Will I get ESD overpayment if my employer didn't properly withhold unemployment taxes?
I got laid off 3 weeks ago and started collecting unemployment benefits. While going through my financial records, I noticed something odd about my paystubs. I think my former employer might not have been withholding the proper ESD unemployment taxes from my paychecks even though the stubs showed deductions. Now I'm worried - if ESD audits them and discovers they weren't paying the proper unemployment taxes, will I end up getting hit with an overpayment notice? Has anyone dealt with this before? I'm already stretching my budget thin and can't afford to suddenly owe thousands back to ESD for something that wasn't my fault!
16 comments
Join the conversation
Lara Woods
You should be fine. ESD taxes are primarily the employer's responsibility, not yours. The employer pays FUTA and SUTA taxes which fund unemployment benefits. While some states have employee contributions to unemployment, the bulk is employer-paid. If your employer wasn't paying their proper share, that's between ESD and them - you wouldn't get an overpayment notice for that reason alone.
0 coins
Oliver Alexander
•That's a huge relief! I've been stressing about this for days. So even if they investigate my employer, my benefits shouldn't be affected? I thought maybe since the fund wasn't properly paid into, they'd try to take the money back from me.
0 coins
Adrian Hughes
i had soemthing like this in 2022!! my boss was shady af with taxes and i found out later he wasnt paying into uneployment like he should. still got all my benefits tho, esd never came after me for anything
0 coins
Molly Chambers
•ESD is gonna be GOING AFTER YOUR EMPLOYER not you!!! The system is rigged against workers in many ways but this is actually one area where you're protected. Employers try to dodge unemployment taxes ALL THE TIME and the state knows this. They'll audit and fine the company but your benefits are based on your reported wages not on whether your cheap boss paid the proper taxes!!!
0 coins
Ian Armstrong
To clarify what others have said: In Washington state, employers pay unemployment taxes based on their experience rating (past layoff history) and other factors. Employees don't directly contribute to unemployment insurance in WA. If your employer misreported your wages or failed to pay proper unemployment taxes, ESD might pursue them for unpaid taxes and penalties, but this wouldn't typically result in an overpayment notice for you. The exception would be if your employer contests your unemployment claim by saying you weren't actually an employee or that you voluntarily quit/were fired for misconduct. In that case, you should gather any evidence showing you were an employee and were laid off (emails, texts, final paycheck stub, etc.).
0 coins
Oliver Alexander
•Thank you for the detailed explanation. This makes sense. They definitely can't claim I wasn't an employee - I have a paper trail of employment for over 2 years. And the layoff was documented in writing as a "reduction in workforce" so I don't think they'd try to contest it as misconduct or quitting. I'll keep all my documentation just in case though.
0 coins
Eli Butler
I went through something sort of similar last year except my employer was classifying me as an independent contractor when I was clearly an employee (they set my hours, provided equipment, etc). The ESD investigator actually helped me file a misclassification claim. Not only did I get unemployment, but they made the company pay back taxes! Might be worth calling ESD to report your situation too.
0 coins
Marcus Patterson
•Good luck trying to get through to ESD on the phone though! I spent THREE WEEKS trying to reach them about an adjudication issue. Eventually I found this service called Claimyr (claimyr.com) that got me through to an ESD agent in under 30 minutes. They have this video that shows how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3 - definitely worth it if you need to actually speak with someone about complex employer tax issues like this.
0 coins
Lydia Bailey
Wait I'm confused about something. If your employer wasn't properly withholding, how did you get approved for unemployment in the first place? Don't they check your wage records when you apply? I thought they would deny your claim right away if the employer hadn't been reporting properly.
0 coins
Ian Armstrong
•ESD determines eligibility based on wage records that employers report quarterly. If the employer reported wages but didn't pay the proper taxes on them, you'd still qualify based on those reported wages. The issue isn't whether wages were reported, but whether the employer paid their unemployment tax obligations on those wages. ESD can also verify wages through other means like tax returns if there's a discrepancy. They have mechanisms to handle situations where employers haven't properly reported or paid taxes while still protecting legitimate claimants.
0 coins
Molly Chambers
I can't believe how PREDATORY some of these employers are!!! They pocket the money that should go to ESD then when hardworking people need benefits they try to contest the claims!!! My cousin's boss did the EXACT same thing but in the end ESD still awarded her the benefits and went after the employer for fraud. OP should report them immediately!!!
0 coins
Oliver Alexander
•I'm honestly not 100% sure they were intentionally committing fraud - it might have been an accounting error. I'll probably wait until my claim is fully processed before deciding whether to report anything. Don't want to rock the boat while I'm still getting benefits approved.
0 coins
Lara Woods
One thing to be aware of: While you're not responsible for your employer's tax obligations, if it turns out they misreported your wages (showing you earned less than you actually did), ESD might issue an overpayment if they later correct those wage records and it affects your benefit calculation. If you're concerned, I'd recommend keeping good records of all your paystubs, W-2s, and any communication about your layoff. Also, double-check that the wage amount shown on your ESD monetary determination letter matches what you actually earned.
0 coins
Oliver Alexander
•That's a good point. I just checked my monetary determination letter and the quarterly earnings look accurate compared to my actual pay. So it seems like they reported my wages correctly, they just might not have been paying the proper taxes on them. I'll keep monitoring my claim status just to be safe.
0 coins
Adrian Hughes
hey just wondering did u get paid under the table at all?? cuz thats a whole different issue than just the tax withholding thing
0 coins
Oliver Alexander
•No, everything was on the books with regular paystubs, W-2s, etc. I just noticed discrepancies in how the taxes were being withheld when I was reviewing my past pay statements. All my income was properly reported on my tax returns.
0 coins