Unemployment insurance fraud is taken very seriously. The federal and state governments ask citizens to report anyone who is knowingly receiving payments under fraudulent circumstances. It is a crime to begin or continue receiving unemployment benefit payments under false pretenses. To report unemployment insurance fraud, contact your local State Unemployment Agency to file a formal report.
There are many ways individuals commit unemployment insurance fraud. Committing fraud involves submitting false information regarding any/all of the following: income earned, availability to work, ability to work, unreported travel or sick time, job offer refusals, etc. Falsifying or purposely omitting information regarding any item reported on your weekly claim is considered fraud.
Most often, an individual commits fraud by not reporting income. In this case, an individual is in fact working, but continues to receive unemployment payments. By law, all income must be reported on a recipient’s weekly claims. Failure to do so is considered fraud.
Each State – including NYS Unemployment – Unemployment Office uses a variety of tools to detect fraud along with public reporting, including employer hiring reports, quality control audits, government records, etc. Alternate strategies for detecting fraud are constantly being developed.
If you know an individual who is employed, including in a part-time, freelance, short-term, or “under the table” position, and they do not report this income on their weekly claim, you should alert your State Unemployment Agency.
You may be given the option to report anonymously, though some agencies will ask for contact information. You should provide the agency with as much information about the fraudulent individual in question as possible when making your report. Expect to share his or her name, address, phone number, employer, and estimated income (if you know it).
If a person is convicted of fraud they are liable for repaying the employment benefits received and will often incur a penalty fee. They may not collect unemployment benefits for a time specified by the state where the fraud was committed. In some cases, investigators may even pursue criminal prosecution. Texas, for example, often prosecutes unemployment insurance fraud at the felony level.
Employers can also commit unemployment insurance fraud by avoiding paying unemployment tax. This happens when an employer pays employees “under the table,” misclassifies workers as independent contractors or moves workers between different payrolls. Employer unemployment insurance fraud encourages illegal wage and hours worked practices, diminished health and safety standards and unbalanced competition—creating a significant negative effect on employees and fellow employers.
If you know an individual or employer who is committing unemployment insurance fraud, contact your local State Unemployment Agency.