Unemployment insurance fraud recovery

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Unemployment insurance
• Terms and definitions • Court cases • Unemployment insurance programs in the states • Reform proposals related to unemployment insurance • Reform activity in the states related to unemployment insurance • Index of articles about unemployment insurance
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Unemployment insurance fraud recovery is a term that refers to government efforts to reclaim improper benefit payments in the unemployment insurance program. Unemployment insurance fraud occurs when individuals violate certain state unemployment insurance laws in order to claim unemployment insurance benefits that they are ineligible to receive.

Federal law requires state governments to investigate possible unemployment insurance fraud and recover overpayments. Every state has laws and policies related to reclaiming improper payments and punishing fraud. States can recover overpayments through benefit offset, state tax offset, and other methods.

Background

See also: Unemployment insurance and Unemployment insurance fraud

Federal law requires that state governments engage in unemployment insurance overpayment recovery efforts. Penalties (such as fines and interest assessed on overpayments) and recovery options vary by state. State laws generally differentiate between the treatment of non-fraudulent and fraudulent cases. In cases of willful misrepresentation and fraud, state laws provide for punitive measures like fines and imprisonment that do not apply in cases where overpayments resulted from accidental misreporting or administrative error.

The U.S. Department of Labor (DOL) encourages states to use various identity verification, data mining, and data analytics resources when unemployment insurance claims are filed. The DOL also encourages ongoing data mining and analytics for the duration of unemployment insurance claims. In an August 31, 2020, letter, the DOL stated that ongoing verification could help identify events like claimants refusing a job offer, failing to meet job search requirements, or continuing to claim unemployment benefits after starting new employment. States that do not conduct initial and ongoing fraud detection activities through, for example, the National Association of State Workforce Agencies' Integrity Data Hub may not comply with federal unemployment insurance verification requirements.

States are also required to prosecute fraud under their unemployment insurance laws. For more information on penalties, click here.

Recovery of overpayments by state

States typically use similar unemployment insurance overpayment recovery methods in cases of both fraudulent and non-fraudulent payments. States primarily use the following overpayment recovery methods:

• Benefits offset - States can deduct overpayment amounts (or a set percentage of overpayments) from future benefits payable to recipients.
• The Treasury Offset Program - A program that allows states to recover overpayments due to fraud and misreported work or earnings from the recipient's federal tax refund.
• State tax offset - States can garnish overpayment amounts from recipients' state tax refunds.
• Direct repayments from overpayment recipients.
• Interception of lottery winnings.
• Denial or suspension of professional licenses for individuals who have not returned overpayments to the state.
• Civil court action to compel repayment in non-fraudulent cases.
• Criminal court action to compel repayment in fraudulent cases.

Recovery of fraudulent claims

The U.S. Department of Labor compiles information on each states' unemployment insurance overpayment recovery options in cases of fraud. The following list includes highlights from the department's 2023 data:

• 40 states have laws providing for the recovery of overpayments due to fraud through state tax offset.
• 47 states allow for 100% benefit offset to recover overpayments due to fraud.
• 32 states charge interest on overpayments due to fraud.

The table below outlines each states' overpayment recovery options in cases of fraud:

