People who are out of work often have the option to file for, and collect, unemployment compensation benefits to help fill the gap, financially speaking, until they can secure new employment. As one may expect, however, not everyone who applies for benefits are eligible to collect them. Ineligibility for benefits can be caused by a variety of factors including, but not limited to, issues regarding self-employment (see here and here), conflicts with other benefits (see here and here), conflicts with retirement (see here and here), issues surrounding termination due to willful misconduct (see here and here and here), issues surrounding whether one voluntarily quit (see here), and/or issues regarding whether one is available for work (see here).
Now, there is a delay between one’s application for benefits and a ruling that one is ineligible and, very often, during that interval a claimant will receive benefits. If, after receipt of benefits, it is determined that the claimant was ineligible, then the benefits he received would be considered, retroactively, an over payment to him as he ought not have received them in the first place due to being declared ineligible.
The obvious question here is this: what is the consequence to receiving benefits to which one is not entitled? There are two possible results based on a finding of the claimant’s intentions when his application for benefits were made. Were the claimant’s intentions “innocent” (in that he acted honestly with Unemployment Compensation at all times) when he applied for benefits which, as a result of the same, he was granted benefits inadvertently? Or, were did the claimant act with deception or fraud when applying for benefits which resulted in him being dishonest with Unemployment Compensation?
For example, the Claimant honestly may not have fully understood the legal distinctions between “employee” and “contractor” (see here) when he applied for benefits or he honestly may not view the conduct which led to his termination as willful misconduct (see here and here and here) or he honestly may not have fully understood the interplay between Unemployment Compensation benefits and other benefits (see here and here) or he honestly may not view his termination from employment as voluntary (see here). If this is the case, then his over payment would be considered to have been caused by no fault of the Claimant’s own
By contrast, the Claimant, when applying for benefits, may have intentionally lied about the cause of his termination, or lied about the status of his side job, or intentionally obscured his other sources of income (e.g.: workers’ compensation benefits). If this is the case, then his over payment would be considered to have been the result of the Claimant’s act of deception and, therefore, brought about by a fault of his own.
If the Claimant’s over payment is due to no fault of Claimant’s own (as described above), the consequence is that if he were to collect unemployment compensation at any time over the following three years, his benefits will be deduced by the amount of the over payment as paid through monthly installments. If the Claimants over payment is due to Claimant’s fault (as described above), the consequence is that the Claimant must immediately repay all of the benefits at pain of penalties, interest, and other sanctions.
Now, like nearly all things in in the American legal system, determining whether the Claimant was overpaid, and whether that over payment was due to the fault of the claimant (as described above), is determined at a hearing after the presentation of evidence and testimony. Sometimes this can be done at a single hearing but, more often than not, two hearings will be held: the first to determine eligibility and the second (if the claimant is found ineligible) to determine whether any payments he received were due to his fault (as defined above). Most of the time, Claimants do their best to fill out the application for benefits and simply do not know how certain terms are used and/or have a different view of the facts surrounding their termination from employment, and, as a result, they will not be required to repay their over payments. Occasionally, however, a Claimant actively tries to deceive Unemployment Compensation and, for that, immediate repayment will be due.