EDD overpayment after legal settlement - will they take from remaining UI balance?

EDD will likely consider your settlement as retroactive earnings for the period you were unemployed. When this happens, they typically establish an overpayment for the weeks that overlap with what your settlement covers. Unfortunately, they probably won't just deduct it from your remaining balance. They'll send you a Notice of Overpayment with a specific amount they want back, and you'll need to either pay it or appeal within 30 days. If you don't respond, they can take more aggressive collection actions eventually. You should gather documentation showing exactly what period the settlement covers and be prepared to explain this if they contact you. The settlement agreement should specify whether it's for lost wages or other damages - this distinction matters.

THIS EXACT THING HAPPENED TO ME LAST YEAR!!! EDD is a NIGHTMARE with settlements. They waited 6 months after my settlement and then hit me with a $6700 overpayment notice out of nowhere! They claimed I was "withholding material facts" even though I had no idea the settlement would affect my benefits! They don't care that you have a balance left - they want THEIR money back RIGHT NOW. And they charge 9% interest if you don't pay right away!!! The whole system is designed to screw people who are already struggling.

have u reported the settlement to edd yet? if not u should call them asap, better to get ahead of it than have them find out later. they might b more understanding if u report it urself

I went through this in 2022 after a wrongful termination settlement. Here's what happens: 1. EDD will establish an overpayment for the weeks your settlement covers (they calculate this based on your weekly benefit amount) 2. You'll get a Notice of Overpayment in the mail with repayment instructions 3. You have options: pay in full, set up a payment plan, request a waiver, or appeal If you can prove the settlement wasn't just for lost wages but also for emotional distress, attorney fees, etc., you might be able to reduce the overpayment amount. Get your attorney to break down exactly what portions of the settlement were for what purpose. And yes, definitely report it yourself before they find out some other way. Settlements are reported to tax authorities, so EDD will eventually know.

Let me tell you something - trying to call EDD about complex issues like overpayments is nearly impossible with their regular phone lines. I had an overpayment issue last year and spent WEEKS trying to get through, calling 30+ times a day only to hear "we're experiencing high call volume". I finally used Claimyr (claimyr.com) to connect with an EDD rep. They have this system that gets you through the phone maze and puts you in the callback queue. They have a video showing how it works: https://youtu.be/JmuwXR7HA10?si=TSwYbu_GOwYzt9km When dealing with overpayments, you really need to talk to an actual EDD specialist who can look at your specific case details. Regular tier 1 reps often give generic or even incorrect info about overpayments.

wait i'm confused... if you got fired how did you qualify for unemployment in the first place? i thought you had to be laid off not fired to get benefits?

To directly answer your original question: No, EDD won't automatically take the overpayment amount from your remaining claim balance. These are handled as separate processes in their system. However, when you receive the Notice of Overpayment, you should immediately submit a request for a payment plan if you can't pay in full. They're generally reasonable about this. Use the DE 428G form "Request for Overpayment Information" to request your payment plan. If you believe repaying would cause extraordinary hardship, you can submit form DE 1446W to request a waiver, but these are granted only in certain circumstances, and a settlement may make it harder to qualify for hardship. Keep certifying for benefits while this is being sorted out if you're still unemployed - one process doesn't automatically stop the other.

I still think this whole system is ridiculous. How can they expect people to pay back thousands of dollars when they're UNEMPLOYED? That money is already spent on SURVIVING. And then they threaten collections and tax refund interception if you can't pay it all back immediately. My advice? Keep any documentation about what exactly your settlement was for. If part of it was for emotional distress or punitive damages, that shouldn't count as "wages" that offset unemployment. Fight it if they try to claim your entire settlement was for lost wages!

one more thing... make sure u stop certifying for any weeks that ur settlement covers if its backpay for specific dates. like if settlement covers april-june dont certify for those weeks if u havent already

I'm going through something similar right now with a workplace discrimination settlement. Here's what I learned from my experience: The key thing is HOW your settlement agreement is worded. If it specifically states what portion is for lost wages vs. other damages (emotional distress, attorney fees, punitive damages), EDD can only consider the wage portion as earnings that create an overpayment. My attorney was smart and allocated only about 30% of my settlement to "back wages" and the rest to emotional distress and punitive damages. When EDD reviewed it, they only calculated the overpayment based on that 30%. Also, don't panic about immediate repayment. When I got my overpayment notice, I called and set up a $50/month payment plan over the phone. They were actually pretty reasonable about it since I explained I was still unemployed and the settlement money was already allocated to debt and living expenses. The worst thing you can do is ignore it if/when you get the notice. They have a lot more collection tools available if you don't respond within the 30-day window.

I went through this exact situation 18 months ago and can share what actually happened in my case. EDD did determine it was an overpayment, but here's the timeline and process: First, they sent me a "Notice of Potential Overpayment" about 4 months after my settlement, asking me to provide documentation about what the settlement covered. I submitted my settlement agreement and a letter from my attorney breaking down the allocation. Then about 6 weeks later, I got the official "Notice of Overpayment" for about 60% of what I initially thought they'd want back (because my attorney had allocated portions to non-wage damages). The important part: They did NOT automatically deduct from my remaining claim balance. These are separate processes in their system. I was still able to certify for benefits while the overpayment was being processed, and my weekly payments continued normally. For repayment, I set up a payment plan for $75/month which they approved over the phone. No interest charges, no collections threats as long as I kept making payments. My advice: Get ahead of it by reporting the settlement yourself and ask your attorney for an allocation breakdown letter. The proactive approach really seemed to help in my case.

Based on everyone's experiences here, it sounds like the key is being proactive and getting proper documentation from your attorney. I'm in a somewhat similar situation - got a settlement 3 months ago but haven't heard from EDD yet. After reading through all these responses, I'm going to call my lawyer tomorrow to request an allocation breakdown letter before EDD even contacts me. It seems like this could potentially save thousands depending on how the settlement can be categorized. @Brianna Schmidt - definitely get that attorney letter ASAP! From what others have shared, it sounds like the difference between a $4000 overpayment and maybe a $2000 overpayment could come down to having proper documentation of what portions weren't actually "wages." Also want to echo what others said about payment plans - seems like EDD is pretty reasonable about setting these up if you're proactive about calling them rather than ignoring the notices.

I just went through this exact situation 6 months ago and wanted to share what worked for me. The settlement/overpayment process is definitely stressful, but there are ways to minimize the impact. First, you're right to be concerned - EDD will likely consider at least part of your settlement as wages that should offset your unemployment benefits. However, the overpayment amount can vary dramatically based on how your settlement is documented. Here's what I wish I had known earlier: 1. Contact your attorney immediately to request a detailed allocation breakdown letter, even though your settlement is finalized 2. EDD won't automatically deduct from your remaining claim balance - they'll issue a separate overpayment notice 3. You can continue collecting your regular benefits while the overpayment is being processed 4. Payment plans are available and they're pretty reasonable about approving them In my case, my attorney was able to provide documentation showing that only about 45% of my settlement was actually for "lost wages" - the rest was allocated to emotional distress, attorney fees, and punitive damages. This reduced my overpayment from what would have been about $5,800 to $2,600. When I got the overpayment notice, I called EDD the same day and set up a $85/month payment plan. No hassle, no interest charges, and I was able to keep my benefits flowing normally. The key is being proactive rather than reactive. Get that attorney letter ASAP and report the settlement yourself before they discover it through other channels.