Recovery of fraudulent claims
State	Recovery of overpayments through offset			Monetary assessments			Max prison time imposed when fraud committed by
	Reduction in weekly benefit amount (WBA)	Number of years benefit offset limited	State tax refunds	Interest charged	Fines or penalties on claimant	Fines or penalties on employer	Claimant	Employer
AL	100%	6 years from date overpayment is final	Yes	2% per month	4 x WBA to maximum benefit amount; 15% of overpayment	$50 - $500	1 to 20 years under Classes B & C felony charges	1 year
AK	100%	No	Yes	No	50% of each fraud overpayment	Penalty assessed under misdemeanor or felony statutes	5 years	Penalty assessed under misdemeanor or felony statutes
AZ	100%	No	Yes	10% per year	15% of overpayment	$2,500	Depends on individual’s record	6 months
AR	100%	No	Yes	10% per year	50% of overpayment (15% if repaid within 30 days)	$20-$200	60 days	60 days
CA	100%	6 years from mailing	Yes	7% until summary judgment filed; 10% until paid in full	30% of overpayment	$20,000	1 year minimum	1 year minimum
CO	100%	No	Yes	No	$25 – $1,000 fine; 65% of overpayment penalty	$25-$1,000	6 months	6 months
CT	100%	8 years	Yes	1% per month	50% 1st offense; 100% subsequent offense	Penalty assessed under misdemeanor or felony statutes	1 year minimum	1 year minimum
DE	100%	5 years from end of benefit year	Yes	18% per year	$23 – $57.50 fine; 15% of overpayment	$20-$200	60 days	60 days
DC	100%	No	Yes	No	Up to $100 fine; 15% of overpayment	$1,000	60 days	6 months
FL	100%	Commenced within 7 years from date established	No	No, unless and until a civil judgment is entered	15% of overpayment	$5,000	5 years	5 years
GA	100%	7 years from release date of notice of determination and overpayment	Yes	1% per month	15% of overpayment	Up to $1,000 for basic fraud; at least $1,000 for multiple counts	12 months per count	Penalty assessed under misdemeanor or felony statutes
HI	100%	2 years from mailing or final appeal decision; after, if individual agrees (percentage up to individual)	No	No	Up to $10,000 fine; 15% of overpayment	Up to $10,000	5 years	1 years
ID	100%	8 years from final determination date	Yes	Yes	25% 1st instance; 50% 2nd instance; 100% 3rd instance and subsequent	$20-$200 and 10 x WBA	Penalty assessed under misdemeanor or felony statutes	Penalty assessed under misdemeanor or felony statutes
IL	100%	No	Yes	No, unless suit filed and judgment entered; then 9% per year	15% of overpayment	Up to $500	180 days	180 days
IN	100%	No	Yes	0.5% per month	25% 1st instance; 50% 2nd instance; 100% 3rd instance and subsequent; 15% of overpayment penalty	See note	6-36 months or 2-8 years	6-36 months or 2-8 years
IA	N/A	N/A	Yes	No	15% of overpayment	50% of tax owed	10 years	N/A
KS	100%	No	Yes	1.5% per month	25% of overpayment	$20-$200	60 days	60 days
KY	100%	10 years from end of applicable BY	Yes	1.5% per month	Up to $10,000 fine; 15% of overpayment	$500-$10,000	1-5 years	1-5 years
LA	100%	No	Yes	No	Penalty is greater of $20 or 25% of overpayment balance	$50-$1,000	10 years	30-90 days
ME	100%	No	Yes	1% per month	50% 1st incident, 75% 2nd incident, 100% other incidents	Penalty assessed under misdemeanor or felony statutes	Penalty assessed under misdemeanor or felony statutes	Penalty assessed under misdemeanor or felony statutes
MD	100%	No	Yes	1.5% per month	Up to $1,000 fine; 15% of overpayment	Up to $1,000	90 days	90 days
MA	100%	No	Yes	1% per month until total interest = 50% of overpayment	$1,000-$10,000 fine; 15% of overpayment	$2,500-$10,000	6 months to 5 years	1 year
MI	100%	3 years from overpayment	Yes	Yes	100% 1st instance; 150% 2nd instance overpayment amount	100% - 1st instance; 150% - 2nd instance	1 year	1 year
