If you received a Hawaii PUA overpayment notice from the Department of Labor and Industrial Relations, you are on the hook for the full overpaid amount, plus a 15% penalty and up to 24 months of disqualification if the DLIR labeled the overpayment fraudulent. Hawaii law also gives you a way out: a waiver when you weren’t at fault and repayment would be against equity and good conscience. You have 10 days from the mailing date of the notice to appeal, so the first decisions you make matter more than anything that comes later.
Why the DLIR Says You Were Overpaid
Most Pandemic Unemployment Assistance overpayments in Hawaii trace back to one of three situations. Knowing which one fits your case shapes both your appeal and any waiver request.
The first is an earnings mismatch. PUA weekly amounts were built from prior self-employment or gig income, and small differences between what you reported on weekly certifications and what your tax records or employer reports later showed could push your benefit above what you actually qualified for.
The second is a documentation gap. PUA claimants had to substantiate eligibility with records like a Schedule C or Schedule SE from the tax year before they applied, 1099 forms, business licenses, or business receipts, and the DLIR told claimants to keep everything for verification.1State of Hawaii Department of Labor and Industrial Relations. COVID-19 Pandemic Unemployment Assistance FAQs When the agency followed up months or years later and the paperwork wasn’t there, it could retroactively decide you weren’t eligible for some or all of the weeks you collected.
The third is a rule change. PUA guidance evolved throughout the pandemic, and some people who qualified under early rules were later found ineligible when the DLIR applied updated directives. That produced overpayments even when the claimant did nothing wrong at the time.
The third scenario is the strongest fact pattern for a waiver, and the first is often defensible on appeal if you can show your reported figures were accurate.
Read the Notice and Watch the 10-Day Clock
A redetermination notice under Hawaii law must state the amount you owe, the basis for the overpayment, and the specific weeks that were overpaid.2Justia. Hawaii Code 383-44 – Recovery of Benefits Paid Two things on that notice control everything else.
The mailing date starts your appeal clock. You have 10 days from the date the notice was mailed to your last known address, not the date you opened it. The DLIR can extend the window to 30 days if you show good cause for missing the original deadline.3Justia. Hawaii Code 383-38 – Appeals, Filing, and Hearing After 30 days, your options narrow sharply.
The other thing to look for is whether the notice treats the overpayment as fraudulent. That word changes everything that follows.
Fraud vs. Non-Fraud Changes Your Whole Strategy
A non-fraud overpayment can be waived in full. A fraud finding cannot be waived at all,4U.S. Department of Labor. UIPL 20-21 Change 1 – Pandemic Unemployment Assistance Overpayments and it stacks three separate penalties on top of what you already owe.
A 15% penalty is added to the overpaid amount. A $10,000 overpayment becomes $11,500. That penalty goes to the unemployment compensation fund and, unlike the base overpayment, cannot be collected by deducting from future benefits; the DLIR pursues it through tax refund intercepts or civil action.2Justia. Hawaii Code 383-44 – Recovery of Benefits Paid
A fraud finding also triggers disqualification from all unemployment benefits. The disqualification runs from the week of the determination through the rest of that period plus the following 24 calendar months.5Justia. Hawaii Code 383-30 – Disqualification for Benefits
Criminal charges are also on the table. Making a false statement or hiding a material fact to obtain benefits is a misdemeanor if the overpayment was $300 or less and a Class C felony if it exceeded $300, with each false statement counted as a separate offense.6Justia. Hawaii Code 383-141 – Falsely Obtaining Benefits The statute does draw one line: if an administrative fraud disqualification has already been imposed, no criminal fine or imprisonment can be added on top of it.
If your notice tags the overpayment as fraud, your first move is to fight that classification on appeal. Get it reclassified as non-fraud and the waiver door opens.
Requesting a Waiver
Hawaii can waive recovery of an overpayment entirely when two conditions are both met: you received the overpayment without fault, and requiring repayment would be against equity and good conscience.2Justia. Hawaii Code 383-44 – Recovery of Benefits Paid Satisfying just one prong is not enough.
