Unemployment Fraud

Today I am writing about unemployment fraud. Despite working in Human Resources for the last 20+ years, a part of me still wanted to believe that some things were just straight forward with no room for dishonesty. I got a wake-up call this year when it came to this subject. I have seen two different cases this year alone. One claim used an employee’s social security number but a different name. The other claim had all of the details of the employee’s work history, social security number, etc.

What is unemployment fraud and how does it happen? A fraudulent claim happens when someone, other than the employee, knowingly uses the personal information of another to file a claim. If the claim is successful, then the person filing it will likely receive the benefits. Personal information can be compromised in a number of ways. According to numerous sources, Illinois alone reported more than 120,000 cases of unemployment fraud through August of 2020. This is likely due to the increase in claims due to the pandemic. State unemployment offices are quick to get the benefits paid out to claimants in this overwhelming time of need.

Unemployment fraud affects both the employee and the employer. Every claimant who receives benefits is only entitled to unemployment benefits for a specified period of time and a dollar amount that is based on the earnings in previous quarters. When someone has filed a fraudulent claim and exhausted benefits on the behalf of your employee, your employee will not be eligible for those benefits when/if the time comes.

Employers are affected when they received their annual unemployment tax rates. If your tax rate is 3%, then for every $100 in payroll, you have to pay $3 in unemployment tax. You can see how this would add up. The more successful claims an employer has, the higher their rate will be each year. This increases the employer’s cost of doing business. In Illinois and Tennessee, employers also have the option to pay their claims outright, rather than pay a tax. If claims are not paid timely, interest accrues. I’m not sure I can wrap my head around how employers who chose this option will be able to pay the claims.

So what can you do about unemployment fraud as an employer?

  1. Due diligence when it comes to reviewing and protesting claims. Make sure that social security numbers match names. If something looks fishy, it likely is.
  2. Notify your employees that unemployment fraud can happen and to keep an eye open for any correspondence from the unemployment office.
  3. Report fraudulent claims to the employee that it has affected.
  4. Report fraudulent claims to the employment office. I have listed a website here provided by the Department of Labor that provides phone numbers in each state, for both the employee and the employer. https://www.dol.gov/general/maps/fraud
  5. Protest your fraudulent claims.

What can employees do?

  1. If you have not filed and you receive something in the mail about unemployment benefits, take action immediately!
  2. Contact your employer to notify them of the fraudulent claim.
  3. Notify your state unemployment office by calling the phone number listed here https://www.dol.gov/general/maps/fraud.
  4. Contact the FTC (Federal Trade Commission) to report the crime and possibly receive recovery assistance. identitytheft.gov
  5. Contact your bank, credit card companies, credit reporting agencies, etc.
  6. You may not be able to ascertain where the breach in your personal information came from, but it’s worth a try to figure out how to prevent it from happening elsewhere or again.



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