California EDD settles lawsuit over unemployment eligibility notification
As part of a settlement of an Alameda County lawsuit, the California Employment Development Department agreed to overhaul how it informs claimants that the agency has retroactively denied them benefits and will be seeking repayment of benefits, the plaintiffs announced Thursday.
Rosen Bien Galvan & Grunfeld brought the lawsuit in June 2023 on behalf of California residents Renee Okamura and Kathryn Din and the nonprofit Legal Aid at Work, seeking class-action status to represent all claimants in similar circumstances.
“This settlement will help ensure that claimants get the information they need in time to fight unfair decisions,” said George A. Warner, staff attorney at Legal Aid at Work. “When the EDD decides that a claimant is not eligible for benefits — or needs to pay back money they’ve already received — these decisions can put claimants into a deep financial hole with life-changing repercussions.”
The nonprofit Legal Aid at Work helps people understand and assert their workplace rights, and it works with low-paid workers and marginalized communities to bring about legislative and regulatory policies that benefit them.
EDD spokesperson Loree Levy said that unemployment benefits are part of a complex, eligibility-based insurance program.
“EDD is committed to modernizing our services to not only elevate our efficiencies in administering this program but also to simplify and strengthen the customer experience for all Californians when in need of these valuable benefits,” Levy said.
When the lawsuit was filed, Okamura said that she sought unemployment benefits because she had a health condition that made working a retail job dangerous during the COVID-19 pandemic.
“I thought I was eligible, and I relied on those benefits to live,” she said. “Then two years later, I received a confusing notice saying I was retroactively not eligible for benefits, that I had made a false statement and that I would have to pay the EDD a huge amount of money, including penalties.”
Okamura said the notice frightened her because she had no idea what the alleged false statement was or why she had been disqualified.
The EDD has agreed to a number of changes that will benefit California workers, and they include:
▪ Starting to tell claimants who receive notices of overpayment that they may be eligible for a waiver. On appeal, the California Unemployment Insurance Appeals Board regularly decides that claimants do not have to pay back the benefits.
▪ Writing notices at an eighth-grade reading level to ensure that claimants can more easily understand their rights, obligations and options.
▪ Expanding the ways that it notifies claimants about benefit decisions, adding email, text messages, and online alerts, the plaintiffs’ lawyers said. EDD now uses those methods for other purposes, they said, but the notice system has largely avoided these communications options until now.
The plaintiffs’ attorneys said that the changes are expected to improve the chances that workers will promptly learn of negative decisions, understand their implications, and challenge them if necessary.
Workers need lifeline but struggle to get it
The lawsuit, Okamura v. Employment Development Department, has highlighted a longstanding issue in California’s unemployment insurance system. As the state agency overseeing unemployment benefits, the EDD is responsible for administering a lifeline for millions of workers, particularly in times of economic crisis. The agency, for instance, paid out nearly $25 billion in 2020, the year the COVID-19 pandemic prompted shelter-in-place orders worldwide.
However, Okamura, Din and other claimants have said that EDD’s failure to properly notify them of denial or overpayment decisions has caused widespread confusion and financial hardship.
The changes are particularly significant in light of historical data showing how poorly many claimants have been treated in the past. According to a report by the California’s Legislative Analyst’s Office, between $500 million and $1 billion in benefits go unpaid each year due to improper denials.
The LAO also noted that the EDD has often sent confusing and sometimes contradictory notices, leaving claimants uncertain about their rights and unable to act swiftly to appeal decisions. Those who do appeal historically have been able to get EDD demands for repayment reversed more than 50% of the time.
In the wake of the pandemic, when unemployment claims shot to record levels, the EDD’s flaws became even more apparent. An estimated 20 million claims were filed between 2020 and 2022, but widespread failures in its notification system left thousands of people struggling to navigate the system, unaware of how to challenge wrongful denials or overpayment claims.
Din said that, until she reached out for help, she had no idea she could appeal an EDD decision that she must repay $2500 in benefits. She said she first learned of the EDD determination in 2022 when a collections agency sent her a notice, and they were threatening to take her tax refund and pursue other legal actions to get the money.
“Because I never received the notice of overpayment that the EDD apparently sent me,” she said, “I had no idea why the EDD thought I had been overpaid.”
While the Okamura lawsuit settlement requires that the plaintiffs in the lawsuit release their claims, it does not preclude other claimants from seeking legal recourse for past mistakes.
If the Alameda County Superior Court approves the settlement, the EDD is expected to implement the changes over the next year.
