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