Unemployment insurance (UI) fraud remains a big problem for employers and is punishable by law. UI fraud, occurs when an “individual fraudulently files for unemployment benefits…and misreports previous income, lies on an application, fails to look for a new job or does not report an income source” in order to collect unemployment benefits.

According to the U.S. Department of Labor, states recorded an aggregate sum of $7.7 billion dollars in improper unemployment insurance payments from 2013-2015. Improper payments were highest in Nevada, New Mexico, Wisconsin, Tennessee, North Carolina, DC, and Maine.

Three common unemployment fraud schemes include falsifying personal information, misrepresenting termination, and intentionally applying for jobs for which a person is not qualified for in order to continue receiving benefits.

Additional unemployment fraud schemes include unreported or underreported earnings, working full time while claiming benefits, and collecting UI benefits while receiving disability or worker’s compensation benefits.

It’s important you safeguard your business by taking these five steps to prevent unemployment insurance fraud.

1. Maintain Proper Documentation

Maintaining proper employee documentation can save you time and money. Upon commencement of employment, ensure you take the time to verify employee information especially social security numbers. In addition, it’s important to keep accurate records of the status of the unemployment claims. Utilizing software, such as our Unemployment Tracker, can save you between 25 and 50 percent of the labor needed to manage claims manually.  

2. Properly Dispose of Records

In order to prevent unemployment fraud via identity theft, shred documents that contain sensitive information such as old employee files and payroll stubs.

3. Maintain Records of Claims and Audit Regularly

Keep track of all unemployment insurance claims and audit them against your staff records to prevent improper filing of claims against your company. This will prevent several UI fraud schemes such as filing claims while still working or filing false claims.

4. Audit Your UI Charge Statements Upon Receipt

Once you receive UI charge statements, review each one carefully to verify proper employee reporting of wages from holiday, vacation, or other types of pay so overpayment is prevented.

5. Clearly Document Misconduct and Discipline

UI claims can be tricky especially when an employee wrongfully claims they were let go. In order to avoid discrepancies and misrepresentation of the facts, keep well-documented and dated records with all instances of misconduct and subsequent discipline. Unemployment Tracker offers convenient data tracking to save you time and money.