An EDD fraud finding is an administrative decision, not a criminal charge. It can disqualify you from benefits for a set number of weeks, require you to repay benefits you were overpaid, and add a penalty equal to 30 percent of the overpayment, and you have 30 days to appeal. A criminal case is separate: it requires a prosecutor to file charges and prove them in court.

If your notice is about CalWORKs, CalFresh, or Medi-Cal rather than unemployment benefits, a different agency and a different law apply; see welfare fraud.

Before EDD decides: a short window to respond

Before disqualifying someone for a false statement, EDD must send notice of the proposed determination and give at least 10 days to respond by telephone or in writing, or 3 days for people who opted into electronic communications (Unemployment Insurance Code section 1260(f)). The response is the chance to explain the facts EDD says were false or withheld. Because what you say may also matter if a criminal case follows, it is worth getting advice before you respond.

What a fraud finding does

EDD can disqualify a claimant who willfully made a false statement or representation, knowing it was false, or withheld a material fact, to obtain benefits (Unemployment Insurance Code section 1257(a)). The disqualification is a set number of weeks, not a permanent bar. If no benefits were paid because of the false statement, it is two weeks plus up to 13 more; if benefits were paid, it is five weeks plus up to 10 more. The weeks are counted only when you are otherwise eligible, and none can fall more than three years after the determination was served (section 1260(c), (d)). This is a decision made by EDD, not by a court.

Repayment and the 30 percent penalty

A person who is overpaid benefits is liable to repay the overpayment unless an exception applies (Unemployment Insurance Code section 1375). The main exception covers an overpayment that was not due to fraud, misrepresentation, or willful nondisclosure, was received without fault, and would be against equity and good conscience to recover. A fraud finding rules that exception out unless the finding is overturned. When EDD finds the overpayment resulted from a willful false statement or representation, made with actual knowledge that it was false, or from withholding a material fact, the director must also assess an amount equal to 30 percent of the overpayment (Unemployment Insurance Code section 1375.1).

Deadlines to appeal

A fraud finding can be appealed to an administrative law judge, but the deadlines are short:

  • A disqualification for a false statement: 30 days from service of the notice of determination (section 1260(f)(4)).
  • A notice of overpayment: 30 days from the date the notice was mailed or served (Unemployment Insurance Code section 1377). The clock can start on the mailing date, not the day you open the letter.

Either deadline can be extended for good cause, which includes mistake, inadvertence, surprise, or excusable neglect, but an extension is not automatic. An administrative law judge’s decision on an overpayment becomes final unless a further appeal to the appeals board is filed within 30 days (section 1377).

When it becomes a criminal case

The criminal offense is separate. Unemployment Insurance Code section 2101 makes it a violation 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 benefits, for yourself or anyone else, under California’s unemployment and disability law or the federal unemployment and allowance laws EDD administers. The punishment is up to a year in county jail or a state prison term, a fine of up to $20,000, or both (Unemployment Insurance Code section 2122). That takes criminal charges proved in court, not an EDD letter. Section 2101 also does not rule out a forgery charge under Penal Code section 470 for the same acts.

What to do with an EDD fraud notice

  • Read what the notice actually decided: a proposed determination, a disqualification, an overpayment amount, a 30 percent penalty, or some combination.
  • Write down the response or appeal deadline the day the notice arrives, counting from the mailing or service date, not the day you read it.
  • Keep copies of what you told EDD and when: certifications, correspondence, pay records, and anything documenting what happened.
  • Do not assume an overpayment letter means you have been charged with a crime, and do not assume an administrative finding ends the matter.

Getting help

An EDD fraud finding and a criminal unemployment fraud charge follow different rules, deadlines, and decision-makers. Call (800) 755-5174 to go over an EDD notice with the Law Offices of David S. Chesley.