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Brandon, Esq.
Brandon, Esq., Lawyer
Category: California Employment Law
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Lets say a person in the state of California realizes he may

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Let's say a person in the state of California realizes he may be guilty of unemployment fraud (he overlooked to report income from an independent contractor job while receiving unemployment). He knows this will be reported to the IRS, from where it may be passed along to California's EDD. What should he do? Is there a way to return the excess unemployment benefits without legal repercussions? Can he pay back the money to the company he worked for? Should he just wait to be caught?

Hello and welcome.

I am so sorry to hear of your difficult situation.

My goal is to provide you with excellent service. I am working on your answer now and will post it here shortly. Thank you for your patience while I prepare your answer.

A fraud overpayment occurs when you knowingly give false information or withhold information and as a result receive benefits that you should not have received. Withholding or giving false information to obtain unemployment insurance benefits is a serious offense that can result in criminal prosecution. With a fraud overpayment, you are 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. However, if you have an argument that the overpayment was due to Non-Fraud, then you would not have to pay the penalties, and possible, not have to re-pay the overpayment at all. Non-Fraud overpayment occurs when you are not at fault for receiving the additional benefits.

Thus, if you believe a notice of overpayment is forthcoming, you can definitely contact the Employment Development Department, or send a check or money order payable to EDD for the amount overpaid. You would include your name and social security account number on the check or money order and mail the payment directly to:

EDD Cashiering, Benefit Recovery
State of California
PO Box 826806
Sacramento, CANNN-NN-NNNNbr/>
More information about this can be found here:

So, as to whether to take the chance of whether or not he will receive a letter, that is entirely up to him, as if he does not receive him, he will not have to pay back any benefits. However, based on the the penalties, it may be better for him to make the argument that he was not aware that what was happening was illegal, and he had no idea that fraud was occuring, and that he would like to pay back any overpayment immediately.

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Brandon, Esq. and other California Employment Law Specialists are ready to help you

I wanted to add a few things to my previous response in case they were unclear.

1. Paying back money to the company he worked for would not change the outcome of their decision. It is the applicant’s responsibility to update and inform the EDD of any jobs in which they are offered employment. Paying back the money to the company will likely do more harm than good.
2. If he waits to be caught, and he believes that fraud took place, then a finding of fraud will likely take place, in which he will be required to pay penalties that he has accrued.
3. By showing that he is responsible by contacting the EDD with the error, he is showing that he did not act with malicious intent to defraud the EDD. If he repays back what is owed, under a theory of full or partial benefits, then a formal investigation will likely not take place, and he will avoid any legal repercussions.


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