What is an overpayment?
An “overpayment” of unemployment benefits happens when the New Jersey Department of Labor (NJDOL) determines that you received unemployment benefits but were not entitled to them. This can happen when the NJDOL makes a mistake in determining your eligibility for benefits, like when it calculates that you worked longer or earned more than you did. Overpayments can also happen when the NJDOL determines that you should have been disqualified from benefits after you already received some or all of your unemployment benefits. (For example, you are initially granted unemployment benefits, then your former employer appeals and wins the case.)
Overpayments can raise complicated issues. The following paragraphs offer some general information about overpayments and refunds. But if you are facing an overpayment, you should consult an attorney for advice.
Do I have to return the unemployment benefits I received?
In general, if you received any unemployment benefits to which you were not entitled, you will have to repay the benefits to the NJDOL. When this happens, the NJDOL will send you a notice of overpayment telling you why you have an overpayment on your record, the exact amount of money that you are asked to repay, and how much the NJDOL expects you to repay each month. The notice will also tell you if you are being charged interest (this happens in cases of fraud) and what you must do to appeal the NJDOL’s determination that you received benefits in error.
If you agree that you received unemployment benefits that you should not have received, you should begin to repay the debt to the NJDOL as soon as possible.
You can make electronic payments or send checks to the NJDOL. If you are unable to pay the monthly amount that the NJDOL has said you should pay, you can ask the NJDOL for permission to pay a lesser amount. That amount will then be listed as the official amount in your “formal monthly agreement” with the NJDOL. To negotiate a formal monthly agreement with the NJDOL, call the Office of Benefit Payment Control at 609-292-0030.
What do I do if I disagree with the overpayment?
If you disagree that you were paid unemployment benefits in error, you have the right to appeal. The appeals process for overpayments is the same as for other unemployment issues. You appeal first to the Appeal Tribunal, then to the Board of Review, then to the Appellate Division, and so on. To appeal an overpayment determination, you must send a Notice of Appeal (a brief statement explaining that you disagree with the determination) to the NJDOL within 10 days of the mailing date on the determination or within seven days of your receipt of the determination. Once you file your letter of appeal, you will be scheduled for an Appeal Tribunal hearing. Overpayment cases, in particular, require very careful scrutiny of the case record (you will want to know who made the mistake, why, and when), so be sure to request a complete copy of your case file right away.
Issues to consider:
Was the overpayment caused by any of the following?
- An error on your part (for example, you did not report all your earnings to the NJDOL). If so, you need to be prepared to address claims of fraud.
- Your former employer filing and winning an appeal. If so, you can appeal this decision. If the employer did not file its appeal on time, you can also raise the issue of “due process.”
- A mistake made by the NJDOL. If so, you should take steps to have your case marked as an Agency Error matter. (See the Agency Error Rule below.)
Have you been found eligible for benefits two times or more?
See the Two Determination Rule below.
Has the Unemployment Division met its burden of proving that you are actually responsible for a refund of the benefits already paid to you?
If not, if there are questions about whether you should have to repay the money, be sure to file an appeal.
The “Agency Error” Rule
N.J.A.C.* 12:17-14.3: Requirements for repaying overpaid benefits
A payment of benefits for which a waiver of recovery is not granted must be repaid in full. The Division may use any means of collection provided by law to satisfy the debt including, but not limited to, offsets permitted under N.J.S.A. 54A:9-8.1 and 8.2. Any individual with an outstanding overpayment who subsequently becomes entitled to benefits shall have such benefits offset by the debt until the debt is repaid in its entirety. However, for any claimant whose overpayment is determined to be the sole result of the Division’s error, the offset amount shall be limited to 50 percent of the claimant's weekly benefit rate for each week of benefits subsequently claimed. (Emphasis added.)
*N.J.A.C. stands for New Jersey Administrative Code. The New Jersey Administrative code refers to the rules that govern an agency, like the New Jersey Department of Labor.
Overpayments caused by NJDOL’s mistake are treated differently from overpayments that result from a mistake that you or your employer made. You will still have to repay the debt, but there are limits on the collection efforts that NJDOL can take to try to get the money from you. For example, they cannot:
- Withhold your tax refunds or rebates
- Force you to enter into a formal monthly payment agreement
- File a lawsuit against you
- Withhold all of your unemployment benefits from you if you apply for unemployment again in the future.
They can, however, keep 50% of your future unemployment benefit until the entire debt is repaid.