Without Fault
Under Hawaii’s administrative rules, you are “at fault” if you made a statement you knew or should have known was incorrect, failed to provide information you knew was material, or accepted a payment you knew or reasonably should have known was wrong.7State of Hawaii Department of Labor and Industrial Relations. Hawaii Administrative Rules Chapter 5 Title 12 – Employment Security The cleanest cases are ones where the DLIR itself caused the error, such as miscalculating your weekly amount from information you reported correctly, or applying a rule change after you had already been paid.
Against Equity and Good Conscience
For PUA overpayments, federal guidance from the U.S. Department of Labor defined three circumstances that meet this prong: recovery would cause you financial hardship, you relied on the payment and gave up a valuable right or changed your position for the worse, or recovery would simply be unconscionable under the circumstances.4U.S. Department of Labor. UIPL 20-21 Change 1 – Pandemic Unemployment Assistance Overpayments The Department of Labor encouraged states to apply this authority broadly, including through blanket waivers for qualifying scenarios.
Waivers are never available for fraudulent overpayments.4U.S. Department of Labor. UIPL 20-21 Change 1 – Pandemic Unemployment Assistance Overpayments
Appealing the Determination
You can appeal an overpayment determination, a fraud finding, or a denied waiver request. File within 10 days of the mailing date, at the DLIR office in the county where you live or where you were last employed, or directly with the employment security appeals referee’s office.8State of Hawaii Employment Security Appeals. Employment Security Appeals – Appeals Process
What Happens at the Hearing
An appeals officer schedules a hearing. You can present evidence, bring witnesses, cross-examine the DLIR’s witnesses, and make legal arguments. Federal law requires that the hearing provide elementary fairness: timely notice, a full opportunity to be heard, access to the evidence against you, and a decision based on what came in at the hearing.
Preparation is what wins these. Bring pay stubs, tax returns, bank statements, copies of everything you submitted to the DLIR, and any correspondence showing the agency’s own errors. If you’re contesting a fraud finding, the DLIR has to prove four elements: that you made a false statement, that the fact was material, that you knew it was false, and that your purpose was to obtain benefits.7State of Hawaii Department of Labor and Industrial Relations. Hawaii Administrative Rules Chapter 5 Title 12 – Employment Security Knock out any one and the fraud finding falls.
Benefits continue under the most recent determination or decision until it’s reversed, at which point payments stop for any future weeks affected.9Justia. Hawaii Code 383-43 – Payment of Benefits Pending Appeal The appeals officer issues a written decision, and further review is available if you lose, but the initial hearing is where most cases actually turn.
How the State Collects if You Don’t Act
The DLIR has several tools, and it uses them.
The most common is a benefit offset. If you file for regular unemployment later, the DLIR can deduct the old overpayment from your new weekly benefits, and it has two years from the mailing date of the redetermination or the final appeal decision to do so.2Justia. Hawaii Code 383-44 – Recovery of Benefits Paid Getting a reduced check while you’re already unemployed is the scenario most worth avoiding.
Since April 2013, Hawaii can also intercept your federal income tax refund to recover the overpayment, penalties, costs, and administrative fees.2Justia. Hawaii Code 383-44 – Recovery of Benefits Paid The attorney general can file a civil action to collect, and while no interest accrues on the underlying debt, a judgment against you opens the door to wage garnishment under Hawaii’s general garnishment statute.10Justia. Hawaii Code 652-1 – Garnishee Process
The DLIR usually offers voluntary repayment plans before pursuing forced collection. If your finances genuinely can’t support one, request a waiver first instead of agreeing to a plan you can’t keep.
Tax Consequences if You Repay
Unemployment benefits are taxable income in the year you receive them, so repaying an overpayment in a later year means you already paid tax on money you had to give back. Recovery depends on the amount.
Repay more than $3,000 and you can claim a tax credit under the claim of right doctrine, calculating your taxes both with and without the overpaid amount and taking whichever method helps more.11Internal Revenue Service. IRM 21.6.6 – Specific Claims and Other Issues For sizable PUA overpayments, this can be significant.
Repay $3,000 or less and the picture is worse. The miscellaneous itemized deduction that used to cover smaller repayments was eliminated for tax years after 2017, so you may not be able to deduct the repaid amount at all. One more reason to pursue a waiver first if you have a legitimate basis.