefits is a potentially criminal offense. Specifically, California Unemployment Insurance Code 2101 states:

"It is a violation of this chapter to willfully make a false statement or representation, to knowingly fail to disclose a material fact, or to use a false name, false social security number, or other false identification to obtain, increase, reduce, or defeat any benefit or payment..."

With a fraudulent overpayment, the claimant is 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.

When an individual voluntarily reports an oversight that they made in their application for unemployment benefits, the EDD will typically be inclined NOT to regard the overpayment as fraudulent because it is clear that the misinformation was not given "knowingly" or "willfully," since the claimant has taken the initiative to correct the error. Accordingly, the likely result in such instance is that repayment of the overpaid sum will be demanded, but the overpayment will not be regarded as fraudulent, so no penalty will be assessed and no criminal charges will be filed.

I sincerely XXXXX XXXXX this information helps you and I wish you the best.

My greatest concern is that you are satisfied with the answer I provide, so please do not hesitate to contact me with follow-up questions. Although I cannot always provide good news, I hope that my answer gives you a better understanding of the law and your rights so that you can obtain the best possible result under the circumstances. Also, please bear in mind that experts are not credited for unaccepted answers, so I greatly appreciate you taking the time to "accept" my answer and leave positive feedback.

Finally, none of the above constitutes legal advice nor is any attorney client relationship created between us.
Patrick, Esq., Lawyer
Satisfied Customers: 6693
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

Thank you kindly for the information provided on April 6, 2012 in regards XXXXX XXXXX EDD unemployment issue.

 

Today, I received three letters from the EDD titled "Notice of Determation." A large portion of the letters refers to code sections 1279 and 1252 and how I am not entitled to the full weekly benefit for certain weeks and how I am not entitled to receive a benefit for other weeks.

 

One section of the second letter I received from them is alarming. It reads:

 

"You are not eligible to receive benefits under California Unemployment Insurance Code Section 1257A beginning 4/22/12 until you have filed a claim for each of 10 weeks in which you are otherwise elgible for benefits."

 

"When you claimed benefits for the week(s) ending 4/7/11 & 4/23/11 to 10/15/11, you declared you had no work or earnings. After considering available information, the deparment finds that you do not meet the legal requirement for payment of full benefits. Section 1257A provides - an individual is disqualified if he willfully makes a false statement of withholds relevant information to obtain benefits. Section 1260A provides - an individual disqualified under section 1257a is ineligible for benefits from 5 to 15 weeks if benefits were paid as a result of the misstatement or omission, He or she must submit a continued claim form to the field office to cover each week and meet all eligibility requirements. No benefits are payable for three years from the original effective date of this disqualification unless it is satisfied at an earlier date and you are otherwise elgible. The repayment of any overpayment does not remove the disqualification."

 

The letters do not directly accuse me of fraud, but I am led to believe (after researching code section 1257a and the 10 week penalty), that is what I am being accused of.

 

I did not willfully make any false statement or purposefully withhold any information. As soon I learned I made a mistake and was not reporting 1099 income that I should have, I contacted the Edd immediately.

 

I am given the right to appeal their decision. Fraud will have a very negative impact on the 1099 business I trying to grow.

 

Please advise.

 

 

Expert:  Patrick, Esq. replied 2 years ago.
Hello again and thank you for your reply. Please be so kind as to click accept/submit for the answer I have already provided and I will be happy to assist you with this additional question.

Thank you and I look forward to assisting you.
Customer: replied 2 years ago.

My apologies. I clicked accept/submit for you.

 

Let me also add that I notified the edd initially (during my first interview) that I was receiving 1099 income, which they had record of.

 

I clearly did not understand that I was supposed to list any 1099 income on my bi-weekly benefit form.

 

I would never want to put my professional licenses in jeopardy. Why doesn't the edd realize that me initially indicating I was receiving 1099 income and me voluntarily coming forward once I was aware I was supposed to report 1099 income as non-fraudulent intent?

 

I await your response.

Expert:  Patrick, Esq. replied 2 years ago.
Thank you very much for accepting my answer.

What is important to understand is that, although you were disqualified on the basis of Unemployment Insurance Code Section 1257(a), the section codifying disqualification on the basis of alleged fraudulent statements, this is not a charge of fraud and no charge of fraud will necessarily result from this EDD determination.

