California Gig Workers May Have to Pay Back EDD Benefits

California gig workers who have received unemployment benefits from the state may soon discover that they are on the hook to repay the government for overpaid benefits received during the coronavirus pandemic. Independent contractors are discovering that they may have been paid more in unemployment than they should have received, and California is starting the process of requesting repayment of that portion of benefits. It could mean that some gig workers owe the state thousands of dollars in a time when people are relying on benefits to get by. If you are concerned about overpayment of unemployment benefits or any other employment law issue, talk to an experienced California attorney in your area today.

Gross Income or Net Income

In California, in order to qualify for unemployment benefits during the COVID-19 pandemic, out of work gig employees were asked to submit their 1099 as proof of income. However, many independent contractors are now discovering that they were supposed to submit their net income, not their gross income. The difference between net and gross income can be significant. Gross income is the income paid to workers prior to any deductions, while net income is the total take home income for employees after deductions.

Gig workers that submitted their gross income are receiving more in unemployment assistance due to the higher income reported, and the difference in benefits between the gross and net incomes must be repaid to the state government. California is now just identifying claims where overpayment has been made, which means that some independent contractors have been overpaid in benefits for months, resulting in repayment of thousands of dollars to the state.

Process for Repayment

Anyone who received more in benefits than they deserved or should not have qualified but received benefits will get a notice in the mail from the EDD. The letter explains the overpayment, the amount and penalties, and information on how to appeal the decision. There are two types of overpayment in the California system — fraud and non-fraud.

For cases of fraudulent overpayment, the state found that a worker intentionally gave false information or withheld information and, as a result, received benefits that they should not have received. With a fraud overpayment, a person can receive a penalty equal to 30% of the overpayment amount as well as be disqualified for five to 23 weeks. The fraud overpayment and penalties must be repaid, and criminal prosecution can also occur. For non-fraud cases, a person received benefits they were not eligible for through no fault of their own. However, the overpayment must still be repaid, or else the gig worker can face civil liability.

Talk to an Employment Law Attorney

If you are concerned about overpaid EDD benefits in California or any other legal issue at work, call or contact an experienced California employment law attorney in your area today to learn more about your legal options as a gig worker or full-time employee.

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