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View Full Version : wages vs non wages reporting to the EDD California


Cindy Marc
11-26-2009, 01:20 PM
I will be getting a settlement from a firm i worked for several years ago. Part is 'wages' and part is 'non wages'. I have been collecting unemployment for the past few months and according to the continued claim form i should not report the pay, becuase it was work/pay earned many years ago. My question is, when the EDD learns about the $$$ (from IRS or what ever organizations report to them) won't they want to immediatly investigate me as it will appear that i was working, hence the sudden pay?:confused:

Betty3
11-26-2009, 04:03 PM
Cindy, didn't this thread answer your question? -
http://www.laborlawtalk.com/showthread.php?t=233753

(You *earned* no wages while unemployed.)

Cindy Marc
11-26-2009, 08:15 PM
It answers the first part of my question about filing out my continued claim form, but does not answer the 2nd part of my question which i have been losing sleep over, that is; when the IRS or other agency that works with the EDD reports the $$$ to the EDD, won't the EDD launch an investigation on me? They don't have any way to know that the money was earned years ago...Below (from the edd site) is specifically what i am worried about....i don't want there to be a misunderstanding;

Quarterly Audit of UI Claims – This audit utilizes the quarterly wage information reported by employers and compares wage information to UI claims information. During this process, the system identifies claimants who have weekly UI benefit information in the same quarter that employers reported wages. When a match is identified, a Benefit Audit (DE 1296B) is sent to the employers who reported quarterly wages for the claimant. The DE 1296B requests earnings and eligibility information for the weeks relating to the reported quarter and subsequent quarter if the claimant received UI benefits.

With the DE 1296B, we ask the employer to provide a breakdown by week of the gross amount earned by the claimant. Even though employers provide total gross wages for the period of the audit when submitting their quarterly tax report, that report is based on when the wages were paid and is not broken down by week. We need to know when the wages were actually earned because this is what the claimant is required to report on a weekly basis.

When claimants misrepresent their earnings while claiming UI benefits, the EDD issues an administrative decision. It includes the audit results and establishes an overpayment that the claimant must repay. If the claimant willfully gave false information or withheld information to claim UI benefits, EDD will assess a 30 percent cash penalty and a false statement disqualification. A false statement disqualification is a penalty that denies the claimant’s benefits from 5 to 23 weeks.

Betty3
11-26-2009, 09:41 PM
It answers the first part of my question about filing out my continued claim form, but does not answer the 2nd part of my question which i have been losing sleep over, that is; when the IRS or other agency that works with the EDD reports the $$$ to the EDD, won't the EDD launch an investigation on me? They don't have any way to know that the money was earned years ago...Below (from the edd site) is specifically what i am worried about....i don't want there to be a misunderstanding

You asked this in the previous link - from previous link:
My concern is that i know the firm will report the income and EDD will find out. Edd will assume that i earned the $$$ recently if i don't tell them otherwise. They will not know that it was earned in 2007. I think the form asks for the dates the money was earned tho. If i don't report it and they find out (which they will) there will surely investigate.

Go to the link & read the answer. I don't know what more we can tell you.

mcarson87
11-27-2009, 01:14 AM
I've personally dealt with an issue of income being reported incorrectly. If your previous employer does report your income as being earned on a different date than it actually was (e.g. they report the date payment was issued instead of when it was actually earned, which was the issue in my case) and your submitted continued claim form does not match, you will receive a letter from the EDD about it. At that point you will need to respond and inform the EDD that those wages were earned several years ago and if you have any supporting documents, it would be highly recommended that you submit them along with your response

Betty3
11-27-2009, 02:18 AM
Per the prior thread, since this is a settlement, there should be no reporting. Please note mine, Scott's & Patty's replies prior thread. "If" for some reason (what I don't know), it is reported, then OP can follow above procedure.

