Unemployment Fraud – Stay on Top of Claims to Reduce Potential Liability

There has been a recent increase in the number of fraudulent unemployment claims filed in Michigan and many other states throughout the US. One form of fraudulent claim filed is a type of identity theft – where someone creates an unemployment claim using the name and personal information of a second individual without the second individual knowing. These types of claims can create major headaches for the identity theft victims as well as for any employer or former employer that may be subject to charges for the unemployment claim.

Many times an employee is not made aware that a fraudulent claim has been filed in their name (and using their Social Security number) until they try to file a legitimate unemployment claim for themselves only to find out they already have an existing claim.

Other times, an employee may find out about the fraudulent claim when an expected federal or state tax refund is intercepted because the unemployment agency has received wages reported for the employee and has determined that the claim filed was fraudulent in that wages earned were not accurately reported to the unemployment agency.

A third way of finding out about a fraudulent claim is the employee or employer receiving a notice that a claim was filed from the state unemployment agency. If the employee receives notice of a claim that they did not file they should call the fraud reporting department of their state’s unemployment agency right away. Likewise, if an employer receives a notice that a claim has been filed for an active employee they should speak to the employee right away to find out whether the claim is legitimate. If not, the fraudulent claim should be reported to the state right away.

Employers should also monitor charge statements sent by the state unemployment agency to make sure there are no charges incurring for current employees. If charges do occur, the employer should promptly notify the state that the charges are for a fraudulent claim. The employer may need to provide proof that the employee is still working, such as copies of pay stubs.

The Department of Labor has provided a list by state of websites and phone numbers to report suspected fraud. To view the list, click here.

Employee Moving Out of State and Filed for Unemployment

question-63916_1280One of my employees is leaving because her husband is being transferred to another state.  Now I discover she has already filed for unemployment.  In fact, I have already received the notice from the Unemployment Agency.  What’s the best way to handle this situation?

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Probationary Periods Don’t Protect You From Unemployment Liability

XDMB0IC7TXWe’ve heard a number of managers refer to probationary periods and make statements such as “we can terminate them within the first 90 days of employment because they’re in a probationary period.”  Even in an at will employment relationship (for the states which recognize at will employment), termination during a probationary period could still result in potential liability for your company in the event of an unemployment claim or other lawsuit (discrimination, harassment, etc).

Whether an employee has worked for your company for 1 day or 10 years, there is still potential liability.  For example, in Michigan, the wages for the last five quarters at all jobs the employee has worked are used when determining benefit eligibility.  So even if the person was only employed by your company for two weeks or two days, they could still be eligible for benefits if their wages from all employers in the last five quarters meet the minimum threshold.

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Employee Gives Two Week Notice – Can We Accept the Resignation Effective Immediately?

1323680_17996870Suppose an employee gives his or her resignation, effective in three weeks, but you decide to accept the resignation effective immediately instead.  Should the employee be paid through the date of intended resignation? You are not required to pay the employee through the intended resignation date unless your business requires a notice of resignation.  If you simply “request” a certain amount of notice, federal law doesn’t require you to pay the employee if you ask him or her to leave before the end of the notice period, although most employers do. But be careful. Continue reading

Can an Active Employee Collect Underemployment Benefits?

hands-460872_1280In most states, in order to collect unemployment benefits a worker must be either unemployed or underemployed. An unemployed worker has no earnings in a week; an underemployed worker is one who has some earnings in a week but is still entitled to some unemployment benefits for that week either due to a reduction in hours worked or a reduction in pay rate.

However, a person who is working full time in a week is not unemployed or underemployed and therefore cannot receive unemployment benefits for that week unless their regular wages have been reduced.

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MYTH: Fire an Employee During Probationary Period to Avoid Unemployment Liability

A common assumption among employers is that having a probationary period at the beginning of employment provides a safe-guard in terms of unemployment.  For example, a company might have a 90 day probationary period for all new hires.  A manager’s assumption is that they can terminate an employee during that 90 day window and the employee would be disqualified from receiving unemployment benefits because they are still a “probationary” employee.

This is not the case.

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Employee Quits – Can they Collect Unemployment Benefits?

people-312122_1280A former employee quit their job voluntarily and then you receive a notice of an unemployment claim.  Can they collect unemployment benefits after quitting their job?

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