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LAW Home > Legal Topics > Jobs and Employment > Unemployment Insurance > Overpayment

Can Unemployment Demand a Refund? They Can and Do



Take the case of Maria . . .

For five years, she worked at a restaurant under several managers, the last of whom, Steve, was hot- tempered and constantly criticized Maria and other employees. Maria decided to leave the job.

After receiving unemployment benefits for two months, she got a notice from New Jersey’s Appeal Tribunal. Her former employer had appealed the Unemployment Division’s finding that she was eligible for benefits.

When Maria and Steve attended a phone hearing with the Appeal Tribunal, Maria testified about the difficulty of working with Steve, and he admitted being impatient sometimes but was surprised by Maria’s resignation. The Tribunal ruled against Maria, disqualifying her from benefits because she left the job “voluntarily, without good cause attributable to the work.” She appealed to the Board of Review, but lost.

When the NJ Department of Labor (NJDOL) demanded Maria return the $2,000 “overpayment,” Maria didn’t know what to do since she did not have the money to repay the debt. She feared that NJDOL would take her tax returns, which she desperately needed to recoup the benefits she had received.

What can a person in Maria’s situation do?

Let’s do a brief assessment. Appealing is no longer an option because the deadline for an appeal has passed. Her chances of success were not good anyway. She can’t argue that the overpayment was due to an “agency error” (which would limit the way NJDOL could recoup her overpaid benefits) because it wasn’t an agency error. It was due to a successful appeal by the employer.

Maria can’t get the benefit of the “two-determination rule,” which prevents the recoupment of benefits where NJDOL has made two determinations of entitle- ment. In her case, there was only one determination of entitlement when the NJDOL initially assessed her claim.

Since none of the above options for challenging an overpayment will work in Maria’s case, she should consider applying to the director of the Unemployment Division for a complete waiver of her overpayment. Waivers of unemployment overpayments are available when a claimant has not misrepresented any significant facts, AND when:

  1. The claimant is deceased; OR
  2. The claimant is disabled and no longer able to work; OR
  3. When making the claimant refund the benefits would be “contrary to the principles of equity” (in other words, when taking the benefits back would cause the claimant significant economic hardship).

In this case, Maria should request a waiver of her overpayment under the third category, since the agency’s recoupment would create significant economic hardship for her. Importantly, she never misrepresented any facts to NJDOL; she was always honest. That is important because waivers are never granted where fraud or misrepresentation by the claimant is involved. Also, in her case, repaying the $2,000 would cause her great economic hardship. She has no big assets (no savings or retirement money) and the little she makes from her new job barely covers her living expenses. Additionally, she is close to retiring and likely won’t work long enough to repay the debt, even if she enters into a repayment plan with NJDOL. She needs every penny she makes.

Considering all of these factors, Maria seems to have a strong case for a waiver of her overpayment. She should write a letter to the director of the Unemployment Division ( and explain that the overpayment was not her fault, she didn’t misrepresent anything, and repaying the $2,000 would be very difficult for her. In response, NJDOL may require that she provide additional financial information. Once she submits the letter and any further documentation, NJDOL will review her case and notify her, in writing, about whether her request has been granted. If she disagrees with the decision, she may appeal to the Appeal Tribunal. ​​