Colorado § 8-81-101 - Penalties.

§ 8-81-101. Penalties.

(1) (a) Any person who makes false statement or representation of a material fact knowing it to be false, or knowingly fails to disclose a material fact, with intent to defraud by obtaining or increasing any benefit under articles 70 to 82 of this title 8 or under an employment security law of any other state, of the federal government, or of a foreign government, either for himself, herself, or for any other person commits a class 2 misdemeanor.

(b) Any person who, in the opinion of the division, has received a benefit to which he was not entitled by reason of his false representation or failure to disclose a material fact with intent to obtain or increase any benefit for himself or any other person and his trial by court is prevented by the inability of the court to establish its jurisdiction over said person shall be ineligible to receive any benefits under articles 70 to 82 of this title from the date of the discovery of the said act until such time as he makes himself available to the court for trial.

(c) If any employer makes or causes to be made a false statement as to the reason for a claimant's separation from employment or makes or causes to be made a false offer of work to a claimant, which statement or offer shall result in a delay in the payment of benefits to any such claimant, such employer shall be penalized by having his account charged with one and one-half times the amount of benefits due during the period of the delay and with one hundred percent of all other benefit payments paid to the claimant thereafter during his current benefit year, any other provisions of articles 70 to 82 of this title to the contrary notwithstanding, and the claimant shall be compensated by being paid one and one-half times his weekly benefit amount for the period of the delay. "The period of delay" as used in this section shall be determined by the division, and such determination shall be binding upon all parties affected and shall not be subject to review. The penalty imposed by this paragraph (c) shall be in addition to and not in lieu of any other penalty, civil or criminal, provided in articles 70 to 82 of this title.

(2) Any employing unit, or any officer or agent of an employing unit, or any other person who makes a false statement or representation knowing it to be false or who knowingly fails to disclose a material fact either to cause an individual to receive benefits to which such individual is otherwise not entitled or to defraud an individual by preventing or reducing the payment of benefits to which such individual would otherwise be entitled, or to avoid becoming or remaining a subject employer, or to avoid or reduce any premium, surcharge, or other payment required from an employing unit under articles 70 to 82 of this title 8 or under the employment security law of any other state, the federal government, or a foreign government or any such employing unit, officer or agent, or other person who willfully fails or refuses to pay any such premiums or surcharges or make any other payment, or to furnish any reports required under section 8-72-107, or to produce or permit the inspection or copying of records as required under section 8-72-107 commits a class 2 misdemeanor. Each false statement or representation or failure to disclose a material fact and each day such failure or refusal continues shall constitute a separate offense.

(3) Any person who willfully violates any provision of articles 70 to 82 of this title 8 or any rule or regulation thereunder, the violation of which is made unlawful or the observance of which is required under the terms of articles 70 to 82 of this title 8 and for which a penalty is neither prescribed in this article 81 nor provided by any other applicable statute commits a petty offense.

(4) (a) (I) Any person who has received any sum as benefits under articles 70 to 82 of this title 8 to which the person was not entitled may be required to repay such amount to the division for the fund. Such sum shall be collected in the manner provided in section 8-79-102; except that the division may waive the repayment of an overpayment if the division determines such repayment to be inequitable. Repayment is inequitable when:

(A) The person who received the overpayment is receiving or has received any of the following public assistance benefits in the twelve months prior to the division providing notice to the person of the overpayment: Federal supplemental nutrition assistance program benefits, temporary assistance to needy families benefits, federal supplemental security income, social security disability benefits received after any unemployment insurance benefits were paid, means-tested legal aid services, benefits from the low-income energy assistance program created in section 26-2-122.5, federal or state earned income tax credits, free or reduced-price school lunch benefits, public or subsidized housing benefits, medicaid benefits under the medical assistance program, articles 4 to 6 of title 25.5, or medicare benefits;

(B) The person's household income, exclusive of public assistance benefits, during the three months prior to the overpayment determination, was at or below four times the federal poverty guidelines determined by the United States department of health and human services under the authority of 42 U.S.C. sec. 9902 (2);

(C) The person needs much of the person's current income to meet ordinary and necessary living expenses and liabilities, including housing, food, school loans, child care, outstanding loan and credit card balances, transportation, and medical expenses;