These protections apply only if the case is marked as an “Agency Error” case. To have your case marked as an Agency Error case, you may raise the issue with the appeals examiner during your appeal. If you do not have an active appeal, but believe that your overpayment was due to a mistake of the NJDOL, write to the Director of the Division of Unemployment Insurance. Explain the facts of your case and ask that your case be marked as an Agency Error matter. Send your request to:
Director, Division of Unemployment Insurance
New Jersey Department of Labor and Workforce Development
P.O. Box 058
Trenton, NJ 08625-0058
The “Two Determination” Rule
N.J.A.C. 12:17-14.4 Overpayment of benefits involving two determinations of entitlement
(a) A determination of entitlement is defined to mean determinations that state that a claimant is both eligible and not disqualified.
(b) If there are two determinations of entitlement, benefits for such period of entitlement shall be paid regardless of the outcome of any appeal which may be taken.
(c) If benefits are paid under (b) above, no claimant shall be required to repay such benefits to the Division and no employer's account shall be charged with benefits so paid through the completed calendar week prior to the date of the appeal hearing, if the decision is finally reversed.
The “Two Determination Rule” means that if you were twice determined to be eligible for unemployment benefits, you will not have to repay any benefits, even if the NJDOL later decides you shouldn’t have received benefits in the first place.
Example: An NJDOL deputy awards you benefits, your former employer appeals to the Appeal Tribunal, and the Appeal Tribunal finds in your favor. Then the employer appeals to the Board of Review and they decide against you. You will not have to repay the benefits already paid to you because you received two “determinations of entitlement” before being found ineligible. As long as you have received two determinations of entitlement, you will not have to repay any benefits that have been paid to you.
This protection will not be applied automatically. Your case will have to be marked as a Two Determination Rule case. To have your case marked as a Two Determination Rule case, you must make this request of the appeals examiner during your appeal. If you do not have an active appeal but believe that the Two Determination Rule applies to your overpayment, write to the Director of the Division of Unemployment Insurance and ask that your overpayment be removed because you have had two determinations of entitlement. Send your request to the address listed above.
Requesting a Waiver of Overpayment
N.J.A.C. 12:17-14.2 Waiver of recovery of benefit overpayment
(a) Upon request of the claimant or the claimant’s representative, the Director may grant the claimant a full waiver of recovery of an overpayment of benefits only after the Director has determined that the claimant has not misrepresented or withheld any material fact in obtaining benefits and only under the following circumstances:
- Where the claimant is deceased;
- Where the claimant is disabled and no longer able to work; or
- Where the recovery of the overpayment, as determined by the Director with the Controller’s concurrence, would be patently contrary to the principles of equity.
In very limited circumstances, a person facing an overpayment can request that the entire overpayment be waived so that they don’t have to repay any money at all. Waivers of recovery of overpayments are only granted where claimants were completely honest in their applications to obtain benefits and where:
- The claimant is now deceased,
- The claimant is disabled and no longer able to work, or
- The Director of the Unemployment Insurance Division decides that it would be unjust to make the person repay the benefits.
To request a waiver of debt, send a written request to the Director of the Division of Unemployment Insurance at the address above. If you are requesting a waiver because you are disabled and no longer able to work, you will need to show proof of your permanent disability. Your treating doctor will have to complete a certification to support your request for a waiver. You should also be prepared to submit other medical evidence, such as proof of receipt of Social Security Disability benefits or documentation of your disability from a treating doctor. If your request for a waiver is denied, you may appeal the denial the same way you would appeal a denial of unemployment benefits.
What if I have to refund the unemployment payments I received?
After you go through the appeals process, if the NJDOL determines that you must refund the benefits you received, you will have to repay the NJDOL either in one lump sum or in monthly payments. If you are currently receiving unemployment benefits, the NJDOL will use your current benefits to repay the debt. In that case, you continue to claim your benefits every two weeks. But instead of receiving the benefits, they will be used to repay your debt. If you are not currently receiving benefits, and have not entered into a formal monthly agreement or have not paid your required monthly payment, the NJDOL will take your state income tax refund/rebate and apply it to the debt. The NJDOL also has the right to pursue collection actions to get the money from you.
If you are facing an unemployment overpayment, call LSNJLAWSM, Legal Services of New Jersey’s statewide, toll-free legal hotline, at 1-888-LSNJ-LAW (1-888-576-5529). You may also apply online. Hotline hours are Monday-Friday, 8 a.m. to 5:30 p.m.