MN	N/A	N/A	Yes	1% per month	40% of overpayment	Penalty assessed under misdemeanor or felony statutes	20 years	20 years
MS	100%	5 years from last week overpaid	Yes	1% per month	$100 - $500 fine; 20% of overpayment	$100-$1,000	30 days for each fraudulent week	6 months
MO	100%	No; may write off as uncollectible after 5 years of no activity	Yes	No	25% - 100% of overpayment	25% - 100% of fraudulent amount	6 months for each violation	6 months for each violation
MT	100%	5 years; 10 years if lien filed	Yes	Yes	50% of overpayment	$50-$500	Depends on recommendation of district attorney or employer	30 days for each false statement
NE	100%	3 years from end of applicable BY	Yes	No	Up to $500 fine; 15% of overpayment	Up to $500	90 days for each count	90 days
NV	100%	10 years from date overpayment established	No	Civil judgments only (6% per year)	15% of overpayment	$2,000	10 years	10 years
NH	1%-10%	10 years from date overpayment decision is final	No	1% per month	Up to $4,000 fine; 20% of overpayment	Up to $100,000	15 years	15 years
NJ	100%	No	Yes	5% for CY 2009	25% of total overpayment	$100 to $1,000 per offense	Decided by court	90 days
NM	100%	No	Yes	No	Up to $100; 25% of overpayment	Up to $10,000	30 days	30 days
NY	100%	No	Yes	9% per year (civil action only)	$500; the greater of $100 or 15% of overpayment	$500	1 year	1 year
NC	100%	No	Yes	No	Up to $200 fine; 15% of overpayment1	Up to $200	2 years	2 years
ND	100%	No	Yes	18% per year	$1,500 fine; 15% of overpayment	$1,000	10 years	30 days
OH	100%	6 years from date overpayment is final	Yes	14% per year	Up to $1,000; 25% of overpayment	Up to $1,000	6 months	6 months
OK	100%	No	Yes	1% per month	Up to $500 fine each week after conviction; 25% of overpayment	$50-$500	6 months	90 days
OR	100%	No	Yes	1% per month	15 - 30% of overpayment	$100-$500	Penalty assessed under misdemeanor or felony statutes	90 days
PA	100%	10 years from date applied for benefits	No	Computed annually based on IRS rate	$500 - $1,500; 15% of overpayment	$100 - $1,500 per offense	30 days per week illegally claimed	30 days per offense
RI	100%	No	Yes	1.5% per month	Greater of $1,000 or double value of fraud; 15% of overpayment	Greater of $1,000 or double value of fraud	1 year	1 year
SC	100%	No	Yes	No	$50 - $250 fine; 25% of overpayment	$20-$100	30 days for each offense or week claimed	30 days
SD	100%	No	No	12% per year	Up to $2,000 fine (higher fine if amount obtained > $200); 50% - 1st instance; 100% - any subsequent instance overpayment amount	$1,000	1 or 2 years	1 or 2 years
TN	100%	No	No	1.5% per month	30% - 1st instance; 50% - any subsequent instance overpayment amount	Penalty assessed under misdemeanor or felony statutes	1 year minimum	1 year minimum
TX	100%	No	No	1% per month	Up to $4,000 fine; 15% of overpayment	$4,000	Depends on whether prosecuted as misdemeanor or felony	Penalty assessed under misdemeanor or felony statutes
UT	100%	No	Yes	No, unless it goes to judgment	Up to $10,000 fine; 100% of overpayment	Up to $20,000	15 years	15 years
VT	100%	5 years from determination date	Yes	No	Up to $5,000 fine; 15% of overpayment	Up to $50	30 days	30 days
VA	100%	No	Yes	No	Up to $2,500; 15% of overpayment	Up to $1,000	1 year	1 year
WA	100%	No	No	1% per month	$20 - $250; 15% - 1st instance, 25% - 2nd instance, 50% - any subsequent instance overpayment amount	$20-$250	90 days	90 days
WV	100%	10 years from last week overpaid	No	Yes	$100 - $1,000 fine; 20% of overpayment	$20-$200	30 days	30 days
WI	100%	No	Yes	No	Up to $25,000 fine; 40% – 100% of overpayment depending on facts of fraud	Up to $25,000	Up to 10 years	Up to 10 years
WY	100%	No	Yes	No	20% of overpayment and additional 5% of unpaid balance every 6 months thereafter until paid	$750	5 years	5 years