(D) Due to the notice that the benefit payment would be made or because of the incorrect payment the person either relinquished a valuable right or changed positions for the worse, including if: The person incurred a financial obligation, such as a lease, based on benefit payments that the person received; the person relied on the benefit payment and took out a loan, in which the person has already invested the benefit payment received and repayment of the overpayment will cause the person to default on the loan, resulting in criminal or civil actions; or the person declined other financial assistance because the person received benefits under articles 70 to 82 of this title 8 and thought the person would not need additional financial assistance from other sources;

(E) The overpayment was caused, at least in part, by an error by the division or by the person's reliance on the division's publicized information or guidance that was later determined to be erroneous; or

(F) Any other reason the division finds sufficient to establish that repayment would be inequitable.

(I.5) The division shall, to the extent possible, review and waive the repayment of an overpayment at the time the overpayment is determined if the division has sufficient information to determine that the repayment would be inequitable. If the division does not have sufficient information in its possession to make such a determination, the division shall notify the person of the right to request a waiver of the overpayment and the process for such a request. The division shall accept copies of relevant bills, receipts, award letters, bank statements, and all other reasonable forms of proof that repayment would be inequitable. If a person cannot provide documentation, the division may accept as sufficient proof a written statement signed by the person seeking to waive the overpayment attesting to the facts at issue.

(II) If any person receives an overpayment because of the person's false representation or willful failure to disclose a material fact, inequitability must not be a consideration in any civil, administrative, or criminal action, and the person shall pay to the division the total amount of the overpayment plus a sixty-five percent monetary penalty. Of the monetary penalty, the division shall pay twenty-three percent into the unemployment compensation fund, created in section 8-77-101, and the remainder into the unemployment revenue fund, created in section 8-77-106. In addition, the person may be denied benefits, when otherwise eligible, for a four-week period for each one-week period in which the person filed claims for or received benefits to which the person was not entitled. The provisions of section 13-80-108 (9) shall be used for determining when an offense is committed for the purposes of this subsection (4)(a)(II). For purposes of this subsection (4)(a)(II), a person has not received an overpayment because of the person's false representation or willful failure to disclose a material fact if: The person provided all information requested by the division correctly, but the division failed to take appropriate action with that information or took delayed action when determining or redetermining eligibility; the person provided incorrect information due to conflicting, changing, or confusing information or instructions from the division; the person was unable to reach the division despite the person's best efforts to inquire or clarify what information the person needed to provide, or experienced other similar barriers, including that it was the person's first time applying for or receiving unemployment benefits, or the person experienced language, education, or literacy barriers; or the person's employer provided the person with incorrect or untimely information or did not timely report facts.

(III) All investigative costs awarded by the court and collected by the division in connection with the conviction, in any criminal action, of a person who has received any overpayment because of his or her false representation or willful failure to disclose a material fact shall be paid into the unemployment revenue fund.

(IV) The penalties associated with an overpayment pursuant to subparagraph (II) of this paragraph (a) shall be made known to individuals upon filing an unemployment claim as defined in section 8-70-112.

(b) Pursuant to rules and regulations promulgated by the director of the division, the division may write off all or a part of the amount of any overpayment which it finds to be uncollectible or the recovery of which it finds to be administratively impracticable. Amounts which remain uncollected for more than five years, or seven years for overpayments due to false representation or willful failure to disclose a material fact, may be written off as uncollectible.

(c) Any person aggrieved by a determination of the division made under this subsection (4) may appeal that determination and obtain a hearing before a hearing officer with the right to further appeal as provided by article 74 of this title. The initial appeal must be received within twenty calendar days after the date of notification of such determination by the division; otherwise, the determination shall be final.

(d) Upon final determination pursuant to paragraph (c) of this subsection (4), repayment of an overpayment that is a result of the individual's false representation or willful failure to disclose a material fact pursuant to subparagraph (II) of paragraph (a) of this subsection (4) shall be made within thirty days.

(e) The division shall not attempt to recover an overpayment until there is a final determination that the debt is in fact owed and all appeals are exhausted. The division shall not attempt to recover an overpayment when there is a pending waiver application until there is a final determination that the person is not eligible for a waiver and all appeals are exhausted.

