Settlement Ensures Future Claimants Will Get Fair Warning Before Facing Benefit Denials or Surprise Orders to Repay EDD
San Francisco, CA (Mar. 27, 2025) – Legal Aid at Work (LAAW) and Rosen Bien Galvan & Grunfeld LLP have reached a settlement agreement with the California Employment Development Department (EDD), the state agency responsible for administering unemployment insurance for millions of people who work in California. The case involves a lawsuit challenging the legality of EDD’s policies for informing unemployment insurance claimants of determinations that the claimant cannot receive benefits or needs to repay benefits that the claimant has already received.
The agreement, which still needs court approval, will dramatically increase the likelihood unemployment insurance claimants will promptly learn about negative decisions, understand them, and know how to challenge them. Among other things, the settlement will require the EDD to start sending information about its decisions by email and text message, and will require the EDD to rewrite its notices so they are written at an eighth-grade level.
The Employment Development Department is responsible for administering unemployment insurance for millions of people who work in California. Unemployment insurance is a crucial lifeline for unemployed workers, and stabilizes the broader economy during periods of high unemployment. During the COVID-19 pandemic, millions of Californians accessed unemployment insurance benefits, and the state paid out nearly $25 billion in benefits in 2020 alone. But far too many claimants never receive the money they are owed. California’s Legislative Analyst’s Office has estimated that between $500 million and $1 billion in benefits go unreceived each year because the EDD improperly denies claims. Other claimants are ordered to repay benefits when they are retroactively deemed ineligible for benefits. These decisions, which can order claimants to repay $10,000 or more in benefits, are often financially crippling. And the decisions are often wrong. Claimants who appeal EDD’s decisions have historically been able to get those decisions reversed on appeal over 50 percent of the time, according to the same LAO report.
“When the EDD decides that a claimant is not eligible for benefits—or needs to pay back money the claimant has already received—these decisions can put claimants into a deep financial hole with life-changing repercussions,” said George A. Warner, a Staff Attorney in Legal Aid at Work’s Wage Protection Program. “This settlement will help ensure that claimants get the information they need in time to fight unfair decisions.”
The lawsuit, Okamura v. Employment Development Department, was filed in Alameda County Superior Court. It argues that EDD failed to properly notify claimants when their benefits were denied, when they owed money back, or when they were accused of fraud. As noted in the Complaint, some claimants only learned about these decisions after their wages were garnished or their tax refunds were seized. Even when claimants did receive notices, the notices were so confusing that they didn’t understand why they were being charged with an overpayment, or realize that they could challenge the EDD’s decision.
Key Changes Under the Settlement
EDD will make many important changes to improve how it notifies people about unemployment benefit decisions, including:
- Expanded Digital Notifications – EDD will soon send emails, text messages, and online alerts to make sure people know about benefit denials and overpayments. Currently, the EDD only sends these notices to claimants by mail, even though most of the unemployment insurance process is done online and over the phone.
- Creating Easier-to-Understand Notices – EDD has agreed that notices revised as part of its longer-term modernization effort will be rewritten at an 8th-grade reading level. Currently, notices are drafted at a college-level reading level, making them difficult to understand for most claimants.
- Using Address Verification Tools – EDD will implement a system to verify claimants’ mailing addresses by cross-checking the National Registry of New Hires, and eventually the United States Postal Service’s National Change of Address database. These changes will reduce instances of lost or delayed communication, especially when the EDD sends notices to claimants months or years after they stopped collecting unemployment insurance benefits.
- Clearer Information About EDD’s Decision – Notices will provide additional information on why benefits were denied or overpaid. Currently, notices only provide limited information about the EDD’s decision, leaving claimants guessing about why they were denied or required to pay back benefits.
- Disclosure About Possibility of Waiver of Overpayment – Importantly, the EDD will also start telling claimants who receive Notices of Overpayment that some claimants are eligible for a waiver of the overpayment. On appeal, the California Unemployment Insurance Appeals Board regularly decides that an overpayment must be waived, and claimants do not need to pay back benefits they were not eligible to receive.
Even though this lawsuit was filed as a potential class action, the settlement only requires the four individual named plaintiffs and Legal Aid at Work, an institutional plaintiff, to release their claims. The lawsuit does not affect other claimants’ right to file their own legal claims if they have been affected by EDD’s practices in the past.
“This settlement doesn’t just help our clients—it improves the system for everyone,” said Jenny Yelin, a partner at Rosen Bien Galvan & Grunfeld LLP. “Because of this settlement, EDD is making real changes that will help millions of workers going forward.”
Next Steps
The motion for settlement approval and entry of judgment was filed today in Alameda County Superior Court. If approved, EDD will begin implementing the agreed-upon changes over the next year.
A copy of the proposed settlement is available here.
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About Legal Aid at Work
Legal Aid at Work partners with people to help them understand and assert their workplace rights. It also advocates for employment laws and systems that empower low-paid workers and marginalized communities.
About Rosen Bien Galvan & Grunfeld LLP
Rosen Bien Galvan & Grunfeld LLP, founded in San Francisco in 1990, focuses its practice on complex litigation, especially cases that move and shape public policy in the areas of civil rights, employment, disability rights, and prisoner rights.
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Selected Media
California EDD settles lawsuit over unemployment eligibility notification, Sacramento Bee, March 28, 2025
Media Contacts:
George Warner
Senior Staff Attorney, Wage Protection Program
Legal Aid at Work
Phone: (415) 593-0065
Email: gwarner@legalaidatwork.org
Jenny Yelin
Partner
Rosen Bien Galvan & Grunfeld LLP
Phone: (415) 433-6830
Email: jyelin@rbgg.com
If you are a worker needing assistance with unemployment insurance, please call Legal Aid at Work at 415-864-8848.