This year, the value of overpaid unemployment insurance (UI) benefits will exceed $14 billion. That enormous sum of money comes from businesses just like yours. The good news is that your company doesn’t have to contribute to that sobering statistic. You have the power to control your unemployment insurance costs.

What Is an Unemployment Insurance Overpayment?

Overpayments are the unemployment insurance benefits paid to a claimant who is later determined not to have been eligible or entitled to those benefits. In this case, the claimant must pay the benefits back. A Notice of Restitution Due is mailed to claimants who have been overpaid. It provides detailed information on what caused the overpayment, the amount of overpayment, any penalties owed (if applicable), and the claimant’s appeal rights.

What Causes Overpayment?

Some of the most common causes of overpayments include:

• Unreported earnings when certifying by phone or online for UI benefits
• Inaccurate reporting of earnings and/or hours worked when certifying for UI benefits
• Appeal decisions that find the claimant ineligible for benefits they have already been paid
• A claimant and/or employer fail to disclose vacation/holiday pay, severance pay, or other similar pay after a job separation
• Changes to a claimant's weekly and/or maximum UI benefit amount — a monetary redetermination is made — because the wage information was incorrect when the claim was initially filed — if the gross weekly earnings were incorrectly reported.
• It is determined that a claimant's reason for separation from their employer was for disqualifying circumstances

How to Prevent Overpayments

So how can you ensure that your company can avoid overpaying unemployment insurance benefits? Here are some basic tips.

Audit UI benefits charge/credit statements against payroll reports for the weeks being charged to your account. Look for under or unreported earnings, sick days, or vacation time. Confirm that the employee wasn’t working full-time while they were collecting benefits, and look for anything else that may be protestable.

When you win a protest that makes a claimant ineligible or disqualified from receiving benefits, make sure you get credit for any charges already accrued on that claim. Take the time to go through the figures to make certain that the credits you receive match up to the actual charge.

It’s important to ensure your protests meet the timeliness deadlines for the state in which the claim is filed. If you miss a critical deadline, it’s likely you will only receive a partial credit, or no credit at all.

Unemployment overpayments are a huge issue for employers in the US, but with proper controls in place, and a little diligence, you can minimize their effect on your company.

Learn more about how Unemployment Tracker can help your business avoid overpaying for unemployment costs.