Cindy Marc
11-27-2009, 05:07 AM
They are calling it wages, and reporting it on a W-2 and i am told it WILL POP UP ON THE QUARTERLY REPORT they get from employers that i copied and pasted in my question. By the way what is 'OP'? Mcarson87 answered my question.

Cindy Marc
11-27-2009, 05:11 AM
I've personally dealt with an issue of income being reported incorrectly. If your previous employer does report your income as being earned on a different date than it actually was (e.g. they report the date payment was issued instead of when it was actually earned, which was the issue in my case) and your submitted continued claim form does not match, you will receive a letter from the EDD about it. At that point you will need to respond and inform the EDD that those wages were earned several years ago and if you have any supporting documents, it would be highly recommended that you submit them along with your response

Mcarson87-Thank you for your reply. I have been asking the same question over and over and you are the only one who understood what i was asking. Do you think it would help if i sent a copy of the settlement agreement to the EDD? It shows the dollar amount for the 'wages' and the 'non wage' checks i am going to get. I really want to avoid any problems with the EDD.

Cindy Marc
11-27-2009, 05:37 AM
mcarson87 is 100% correct.

http://www.edd.ca.gov/pdf_pub_ctr/de1296e.pdf

For anyone else who might have the same question as i, here is the link to the form (DE1296) employers get (and need to return in 10 days) if there is a discripency between someones continued claim form and the EDD's quarterly report.

Betty3
11-27-2009, 08:40 AM
On the other link you told one of our responders you would get a 1099.

OP is original poster. (you)

Cindy Marc
11-27-2009, 08:57 AM
once check is coming to me via 1099 called 'non wages' and another check is coming via w-2 called 'wages'.

Betty3
11-27-2009, 09:19 AM
Ok, you didn't say that originally & the person replying was a payroll person & they know how to answer those questions. You go ahead & do whatever you have to do. Congrats on winning your settlement. Betty3

Cindy Marc
11-27-2009, 09:34 AM
so what do you suggest? I want to avoid any problems with the EDD...i do not want them to think i am hiding anything!

Betty3
11-27-2009, 09:43 AM
I said do what you have to do. (what you're required to do)

Cindy Marc
11-27-2009, 09:56 AM
So your advise is "do what you have to do"? You do not have any suggestions?

Pattymd
11-27-2009, 10:13 AM
What type of suggestions do you want? When you get the check, call the EDD and ask them. You'll need to know how much is wages and how much is 1099 compensation.

Here's what happens. The employer reports SUI taxable wages on the quarterly report, due the end of the month following the end of the quarter. Once those wages are in the system, the state says "Oh, Mary had reportable wages for the same quarter in which she received unemployment benefits". Then they send a form to the payer and list every week that Mary received benefits. The employer has to report for each week listed, what day(s) Mary worked (if at all) and, if Mary received pay for the week, what type of pay it was.

Cindy Marc
11-27-2009, 10:26 AM
Right, i figured that all out by reading on the internet for the past 4 hours hence my link at 5;47 this morning. "What kind of suggestions do i want?" I guess i will just revert to my question one more time;
"How do i avoid getting investigated by the EDD seeing they will likely view my settlement as recent income?" I can't get through to them over the phone....i have been trying that for the past 2 months unsuccessfully. Do I just wait for the EDD to send me a letter of overpayment?

Pattymd
11-27-2009, 10:35 AM
You can't "avoid" it by doing anything up front. If the company reports on the benefits audit I explained to you what the EDD deems to be earned wages, the EDD will contact you.

Cindy Marc
11-27-2009, 10:42 AM
Ok, thank you. That is what i wanted to clarify/learn...i thought there might be some pro-active step i could take. Thanks for your help.:)

Scott67
11-27-2009, 10:51 AM
Cindy,
EDD does not have a process that I have been able to identify to "head off" an "investigation", which I think is what you are hoping to do. Their approach is process and pay the bi-weekly forms that have no anomalies and to put others in a stack that usually results in a telephone interview. You can try including a letter or explanation with the bi-weekly form that you file for the period in which you receive the check. I've suggested that to others, and I have not yet seen any evidence that this will head off a letter from EDD scheduling a telephone interview. It won't hurt you to do it, so you have nothing to lose. I think it comes down to the people at EDD who process the bi-weekly forms are not the same people who handle anomalies. From telephone interviews in which I have participated, it doesn't appear that the persons conducting the interview even have copies of the claim forms, so they probably wouldn't see the letter either. I'm conjecturing here, because I haven't actually been inside of EDD to see how this all flows.

