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.