What Are the Steps to Report Unemployment Fraud: Is it Fraud?

Is It Fraud?

I have worked in the human resources field for many years and learned the labor laws for the states of New Mexico, Nevada, Oregon, Washington State, California, Pennsylvania, and even Florida. Before you learn if you can indeed report unemployment fraud, check to see if the state where you do business considers over-abusing the unemployment insurance system fraudulent?

Some states are pro employer and some are pro employee. For example, in Pennsylvania and many states in the Eastern part of the US, workers are only eligible to receive unemployment insurance if they lost their job through no fault of their own. This means if an employee was laid off or the business closed, they are usually eligible for unemployment insurance.

In other states, such as New Mexico and Nevada, which are more pro employee states, a person who has been terminated, even for misconduct, may still be eligible for unemployment benefits.

While the US Department of Labor (DOL) requires that every state have and make rules for their own unemployment insurance benefit program, the DOL does not require state policies to be equal across the board.

Before you consider how to report unemployment fraud, if you suspect it, call your state’s Department of Labor and ask about the rules on unemployment benefits and who is eligible to receive it. You should also inquire for how many weeks someone may receive unemployment insurance and what steps the DOL takes to ensure they are actively seeking another job.

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Determining Unemployment Insurance Eligibility

Every human resources manager has had an ex-employee whom they know is taking advantage of the unemployment benefit system. When a former employee files for unemployment insurance, even if they have been terminated for misconduct, some states still require the former employer to complete and return an Employer’s Statement based on the Claimant’s (former employee) Statement.

In the employer statement, the HR manager can review why the former employee claimed they lost their job and compare it to supervisor notes, written warnings or if the employee was laid off due to lack of work. If an employee was fired for employee theft, for example, the HR manager will state that on their response form, and return it to their state’s Department of Labor who then makes a determination on benefit eligibility.

Most people here might think, “Employee theft? That’s certainly misconduct and that person should not receive unemployment benefits!” This, however, is unfortunately not true. Some states are very lax in offering unemployment benefits no matter what the cause for the employee termination and HR managers often find themselves lost in the hassle world of appealing unemployment claims.

Workers who have lost their jobs and receive unemployment benefits, (fraudulent claims or not) are usually eligible to receive benefit pay for up to 26 weeks in most states. What is often sad is in some states, a former employee can receive benefits for 26 weeks, take a job and quit in one week and then regain unemployment insurance (UI) from the first employer’s UI account for another 26 weeks. This may sound unbelievable, but it does happen and people who know how to “work” the system can and do—all the time.

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Reporting UI Fraud

Again, the steps to report unemployment fraud depends upon your state’s Department of Labor laws. For example, in the state of Washington, they offer an extremely easy way to report fraudulent unemployment benefits online and also offer many toll-free numbers an HR manager or employer can call to report this type of fraud, if suspected.

In New Mexico, the Department of Labor offers no online resources on unemployment fraud. Because I live and do business in New Mexico, I called my local DOL office and asked what the steps were for unemployment fraud. I was told by a DOL worker who shall remain nameless, “T_here really is no set policy. Every person receiving benefits must complete a form each week stating they actively looked for a job and that’s how we keep track of things_.”

Not satisfied with that response, I asked the DOL worker, “What if I know a former employee is taking advantage of the system or is working for pay under the table while receiving benefits?”

“You could probably send a letter, but if the employee was already found eligible for unemployment benefits and is receiving them, if you didn’t file an appeal within the required amount of time, there is really no way we can investigate your claim that a person is committing unemployment insurance fraud.” Frustrated and flabbergasted, I ended our conversation.

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Tips for the HR Manager on UI Fraud

HR managers around the country are often frustrated with the unemployment benefits process in their state. While those who truly deserve unemployment benefits should be treated fairly, there are times when HR managers simply have no avenues to seek if they suspect unemployment fraud. There are some things you can do, no matter what state you live in, to protect yourself from unemployment fraud:

• Document Everything – If an employee is a problem employee and you only offer verbal warnings, you can bet without written documentation it will be just your word against their word—and they will receive the benefits. This means you must document warnings through a disciplinary warning process and follow the written termination policies in your employee handbook.
• Investigate On Your Own – If you feel a former employee is unfairly receiving UI benefits, because it is your right, ask your local DOL if you can see their weekly job search forms. While you may not be able to obtain copies of these reports, you can view them to determine if the person is indeed looking for work or if it appears they are “working the system” instead.
• Write Letters – If you feel you can prove unemployment benefit fraud, write letters to your DOL and every state government agency you feel can help your cause.
• Reporting Systems – If you live in a state such as Washington State, as soon as you suspect someone is receiving benefits unfairly, report unemployment fraud through online or telephonic resources. States that offer good ways to report UI fraud do investigate each and every claim.
• Accept It – An HR manager can drive themselves almost crazy trying to tackle real unemployment fraud, even if they have documentation, have lost appeal after appeal, and know the former employee should not be receiving UI benefits. Instead of driving yourself into insanity, if you live in a pro employee state, do what you can, then learn to accept your state’s policies.

Although every HR manager should be able to effectively report unemployment fraud, often the process is impossible and the suspected individual wins. It is essential that the work timeline of every employee you have be documented in writing, to prove fraud and hopefully, if you live in a state that is pro employer, you can successfully report fraudulent claims.

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