Source: L. 36, 3rd Ex. Sess.: p. 47, § 16. CSA: C. 167A, § 16. L. 39: p. 581, § 12. L. 41: p. 800, § 16. L. 51: p. 821, § 14. CRS 53: § 82-11-1. L. 63: p. 682, § 10. C.R.S. 1963: § 82-11-1. L. 65: p. 847, § 10. L. 67: p. 73, §§ 1, 2. L. 69: p. 671, § 10. L. 77: (1)(a) amended, p. 478, § 3, effective July 1; (4)(b) R&RE, p. 478, § 4, effective July 1; (4)(c) added, p. 479, § 5, effective July 1. L. 79: (4)(a) and (4)(c) amended, p. 355, § 24, effective September 30. L. 81: (2) and (4)(a)(I) amended, p. 507, § 28, effective July 1; (4)(a)(I) and (4)(b) amended, p. 487, § 15, effective July 1. L. 83: (4)(a) amended, p. 433, § 13, effective June 3; (4)(d) added, p. 438, § 1, effective June 15. L. 84: (2) amended and (4) R&RE, pp. 319, 320, §§ 12, 13, effective July 1. L. 86: (4)(a)(II) amended, p. 703, § 10, effective July 1; (4)(b) and (4)(c) amended, p. 496, § 108, effective July 1. L. 86, 2nd Ex. Sess.: (4)(c) amended, p. 56, § 4, effective August 15. L. 90: (4)(a)(II) amended, p. 608, § 6, effective April 16. L. 92: (4)(b) amended, p. 1796, § 9, effective April 10. L. 2000: (4)(a)(II) amended and (4)(a)(III) added, p. 815, § 4, effective July 1. L. 2002: (4)(c) amended, p. 340, § 14, effective April 19. L. 2007: (4)(c) amended, p. 805, § 8, effective August 3. L. 2009: (2) amended, (HB 09-1363), ch. 363, p. 1909, § 35, effective July 1. L. 2011: (4)(a)(IV) and (4)(d) added, (HB 11-1288), ch. 212, p. 932, §§ 16, 17, effective July 1. L. 2013: (4)(a)(II) amended, (HB 13-1124), ch. 97, p. 312, § 2, effective August 7. L. 2021: (1)(a), (2), and (3) amended, (SB 21-271), ch. 462, p. 3144, § 99, effective March 1, 2022. L. 2022: (4)(a)(I) and (4)(a)(II) amended and (4)(a)(I.5) and (4)(e) added, (SB 22-234), ch. 224, p. 1621, § 11, effective May 25.

ANNOTATION

This section is constitutional. The general assembly provided guidelines for application of the penalty provisions by directing that principles of equity determine whether improperly paid benefits are to be repaid or set off against future benefits. Duenas-Rodriguez v. Indus. Comm'n, 199 Colo. 95, 606 P.2d 437 (1980).

A state statutory scheme conditioning receipt of current benefits on recovery of prior overpayments is expressly authorized by Congress, as is denial of claims for benefits where state eligibility requirements have not been met. In re Adamic, 291 B.R. 175 (Bankr. D. Colo. 2003).

Knowledge of section presumed of claimant. A claimant who has requested benefits pursuant to the unemployment compensation statutes must be presumed to have knowledge of § 8-74-109 and this section, which specifically provide for recovery of benefits paid in error. Paul v. Indus. Comm'n, 632 P.2d 638 (Colo. App. 1981).

Culpable mental state that must be established by state to prove unlawful receipt of benefits is "knowingly" under subsection (4)(a)(II). Div. of Emp. & Training v. Indus. Comm'n, 706 P.2d 433 (Colo. App. 1985).

Before an employee who is discharged for falsifying his employment application may be denied unemployment compensation benefits, the false statements on the employment application must be found to be material to the employee's ability to perform properly the duties for which he was employed. Casias v. Indus. Comm'n, 38 Colo. App. 261, 554 P.2d 1357 (1976).

Representations as to material fact. Inquiry regarding any circumstance, including school attendance, which has a bearing upon eligibility conditions is not only proper, but is required in the efficient administration of the act. The answers and representations made by the claimant as to school attendance are representations of material facts. Indus. Comm'n v. Bennett, 166 Colo. 101, 441 P.2d 648 (1968).

