Unemployment fraud is a serious crime. States routinely pursue reports and indications of UI fraud vigorously and prosecute offenders to the fullest extent of the law.
Unemployment fraud penalties and consequences can be severe and have long-lasting effects on workers’ lives. In some cases, being convicted of fraud can negatively impact workers’ ability to find new employment and receive state and federal assistance. It may even cost workers their right to vote.
Unemployment insurance fraud comes in many forms. It may be intentional or unintentional, and may be committed by workers or employers. It can be detected by state authorities dedicated to identifying and preventing such crimes, or may be reported by anyone who has information that fraud may be occurring. To encourage the public to assist with the unemployment investigation process, states typically allow informants to remain anonymous. Recipients who believe they have accidentally committed fraud are strongly encouraged to contact UI authorities themselves.
Employers and workers can commit unemployment insurance fraud in many ways. Fraud occurs any time that workers willfully submit false or inaccurate information when applying for benefits. Knowingly accepting benefits based upon erroneous information or for which one is not eligible or is also fraud. Examples of unemployment fraud by workers include, but are not limited to:
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In every state, it is the responsibility of employers and workers to ensure that they avoid unemployment insurance fraud by providing UI authorities with true and accurate information at every step of the process.
Employers can also commit unemployment fraud. Employer fraud most commonly takes the form of efforts to avoid paying out UI fees and taxes. Employers may also attempt to prevent qualifying workers from filing for or receiving unemployment benefits. Businesses commit unemployment insurance fraud any time they:
All states treat unemployment fraud as a crime and actively take steps to prevent, identify and prosecute it. The consequences workers and employers face when they are found guilty of fraud vary and may be influenced by the duration and severity of the situation. Standard unemployment fraud penalties and consequences include:
Most states maintain dedicated divisions assigned to identify and prosecute unemployment insurance fraud. The unemployment investigation process typically begins when:
A common example of electronic systems flagging a potential unemployment fraud might be when an employer reports to the state that it has hired a new employee but during the same week, that worker files for unemployment. Similar information might be uncovered during a UI fraud division’s audit of a randomly selected claim. Alternatively, UI authorities might uncover attempted fraud while verifying the employment records and cause of separation information submitted by a new claimant.
Workers and employers being investigated by unemployment authorities should make every effort to comply with requests for information or assistance. Failure to do so may lead to disqualifications from benefits and other penalties.
Americans can help prevent UI fraud by reporting individuals and businesses they have reason to believe may be acting illegally. Most states accept tips and reports of fraudulent activity online, by mail or by phone. Individuals seeking to report possible unemployment insurance fraud can call their states’ free hotlines, email the contact address on their websites, or print, complete and mail in a hard copy report.
Informants do not need to have proof that fraud is happening. They only need to report why they have reason to believe that it may be and sufficient identifying information, such as the claimants’ names, in order for the UI office to begin investigating.
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