Recovery of non-fraudulent overpayments

The U.S. Department of Labor compiles information on each states' unemployment insurance overpayment recovery options in non-fraudulent cases, including accidental misreporting. The following list features highlights from the department's 2023 data:

• 41 states have laws providing for the recovery of non-fraud overpayments through state tax offset.
• 33 states allow for up to 100% benefit offset to recover non-fraud overpayments, depending on circumstances.
• 39 states can pursue civil action to recover non-fraud overpayments.
• 14 states charge interest on non-fraud overpayments.

The table below outlines each states' overpayment recovery options in cases of non-fraudulent payments:

Recovery of non-fraudulent overpayments
State	Offset against future benefits	Number of years benefit offset limited	Offset with state tax refunds	Civil action permitted	Interest assessed
AL	100%	No	Yes	Yes	No
AK	100%	No	Yes	No	No
AZ	50%-100%	No	Yes	No	10% per year from month after overpayment established
AR	100%	4 years from date of final determination	Yes	Yes	10% annually once final overpayment has force and effect of judgment of Circuit Court
CA	25%	6 years from date overpayment notice mailed	Yes	No	No
CO	25%	No	Yes	Yes	No
CT	50%; if WBA <$100 then 25%	No; may write off as uncollectible after 8 years	Yes	Yes	No
DE	50%	5 years from end of BY	Yes	Yes	No
DC	100%	No	Yes	Yes	No
FL	100%	Commenced within 7 years from date overpayment is established	No	Yes	No, unless and until a civil judgment is entered
GA	50%	7 years from release date of the notice of determination and overpayment	Yes	Yes	No
HI	100%	2 years from date of mailing notice of redetermination or final appeal decision; after, may offset % agreed to by individual	No	Yes	No
ID	100%	No	Yes	Yes	Yes
IL	25%	5 years from date overpayment decision issued	Yes	Yes	No
IN	100%; if agency error, then 50%	No	Yes	Yes	No
IA	100%	10 years from date of last activity	Yes	No	No
KS	100%	No	Yes	Yes	1.5% per month if 2 years old
KY	25%	5 years from last day of BY	Yes	Yes	No
LA	100%	No	Yes	Yes	No
ME	10% of 1st $100 WBA; 50% of rest	No	Yes	No	1% per month starting 1 year after decision is set up in system
MD	100%	No	Yes	Yes	No
MA	100%; 50% if nonfault and individual requests	No	Yes	Yes	No
MI	Up to 20%	3 years from date of payment	Yes	Yes	Yes, starting 1 year after determination is final
MN	50%	6 years from date overpayment is determined	Yes	Yes	No
MS	100%	5 years from last day of week overpaid	Yes	Yes	1% per month on principal balance after 1st full month overpayment established
MO	100%	No; may write off as uncollectible after 5 years of no activity	Yes	Yes	No
MT	50%; higher if individual permits	5 years; must file lien against individual’s real and personal property to extend to 10 years	Yes	No	Yes
NE	Any amount per week and any amount up to MBA	3 years from end of BYE in which overpaid weeks were paid	Yes	Yes	No
NV	50%	5 years from date overpayment established	No	No	No
NH	1%-10%	10 years from date overpayment decision is final	No	Yes	1% per month on principal balance from 1st day of month after decision if not paid within 60 days
NJ	100% or 50%	No	Yes	Yes	2% annually 6 months after debt established if no formal payment agreement
NM	100%; 50% or 75% if request approved	No	Yes	Yes	No
NY	50%	No	Yes	No	No
NC	50%	No	Yes	Yes	No
ND	Minimum 50%	No	Yes	Yes	18% starting 180 days after establishment of overpayment or 180 days from date of final appeal determination
OH	100%	3 years from date decision is final	Yes	No	No
OK	100%	No; except for administrative error, 1 year from expiration of BY current at time overpayment established	Yes; administrative error	Yes; administrative error	1% per month starting date overpayment determined
OR	100%	5 years from week decision became final for nonfault or nonfraud overpayments; no time limit for fault overpayments	"Yes (if fault overpayment)"	Yes	If fault, 1% per month from 1st day of month following 60 days after final decision
PA	33⅓% (nonfault); 100% (fault)	4 (nonfault), 7 (fault) years from date of application for benefits	No	Yes	Computed annually based on the IRS rate
RI	100%	No	Yes	Yes	No
SC	100%	No	Yes	No	No
SD	100%	No	No	Yes	12% per year upon establishment of fault overpayment or 6 months after establishment of nonfault overpayment
TN	100%	After the expiration of 6 years from overpayment determination	No	Yes	No
TX	100%	No limit for overpayment absorptions on subsequent BYs	No	Yes	1% per month from 30 days after served (when becomes judgment)
UT	50% (nonfault) or 100% (fault)	If nonfault, 3 years from date decision is final; if fault, 8 years from effective date of judgment lien	Yes (fault only)	Yes (fault only)	No, unless it goes to judgment
VT	100%	5 years from determination date	Yes	Yes	No
VA	100%; 50% if administrative error	No	Yes	Yes	No
WA	50% (up to 100% depending on claimant request)	No	No	Yes	1% per month (simple interest) after ≥ 2 minimum monthly payments are delinquent
WV	100%	5 years from last day of week overpaid	Yes	No	No
WI	100%	No	Yes	Yes	No
WY	100%	First 5 years from effective date of claim resulting in overpayment	Yes	Yes	No

Waivers for nonfraud overpayments by state

Some states waive repayment requirements for individuals in cases that involve, for example, agency error, employer error, or financial hardship.