Admission based upon material false information declared void ab initio. Where the evidence supported the referee's finding that claimant supplied materially false information upon which his employer and its insurer relied in filing an admission of liability, the referee was justified in declaring the admission void ab initio. Vargo v. Colo. Indus. Comm'n, 626 P.2d 1164 (Colo. App. 1981).

Because the conduct prohibited by subsection (1)(a) of this section is distinct from the conduct prohibited by § 18-4-401, prosecution under one such statute as opposed to the other does not violate a defendant's constitutional rights. People v. Chesnick, 709 P.2d 66 (Colo. App. 1985).

Because conduct prohibited by § 18-5-102 is distinguishable from conduct prohibited by subsection (1)(a), charging a defendant under the former did not violate his or her right to equal protection of the laws. People v. Clanton, 2015 COA 8, 361 P.3d 1056.

The general assembly did not intend to preclude prosecution for forgery where the conduct underlying the charge also arguably violates subsection (1)(a) of this section. People v. Clanton, 2015 COA 8, 361 P.3d 1056.

This section is not intended to penalize an employer where the grounds assigned for discharge are ample if believed by the employer, even though given a contrary construction by others. Indus. Comm'n v. Emerson W. Co., 149 Colo. 529, 369 P.2d 791 (1962).

And it is immaterial that an employer does not choose to elaborate on the reasons for discharge or support them with additional testimony at the hearing, and such lack of elaboration is not proof that what had been reported was not the reason for the discharge. Indus. Comm'n v. Emerson W. Co., 149 Colo. 529, 369 P.2d 791 (1962).

Where the statements furnished by an employer are not willfully or deliberately false, they are not such as come within the penal terms of this section. Indus. Comm'n v. Emerson W. Co., 149 Colo. 529, 369 P.2d 791 (1962).

And without intent to falsify being shown, an employer cannot be held liable for making a false statement. Indus. Comm'n v. Emerson W. Co., 149 Colo. 529, 369 P.2d 791 (1962).

By virtue of subsection (4)(a), the division has authority to demand repayment of benefits mistakenly paid, or may have such overpayments credited to any future benefits to which the claimant may be entitled, if equity and good conscience so require. The division may also waive collection if it deems collection to be administratively impracticable. Gatewood v. Russell, 29 Colo. App. 11, 478 P.2d 679 (1964).

The monetary penalty under subsection (4)(a)(II) from overpayment is mandatory when the claimant knowingly fails to disclose earnings from employment, regardless of financial hardship. Woollems v. Indus. Claim Appeals Office, 43 P.3d 725 (Colo. App. 2001).

The statutory fifty percent penalty applied against defendant pursuant to this section was not properly included in the amount of restitution owed because the prosecution did not demonstrate that the amount of the penalty equaled the costs actually incurred by the department of labor and employment in enforcing compliance with the Colorado Employment Security Act (CESA). People v. Welliver, 2012 COA 44, 317 P.3d 1192; People v. Russell, 2013 COA 121, 310 P.3d 284 (decided prior to 2013 amendment).

The CESA authorizes the imposition of a "four-for-one" penalty for each week that a person received benefits to which he or she was not entitled. The statute requires recovery of the overpayments and imposition of a 50 percent monetary penalty. The repayment and monetary penalty provisions are mandatory. The provisions concerning recovery of past overpayments by withholding current benefits are permissive. In re Adamic, 291 B.R. 175 (Bankr. D. Colo. 2003).

The public policy behind the 40-week penalty is to protect the integrity of the unemployment insurance system by deterring the filing of false or misleading claims for unemployment benefits. In re Adamic, 291 B.R. 175 (Bankr. D. Colo. 2003).

The amount that may be assessed against a person by this section is a penalty and thus not dischargeable in bankruptcy. In re O'Brien, 110 B.R. 27 (Bankr. D. Colo. 1990).

Penalties arising from overpaid unemployment compensation obtained by "false pretenses, a fraudulent representation, or actual fraud" are nondischargeable under 11 U.S.C. § 523(a)(2)(A) to the same extent as the restitutionary debt for overpaid unemployment compensation. In re Wine, 558 B.R. 438 (Bankr. D. Colo. 2016).

