Dealing With Unemployment Fraud as a Business Owner

If you have employees, the chances are very high that you’ve dealt with unemployment claims. And you probably know that in Texas, if unemployment claims are paid out, those claims can be charged back to the employer’s account, resulting in a higher unemployment tax rate in the future. Unfortunately, fraudulent unemployment claims have been on the rise due to the current sluggish economy. And those claims, if not addressed, can also result in chargebacks and higher tax rates. So how can you tell when unemployment fraud is being perpetrated and what can you do about it? Our partner Tonia Lucio breaks it down below.

Seeking Out the Scam

Let’s start with an example and say that an unemployment claim has been submitted to the Texas Workforce Commission, or TWC, either using the information of an employee that still works for you or possibly a former employee. But the catch is that it hasn’t actually been submitted by that employee or former employee. Instead, it’s been submitted by a con artist who is impersonating the employee and is hoping that the claim is lost in the shuffle and goes unquestioned.

If you get an unemployment claim that you believe to be fraudulent, you should first verify with the employee or former employee as to whether they filed the claim in the first place. If the answer is no, you should promptly respond to the notice and state that the claim is fraudulent. Even if you’re unable to verify with the employee whether or not it is a legitimate claim, if the circumstances are suspicious and don’t match the facts of the case, it could be fraudulent, and you should respond to the notice in kind and explain the situation.

For this particular example, let’s assume that the person who supposedly filed the claim is still employed at your business, you spoke with them, and they confirmed they never submitted any such claim. This is clearly an unemployment fraud situation and must be addressed. If it’s a claim that you believe was submitted by a former employee, but you disagree that the former employee should get unemployment benefits, that’s different from a fraudulent claim and you should just respond to the claim as you normally would.

How Should You Handle a Fraudulent Claim?

You can respond to unemployment claims in a few different ways, including via fax, mail, telephone, or the TWC website, where you can find more details on what kind of information should be included in your response. In cases of unemployment fraud, the TWC also provides a way to bypass the standard response form by reporting fraud through a dedicated URL here.

While the TWC generally prefers that impersonated employees lodge fraud reports on their own, employers are also allowed to report on their behalf. Either way, failing to address a fraudulent unemployment claim within the time allowed is akin to passive agreement with said claim. If the TWC doesn’t hear from you, they can only assume that the claim is a legitimate one and will proceed accordingly. So whatever you do, don’t ignore unemployment claim notices when they land in your mailbox.

If you have questions about unemployment claims, their legitimacy, or just need help understanding how you should approach the process, Richards Rodriguez & Skeith’s Employment Law team may be able to help! Contact us today for more information.