California EDD accuses approved applicants of fraud, garnishes wages to get money back

SAN FRANCISCO - California’s Employment Development Department is accusing some pandemic-era claimants of fraud and demanding repayment, years after their applications were approved.

In some cases, current wages are being garnished to claw back the unemployment money stating ineligibility, even before appeals can be filed.

"It’s been awful to be honest," a Bay Area school teacher who didn’t want to be identified said. "I was actually horrified. I started crying. I couldn’t believe this happened, I’ve never paid a bill late in my life and I have excellent credit."

The teacher lost her secondary job as a restaurant server at the start of the pandemic and applied for unemployment benefits. While she was approved in 2020 and received more than $13,000, the EDD said two years later she wasn’t eligible. The state began garnishing her teaching wages soon after.

"I was just so embarrassed," she said. "Just the fact that they reached out to my school about this – it was a nightmare."

Every paycheck since early 2022, close to $800 is taken out, she said. So far, $10,000 and counting has been paid back to the EDD.

Her lawyer tells KTVU that she is not alone.

"We literally can’t even call people back," employment attorney John-Paul Deol said. "I would think there are hundreds, if not thousands of cases."

The EDD said in a statement that "when a person applies and certifies for unemployment benefits, they must meet the eligibility requirements…it is important to repay overpayments to avoid collection and legal action."

The state's attempt to recoup the unemployment money has kept attorneys like Deol busy working on appeals, primarily for those with modest means who were previously approved to receive unemployment money.

"That’s what’s so bizarre. I don’t understand," he said. "The EDD hasn’t explained how it approved people only then two, three years later to say, ‘Oh, we shouldn’t have approved you but why don’t you pay us back?’ Well, it seems to me if the EDD made the mistake then the EDD should eat the cost."

But it’s not the only mistake. Another person’s appeal forms were sent to the school teacher in error. The documents contain personal information including social security number, address and employment history.

KTVU contacted that other person who expressed disappointment and called the entire appeals process confusing. No documents were mistakenly sent to that person but it still raises questions.

"I felt discouraged because then I started to panic," the school teacher said. "Was my information now set to a stranger including my social security number?"

The EDD did not answer KTVU’s specific questions but said it has deployed fraud fighting tools in recent years. If someone receives correspondence containing information of others, the EDD said it should be reported immediately by visiting its webpage.

Deol said it’s the latest security problem that exposes ongoing disorganization and incompetence within the department.

"The scope is going to be huge and I’m sure it’s just getting worse," he said. "It’s very concerning."

Brooks Jarosz is an investigative reporter for KTVU. Email him at  brooks.jarosz@fox.com and follow him on Facebook and Twitter @BrooksKTVU