This EDD determination is entirely separate from any potential civil or criminal action against you that could jeopardize a professional license. This notification simply provides the reason why you were denied UE benefits--nothing more, nothing less.

Were criminal charges to be filed (which is quite unlikely, especially given that you were later up front about your earnings), the EDD would need to refer this matter to the District Attorney's Office and the DA would need to decide to press charges. The EDD does not have independent discretion to initiate criminal charges.

An individual in your circumstance can certainly appeal on the basis that it was unknown to you that 1099 income needed to be reported. Indeed, this may negate the "wilfulness" requirement of section 1257a. However, ignorance of the law (the fact that 1099 income was supposed to be reported) is typically no excuse, and so this defense is of questionable value. Still though, it may certainly be a defense worth asserting.

So to summarize, disqualification from UE benefits on the basis cited above is completely separate and apart from any civil or criminal action that could potentially negatively affect one's professional license, typically speaking. An individual in your circumstance could certainly appeal the 1257a denial on the ground that failure to report 1099 income was not a "willful deception."

I sincerely XXXXX XXXXX this information helps you and I wish you the best.

Please again bear in mind that none of the above constitutes legal advice nor is any attorney client relationship created between us.
Patrick, Esq., Lawyer
Satisfied Customers: 6693
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

Thank you for your reply.

 

My major concern is that I was disqualified under Section 1257a. Section 1257a mentions fraud even though it is not a charge of fraud and mentions that I willfully made false statements.

 

As you know from my previous coorespondence, as soon as I discovered my error I reported it to the EDD.

 

My main concern is not repayment of the money. My main concern is how this information is made public and will it affect my license with the California Department of Insurance?

 

I am considering the following alternatives:

 

1) Not to appeal and repay monies paid to me plus any penalties

 

2) Appeal decision because I know I did not willfully withhold information or commit fraud.

 

If I choose not to appeal, how is this communicated as public information on my record?

 

If I choose to appeal the decision and lose, how is this communicated as public information on my record?

 

My insurance license comes up for renewal on 7/31/12. Please see the questions below that are asked on my renewal. Question number #2 refers to administrative disciplinary action. Is this considered administrative disciiplinary action in regards XXXXX XXXXX insurance license ?

 

Have you been convicted of a crime which has not been previously reported to the California Department of Insurance? Yes No

"Crime" includes a felony, a misdemeanor or a military offense. "Convicted" includes, but is not limited to, having been found guilty by a verdict of a judge or jury, having entered a plea of nolo contendere, no contest, having had any charge expunged, dismissed or plea withdrawn pursuant to Penal Code 1203.4, or having been given probation, a suspended sentence or a fine. You may exclude traffic citations and juvenile offenses tried in juvenile court. You should answer "yes" if you have been convicted of a felony or a misdemeanor including driving offenses such as, but not limited to, reckless driving, driving under the influence and driving with a suspended license, whether or not you spent any time in jail, and whether or not you believe the conviction has been removed from your record.

2. Have you been involved in any administrative disciplinary action which has not been previously reported to the California Department

of Insurance? Yes No

"Involved" means having a license censured, suspended, revoked, canceled, terminated or, being assessed a fine, placed on probation or surrendering a license to resolve an administrative action. "Involved" also means being named as a party to an administrative or arbitration proceeding, which is related to a professional or occupational license. "Involved" also means having a license application denied or the act of withdrawing an application to avoid a denial. Include any business so named because of your actions in your capacity as an owner, partner, officer, director, or member or manager of a Limited Liability Company. You may exclude terminations due solely to noncompliance with continuing education requirements or failure to pay a renewal fee.

 

The California Department of Insurance website also refers to Section 1729, which is a change in background information and states the following:

 

"Background information" means any of the following: a misdemeanor or felony conviction; a filing of felony criminal charges in state or federal court; an administrative action regarding a professional or occupational license; any licensee's discharge or attempt to discharge, in a personal or organizational bankruptcy proceeding, an obligation regarding any insurance premiums or fiduciary funds owed to any company, including a premium finance company, or managing general agent; and any admission, or judicial finding or determination, of fraud, misappropriation or conversion of funds, misrepresentation, or breach of fiduciary duty.

 

Does my situation apply here?

 

Thank you again.

