Since 1987, the Labor Department has tracked unemployment insurance (UI) overpayments. As such, much is known about unemployment overpayments, however, few companies take action to combat fraudulent claims. This year, the value of overpaid UI benefits are expected to exceed $14 billion. The bad news? That enormous sum of money comes from businesses just like yours. The good news? Your company doesn’t have to contribute to that sobering statistic. You have the power to control your unemployment insurance costs.

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.

WHAT CAUSES UI OVERPAYMENTS?

The integrity of the UI system can be broken down into three aspects: Whether employees, fraudulent or otherwise, gain more benefits than they are entitled to under the law, whether they receive less than they are entitled to, and whether workers pay the taxes they are required to pay. Unfortunately for employers, many claims result in the former — workers receiving more benefits than they are entitled to. So, what causes UI overpayments?

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

Why should employers be concerned about unemployment overpayments?  

The answer is quite simple— as a company, when you overpay on unemployment compensation, it raises your unemployment insurance tax rates. The higher tax rates can results in thousands, tens of thousands, or in some cases millions of dollars in higher unemployment insurance tax payments.  As an employer, why would you want to pay more in taxes than you should be paying?  

Many employers don’t bother to look into UI claims as they are time consuming, labor intensive, and tedious. But paying attention to the small things that lead to overpayments is critical to reducing or even eliminating them.

As an employer, you’ve come across the solution — Unemployment Tracker, a software to manage your UI claims, increase the credits to your State UI Account, and significantly reduce errors and missed deadlines. We get that you’re busy, that’s why we created a comprehensive software that’s intuitive and simple to use; everything you need is in one place. With Unemployment Tracker, you’ll enjoy features to help you manage your claims effectively, quickly, and, most importantly, correctly.

Check out our blog for more details on how to prevent overpayments, or learn to be your own UI expert by requesting a live demonstration today.