Repaying an Overpayment of Unemployment Benefits

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An overpayment of unemployment benefits occurs when you receive unemployment compensation you were not eligible for. There are many reasons why a claim for unemployment benefits can be disqualified.

Overpayment of Unemployment Benefits

You could have been overpaid because of an error or because you claimed benefits you were not entitled to receive. For example, some of the reasons a claimant might be overpaid include the following:

  • You made a mistake when claiming benefits.
  • You were not ready, willing, and able to work.
  • You did not complete the required work search activities.
  • You knowingly gave false or misleading information when filing a claim or claiming weekly benefits.

Another reason could be that your former employer successfully contested your unemployment claim. If this was the case, the state could have determined that you were therefore not eligible for benefits. In most cases, you will be required to repay the unemployment compensation that was overpaid.

How You Are Notified

Your state unemployment office will notify you (typically by mail) if you have been overpaid. The notice will explain the reason you are getting the overpayment notice, how much you owe, penalties (if applicable), information on how to appeal, and instructions on repaying the amount you have been overpaid.

How Is the Overpayment Repaid?

In most cases, you will be asked to repay the overpayment. You may be asked to send a check for the balance of the overpayment. If you can't repay it all at once, you may be able to negotiate a payment plan.

Otherwise, if you are entitled to further benefits, you may be able to use those benefits to repay the overpayment.

In some states, you will forfeit days or weeks of unemployment to make up what you owe.

For example, in New York, you will lose 25% of your benefits for that week for every forfeit day that is assessed, so if you have four forfeit days, you would receive no benefits for that week.

If you have not made an adequate arrangement for repayment, the money that you owe may be seized from your paycheck (if you are working), lottery winnings, or tax refunds.

If the overpayment was because of fraud, you may be charged a penalty and possibly charged with criminal fraud. Also, you may be banned from collecting future unemployment benefits.

Appeals and Waivers

Asking for a Waiver

If you believe the notice is not accurate, you can appeal the decision. If you were overpaid because of an error, you might be able to ask for a waiver to avoid repaying all or some of the benefits you received by mistake. In most cases, you will have to prove financial hardship to receive a waiver or to negotiate a payment plan.

Filing an Appeal

In most states, you will be entitled to a hearing to consider your appeal. A hearing is an informal proceeding held before an administrative law judge. Based on the evidence presented at the hearing, the judge will decide whether you are entitled to—or eligible for—unemployment insurance benefits.

At the hearing, you, your employer, and any witnesses for either side may testify. The testimony will be recorded. Either side can also present papers or other physical evidence.

Review the Process

Instructions on filing an unemployment benefits appeal will be listed on your state's unemployment website. You may be able to file an appeal online, by fax, by mail, inperson, or by phone.

State Laws

State unemployment laws contain general and state-specific information on unemployment overpayment, unemployment compensation, and benefits. Contact your state unemployment office for a determination of your specific circumstances and clarification about how overpayment is handled in your state. Remember that state laws vary.

Article Sources

  1. New York State Department of Labor. "Overpayment and Penalties." Accessed April 23, 2020.