Expert:  Patrick, Esq. replied 2 years ago.
Thank you for your followup. Please first understand that I am limited to providing information about the law. I cannot advise you on a particular course of action, so how you decide to proceed will ultimately be up to you.

The above noted, your question is an interesting one and appears to boil down to the following: Does a disqualification for UE benefits on the ground of section 1257(a) constitute involvement in an "administrative disciplinary action"?

The above question in turn hinges on the definition of "involvement," which appears to mean "having a license censured, suspended, revoked, canceled, terminated or, being assessed a fine, placed on probation or surrendering a license to resolve an administrative action.

As I understand it, you have not yet been assessed a fine. As I understand it, section 1257(a) has simply been cited as a basis for denying benefits. Even if an individual in your circumstance was made to pay money back to the EDD, such money would likely only constitute a "fine" if it was above and beyond the repayment of principal plus interest on benefits already paid.

In other words, unless by virtue of a section 1257(a) disqualification an individual is may to repay benefits plus a penalty, a "1257(a) denial" would probably not constitute involvement in an "administrative disciplinary proceeding." Without a penalty assessment, a 1257(a) denial is not a disciplinary proceeding, it is simply the denial of benefits. People are denied benefits all the time and for all sorts of reasons, section 1257(a) being one of many.

I do hope that you find this information helpful. Again please bear in mind that none of the above constitutes "legal advice" nor am I your attorney.

Kindest regards.
Patrick, Esq., Lawyer
Satisfied Customers: 6693
Experience: Significant experience in all areas of employment law.
Patrick, Esq. and other California Employment Law Specialists are ready to help you
Customer: replied 2 years ago.

I intend to send a letter to the EDD (below) and would appreciate your thoughts.

 

Thank you again for your help thus far.

 

 

I received Notice of Determination correspondence from the EDD dated 4/27/12. The determination letters stated that I was not entitled to receive unemployment insurance benefits under Code Section 1279 beginning 4/3/11 through 2/11/12. I agree with the Notice of Determination that the monies I received must be paid back. My main concern is the Notice of Determination letters refer to Section 1257(a). The letter states "Section 1257(a) - provides an individual is disqualified if he willfully makes a false statement or withholds relevant information to obtain benefits." I realize that ignorance of the law is not an excuse, but I did not willfully make a false statement or withhold information.

I spoke with my accountant in late March 2012 to complete my income tax return for 2011. I explained that I was receiving unemployment benefits and he was aware of my 1099 income and questioned whether or not I was reporting correctly on the Continued Claim Form. He indicated to me that he believed I was supposed to report all 1099 income on the Continued Claim Form. I immediately called the EDD to alert them of my mistake. I had a phone interview with an EDD interviewer on 4/9/12. At the request of the interviewer, I faxed a listing of my 1099 income received from 4/2/11 through 3/17/12.

During the period 4/2/11 through 3/17/12, I answered all claim form questions to the best of my ability. There was no willful intent to make false statements, representations or knowingly fail to disclose any facts. As soon as my accountant alerted me of my errors, I called the EDD to report my mistake

Again I understand my responsibility to pay back monies I have received to date.

Customer: replied 2 years ago.

My apologies. I forgot to accept.

 

What it all really comes down to is I want to make sure I do not face any issues with the California Department of Insurance. This is my life and all I really know how to do.

 

I wish that the EDD would see that by me taking the steps to contact them, this was a mistake.

 

From your experience, do you feel my letter above would be convincing enough or do you see this going to a hearing?

Expert:  Patrick, Esq. replied 2 years ago.
Thank you for your followup. I apologize for my delay in getting back to you, but I have had meetings all afternoon. Not intentional, I assure you.

Your letter sounds very appropriate for this type of circumstance. The EDD has discretion as to whether to penalize a claimant for overpayments they received. I think that a judge exercising proper discretion would not assess penalties against someone who voluntarily came forward and reported earnings that had not previously been reported. As I noted above, if penalties are not assessed, disqualification on the basis of 1257(a) probably would not constitute an "administrative disciplinary action," as defined above.

I cannot say whether a hearing will still be necessary, but that is not as important as whether penalties will be assessed. Under the circumstances you describe, I would typically be inclined to say that the assessment of penalties is unlikely.

I do hope that this helps and I wish you the very best both personally and professionally.

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