When an employee is let go due to circumstances they cannot control, they may be eligible for unemployment insurance. During this time, they should be filing unemployment insurance claims, and you should be receiving a notice or statement. However, sometimes unemployment insurance claims can be false, so you should be doing your best to identify and prevent unemployment insurance fraud and identity theft.
There are a few reasons why unemployment insurance fraud might occur. The most common cause is that the employee claiming unemployment insurance may not know that they must stop claiming unemployment insurance as soon as they find a new job. Other times, it could be a case of identity theft or misleading employers filing claims for fake employees. In one fraud situation, around 80 employers filed more than 900 unemployment insurance claims in a two-year period worth $8.7 million.
If you receive a notice that a current employee has filed an unemployment insurance claim, you should immediately contact that employee to confirm they have not filed a claim and then contact your state's unemployment department. If you accidentally returned a notice before checking with your employee and you learn that your employee did not file this claim, file an online fraud report. Once you submit a report, you will need to provide sufficient evidence that the report if false or fraud within ten days.
Unemployment insurance fraud and identity theft is a severe situation. This crime is a felony, and a convicted person can spend up to five years in state prison. The financial costs for this felony can include a maximum fine of $150,000, lack of compensation for work, and investigation costs. Help keep your employees safe by providing them with informative documents that will help them protect their identity and file for unemployment insurance correctly when the time is right.