So, either EDD will never find out about the payment and life just goes on, or they will find out and they'll schedule you for an interview. If they do the latter, you can expect about 6 weeks without checks pending the interview. To be prepared for the interview, make sure you have all of the documentation on the payment to make it very clear that it is not payment for current work. In the interview be prepared to explain clearly and concisely the origin of the payment. Beyond that, answer their questions and do not get into any other details that may cloud the issue in the mind of the interviewer. After a successful interview, forms will be sent to you for the weeks that were delayed, so continue keeping your records of your job search activities during that time.

I have found the interviewers to be easy to talk to and, if not totally impartial, biased on the side of the employee. They do have a demanding schedule, going from one telephone interview to another all day long, so they can get irritated if the interviewee has difficulty in staying on topic.

Betty3
11-27-2009, 10:54 AM
You said in post #7 mcarson answered your question & she told you what to do in her post so I said go ahead & do what is required. (what you have to do) Patty also told you in her first post what to do.

I'm glad you finally got all your questions answered & know what to do.

PS - Scott, your post wasn't there yet when I typed mine.

Cindy Marc
11-27-2009, 11:05 AM
thanks Scott for your info. If i send a note to them via US mail do you think they would document my file that i attempted to notify them of the pending settlement? I would also like to avoid them ever being able to say i "didn't disclose" something.

Scott67
11-27-2009, 11:14 AM
Cindy, You are welcome.

Sending them a note can't hurt you, but I rather doubt that they have a process entering it in the file. So, I personally wouldn't do that. You have nothing to disclose regarding this payment, so you can't be in trouble for not disclosing it. Your only issue is to be able to prove the source and nature of the payment, if and only if, THEY raise the issue. Just to be safe, I'd hang on to that documentation for a few years. Beyond that, relax and try to get some sleep.

Cindy Marc
11-27-2009, 11:21 AM
sounds good....i feel much better now. I have been dreading this day for 2 years. The settlement has been a long time coming but worth it. One last question...do firms have to report SUI on all pay or just on regular on-going employees...if you know. Is there ever an instance where they do not report SUI?

DAW
11-27-2009, 12:08 PM
I am not a SUI or CA-EDD expert, but your question just crossed into something I do know. Employers file quarterly wage reports with the state (all states). Anything that appears on a W2 almost certainly is also reported on the state quarterly report, along with your name and SSN. So, if it was reported on a 1099, then it was not reported on the state quarterly report. If it was reported on a W2, then it was reported on the state quarterly report. Now that is payroll only.

Unrelated to that, the state sends the employer various documents when a UI claim occurs. These documents generally end up in HR (not payroll). Some of these documents request/require a response, others the response is voluntarily (meaning no response is taken as agreement) and some documents are basically FYI. The employer does whatever the employer does. Some employers respond, and some do not. Some employers tell the truth and some do not.

Your problem is that if the payment went through payroll (W2), then the state will get it reported on the quarterly. It will be a number, period. No explanation. The state will be getting this for every single employee in the state at more or less the same time, and their priority will be to get their number into their computer system ASAP. Not read notes or do anything else. At some point, the computer system (not an actual person) is going to notice that someone currently drawing UI has reported quarterly wages. That at best will set off a flag, more likely some type of automated response. The chances you can stop this is more or less nothing. Something will happen and it will be automatic (no humans involved). The computer will not check your file to see if there is a note in it. When it happens, TALK TO SOMEONE. The person you talk to will be paid minimum wage, will not actually know anything, and be told to keep the call under 18 seconds. Meaning that you will not get a good result. Keep appealing and going up the food chain until you can find an actual person who is not on an 18 second clock who knows what they are doing. You are legally right, but there is no chance that you can short circuit the initial steps of the bureaucratic process.