States also may not seek to recover overpayments if the workforce agency believes repayment would deprive the worker of basic necessities or if other factors exist indicating that repayment would cause the individual undue economic, physical, or mental hardship. In such cases, states may grant an equity or good conscience waiver. As of 2023:

• 11 states had waivers for agency errors.
• Nine states had waivers for employer errors.
• 24 states had waivers for equity or good conscience.
• 11 states had waivers for financial hardship.
• Six states had waivers for other reasons.
• Ten states (Delaware, Kentucky, Mississippi, Missouri, New Mexico, New York, Oklahoma, Texas, Virginia, and West Virginia) did not have overpayment waiver provisions.

Waivers for nonfraud overpayments by state
State	Agency error	Employer error	Equity or good conscience	Financial hardship	Other
AL
AK
AZ
AR
CA
CO
CT
FL
GA
HI
ID
IL
IN
IA
KS
LA
ME
MD
MA
MI
MN
MT
NE
NV
NH
NJ
NC
ND
OH
OR
PA
RI
SC
SD
TN
UT
VT
VA
WA
WI
WY

Fraud identification methods

States can use a variety of methods to identify unemployment insurance fraud, including "the Social Security Administration’s Death Cross-match, Vital Statistics Cross-matches, Department of Motor Vehicles Cross-matches, Fictitious Employer Cross-matches, and other comparisons that detect shared characteristics (i.e., phone numbers, mailing addresses, email address, and banking information) on multiple claims."

Integrity Data Hub

See also: Integrity Data Hub

The National Association of State Workforce Agencies' (NASWA) Integrity Data Hub provides state agencies that administer unemployment insurance programs with the following tools to facilitate fraud identification:

• The Suspicious Actor Repository (SAR), which allows states to compare UI claims against a list of suspicious claims from other states.
• A database of suspicious email domains.
• A database of foreign IP addresses.
• A database of incarcerated persons.
• Data analysis tools that allow states to compare claims to national data and conduct cross-state validation checks.
• A multi-state database of UI claims data.
• A centralized identity verification service.
• The Fraud Alert System (FAS), which allows states to share information about new fraud schemes.

Types of unemployment insurance fraud

Employers, claimants, and criminals can commit unemployment insurance fraud in a variety of ways. The following list identifies selected examples of unemployment insurance fraud:

Individuals

• Reporting false information on an unemployment insurance application.
• Failing to report employment, such as self-employment, temporary positions, or cash jobs.
• Neglecting to report income.
• Making false statements to receive or increase benefits.
• Failing to report work refusals.
• Falsifying work searches.
• Not disclosing a work separation.
• Receiving benefits when incapable or not available to work.
• Neglecting to report other remittances, such as workers' compensation payments.
• Assisting another individual to commit unemployment insurance fraud.

Employers

• Wrongly classifying workers as independent contractors.
• Neglecting to report wages paid to employees or falsifying employee information.

Criminals

• Using another individual's identity to file for unemployment insurance benefits.

State laws governing unemployment insurance may classify unemployment insurance fraud as either a misdemeanor or felony offense, depending on the extent of the fraud. Federal guidelines require states to assess a minimum penalty of 15% of the amount of the fraudulent claim, according to the U.S. Department of Labor. States generally prohibit individuals found guilty of committing unemployment insurance fraud from receiving future benefits for a minimum of six weeks for every week of fraudulent claims.

Criminal prosecution under unemployment insurance laws may result in the following penalties, depending on the state:

• Fines up to or exceeding $10,000, depending on the state.
• Incarceration.
• Probation in addition to, or in lieu of, incarceration.
• Repayment of fraudulent benefits.
• Forfeiture of future income tax refunds.
• Permanent loss of eligibility for unemployment insurance benefits.

See also

• Unemployment insurance
• Unemployment insurance fraud
• Unemployment insurance fraud recovery
• Unemployment taxes
• Unemployment Trust Fund
• Unemployment filings during the coronavirus (COVID-19) pandemic, 2020-2021
• State government plans to end federal unemployment benefits related to the coronavirus (COVID-19) pandemic, 2021

External links

• Search Google News for this topic

Footnotes

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