By Kristine Lazar

LOS ANGELES (CBSLA) — Gig workers who are receiving unemployment may be on the hook to pay back some of their benefits due to overpayment.

Dianne Christman said she believes she may have to pay EDD between $5,500 and $6,500.

“The stress level is off the charts,” she said. “They’re asking money from people who have no income. It’s an oxymoron to be honest.”

Christman is an out-of-work Lyft driver. When she applied for pandemic unemployment assistance in April, she said she was told to submit her 1099 as proof of income. As it turns out, independent contractors needed to report their net income — not gross income.

“Unfortunately, with Pandemic Unemployment Assistance, overpayment has to be recouped,” said Michele Evermore, a senior researcher with the National Employment Law Project. “There is no waiver for that.”

Evermore said that, at the beginning of the pandemic, the focus was on getting money out to the unemployed as quickly as possible.

“Because states focused, rightly on processing old claims, it took a while for states to identify overpayment, so once they get there it’s been months and so people have gotten overpayments for a very long time,” she said.

Another gig worker, who asked that his name be withheld, said he calculated that he and his wife may be on the hook for up to $13,000.

“So $13,000 for a household that made under $60,000 combined is a lot of money,” he said.

He said he and his wife believed they were supposed to report gross income when they applied.

“If we had known we didn’t qualify for it, there is no way we would have spent or even taken that money in the first place,” he said.

Evermore said that Congress could waive non-fraudulent overpayments in the next stimulus bill, adding that about half of all people receiving unemployment benefits right now are doing so through pandemic assistance programs

“So every dollar you give someone in an unemployment insurance benefit generates $1.61 in local economic activity,” she said. “When you suck it out of the economy, you’re not just taking back the dollars that you gave to that worker, you’re taking back all that buying power.”

In a statement, an EDD spokesperson said that “overpayments are always a part of the Unemployment Insurance program across the country. We do not have any readily available data on total formal overpayments and do not track the circumstances of how the claim reached that status.”

Anyone who received benefits they were not eligible for should receive notice by mail, according to EDD. The notice should explain the reason for the overpayment, the amount and penalties, as well as information about appeal rights.

“The EDD generally classifies overpayments into two categories: fraud or non-fraud,” the spokesperson wrote, providing these descriptions for each:

  • Fraud: If the EDD finds that you intentionally gave false information or withheld information and, as a result, received benefits that you should not have received, the overpayment is considered fraud. Withholding or giving false information to obtain benefits is a serious offense that can result in penalties and criminal prosecution. With a fraud overpayment, you can receive a penalty equal to 30 percent of the overpayment amount. Additionally, you can be disqualified for 5 to 23 weeks. You must repay fraud overpayments and penalties.
  • Non-Fraud: If you received benefits you were not eligible for and the overpayment was not your fault, the overpayment is considered non-fraud. You will receive a notice telling you if the overpayment must be repaid.

Kristine Lazar