Cindy Marc
11-27-2009, 12:26 PM
thanks for the detailed info. I think my best bet is to just keep my settlement agreement in a real safe place! It clearly displays the exact dates that i worked for the firm and i can't imagine how anyone could dispute that:o. It was several years ago and over a year before i started to collect EDD. They were not even the last employer i worked for....i did not file for unemployed after working for them...i went on to work elsewhere for quite some time. If i am truly not due any more unemployment due (although i am certain i still qualify) to the reciept of this settlement that is fine...i just don't want to have to pay a 30% penality. Thanks again...:o

mcarson87
11-27-2009, 01:07 PM
Cindy I concur with the other posters that you should just wait until contacted by the EDD. While I understand you are anxious about what the outcome will be, your efforts to be proactive will likely all be in vain. You likely will not receive a notice of potential overpayment for 9-12 months so hopefully you will be back to work by then and your UI benefits will never be suspended. Further, if all goes well (your statement is clear, you provide supporting documents, and your employer confirms that the payment was for wages earned several years ago) you may never even have to wait around for a telephone interview; your response via mail may suffice.

Also, many times I see out of state posters suggesting to contact the EDD. Unless absolutely necessary I would advise against this; not because of anything harmful that will come about, but because it is practically impossible to get through. Your chances of getting struck by lightning are probably greater than the chances of you not getting the stock recording about how the call center is unable to take your call due to high call volume. Unless you want to dedicate a whole day or several partial days pressing redial, don't bother.


The person you talk to will be paid minimum wage, will not actually know anything, and be told to keep the call under 18 seconds. Meaning that you will not get a good result.
Wow! I've never experienced customer service that poor from the EDD. The biggest issue I have with them is that many of their employees have poor English skills.

Cindy Marc
11-27-2009, 01:35 PM
excellent suggestions and info. I agree. I am not going to do anything. I have confidence that if asked, the firm will provide my employment dates correctly....they got them correct on my settlement agreement. And if not, i can prove them with the SA, final checks, and other documentation. Thanks so much for your detailed help! :)

sned45
01-02-2010, 01:50 PM
I'm going through this right now. When the company I worked for merged with Google 9/2007 my options were paid out with a small percentage put into escrow for 18 months.

I was laid off 3/08 and unemployed until 12/7/09.

The escrow payment was paid out early 2009 via W2 through Google.

On Oct 13th received a notice for phone interview on Sat Nov 7th for "undisclosed wages". Once they send out a notice for phone interview they suspend all payments until resolved

During my phone interview I explained the whole 2007 merger and escrow to the EDD person performing the phone interview and was told everything was ok and my UI check should go out on Monday. Haven't received a check yet.

Since then I have been emailing and emailing CA EDD and keep getting the response that my claim was still pending. I even had two replies that said I would receive a call within two business days, of course they never happened.

Luckily I'm now working but this whole thing just goes to show how screwed up CA EDD is.

Cindy Marc
01-02-2010, 04:45 PM
That is exactly what i am afraid of. I called EDD when i got my settlement and spoke to a senior CS rep. He made a bunch of notes in my file regarding the settlement pay...i just hope they check the file (for notes) before cutting off pay and starting the investigative process. They are supposed to send a form to the employer asking them to confirm dates work.....if the employer fills it out correctly, that should indicate to the EDD what the true work period was....and that the pay was not for recent work. I'm prepared for the process where they will investigate the sudden W2 pay....i've done everything i could do so it doesn't look like i am trying to hide anything....Hopefully the process will go ok. I'm sure your checks will start up again soon but i would call them everyday until you get them again!

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