The sixty-five percent monetary penalty in subsection (4)(a)(II) is nondischargeable under 11 U.S.C. § 523(a)(7) because it is a "fine, penalty, or forfeiture" within the meaning of that section. In re Martinez, 609 B.R. 351 (Bankr. D. Colo. 2019).

And, under 11 U.S.C. § 523(a)(7), penalties may be nondischargeable even if there is no other underlying nondischargeable debt. In re Martinez, 609 B.R. 351 (Bankr. D. Colo. 2019).

A governmental unit may satisfy a debtor's pre-petition obligation for receiving overpayments of unemployment benefits by offsetting or applying post-petition benefits to the outstanding debt. An automatic stay in a voluntary Chapter 13 bankruptcy proceeding does not preclude the governmental entity from recouping unemployment benefit overpayments made prior to debtor's bankruptcy filing. In re Adamic, 291 B.R. 175 (Bankr. D. Colo. 2003).

Because the debtor is not entitled to receive unemployment compensation under state law as a result of his prior fraud and/or failure to disclose a material fact, he never "acquired" the post-petition payments and those payments do not constitute "earnings for services performed". Accordingly, weekly unemployment payments to which the debtor is not entitled under the CESA cannot be property of the estate; and the department's exercise of its right to withhold the post-petition benefits is not an act to collect, assess, or recover a pre-petition claim against the debtor. In re Adamic, 291 B.R. 175 (Bankr. D. Colo. 2003).

The phrase "against equity and good conscience", as used in subsection (4)(a), means that adjustment or recovery of an incorrect payment will be considered inequitable if an individual, because of a notice such payment would be made or by reason of the incorrect payment, relinquished a valuable right or changed his position for the worse. Duenas-Rodriguez v. Indus. Comm'n, 199 Colo. 95, 606 P.2d 437 (1980).

And this definition remains applicable, even though the phrase has been amended from "against equity and good conscience" to "not inequitable", because there is no substantial difference between the meaning of the phases. Mugrauer v. Indus. Comm'n, 709 P.2d 47 (Colo. App. 1985).

Regarding the phrase "against equity and good conscience", to the extent that Mugrauer v. Indus. Comm'n is construed as having interpreted Duenas-Rodriguez v. Indus. Comm'n to require that this statute carry the same meaning as a similar provision in the federal Social Security Act, that construction is rejected and it is held that the federal act is not the sole means by which inequity is measured under this section. Hesson v. Indus. Comm'n, 740 P.2d 526 (Colo. App. 1987).

Waiver of right of recovery of overpayment. The commission is not required to determine that recovery of an overpayment is impossible or impractical in order to waive its right to recovery of that overpayment. Schmidt v. Indus. Comm'n, 42 Colo. App. 253, 600 P.2d 76 (1979).

Setoffs applied to benefits of illegal alien. Where an illegal alien, not legally entitled to work in this country at the time he was receiving benefits to compensate him for being unemployed, presented no evidence that he relinquished any valuable right or changed his position for the worse because he received such benefits, no equitable reason was found for allowing him to avoid setoffs from future benefits to which he may become entitled. Duenas-Rodriguez v. Indus. Comm'n, 199 Colo. 95, 606 P.2d 437 (1980).

Failure to consider financial condition of claimant requesting waiver of overpayment of benefits pursuant to subsection (4)(a) constituted error. Kalkbrenner v. Indus. Claim Appeals Office, 801 P.2d 545 (Colo. 1990).

Failure to address issue of claimant's having spent the overpaid funds on basic necessities or her impoverished status at the time of the repayment hearing constitutes error. Munoz-Navarette v. Indus. Claim App. Off., 833 P.2d 827 (Colo. App. 1992).

Applied in Bullers v. Indus. Comm'n, 37 Colo. App. 412, 547 P.2d 945 (1976); Nesbit v. Indus. Comm'n, 43 Colo. App. 398, 607 P.2d 1024 (1979); Johnson v. Indus. Comm'n, 652 P.2d 1109 (Colo. App. 1982); Zadel v. Indus. Comm'n, 701 P.2d 1270 (Colo. App. 1985); City and County of Denver v. Indus. Comm'n, 707 P.2d 1008 (Colo. App. 1985).