U.S. DOL Issues Warning Against Fraud and Misuse of Unemployment Benefits

Ballard Spahr LLP

Ballard Spahr LLP

On Tuesday, May 19, 2020, the U.S. Department of Labor (DOL) released updated resources for employers, employees, and states to prevent fraud or misuse in the unemployment insurance system, including with respect to the expanded unemployment benefits under the CARES Act.

In a press release, the DOL reminded claimants they may commit unemployment insurance fraud by knowingly submitting false information, knowingly continuing to collect benefits when ineligible, or intentionally collecting full benefits while not reporting other wages or income. The DOL noted that claimants should also understand their state’s requirements related to accepting offers of suitable employment and that refusing available work may serve to cut off benefits.

The DOL also issued a set of Frequently Asked Questions (FAQs) that address an individual’s refusal of suitable employment. The FAQs explain that individuals receiving state unemployment benefits must act upon any referral of suitable employment, and that an employer’s request to a furloughed employee to return to work would very likely constitute an offer the employee must accept, barring unusual circumstances. An individual could, however, remain eligible for the CARES Act’s Pandemic Unemployment Assistance if he or she meets one of its qualifying reasons. The FAQs also explain that, typically, an individual who voluntarily quits his or her employment will not be eligible for unemployment insurance benefits and may be found to have committed fraud if untruthful on the application for benefits. The DOL FAQs address a number of other issues and can be found here.

The DOL also took the opportunity to remind employers of their obligations related to unemployment insurance, and that they may commit fraud if they take certain actions to avoid tax liability or enable fraudulent claims against their accounts. The DOL also called attention to employers’ obligation to report any potential unemployment fraud. A list of all state unemployment insurance fraud hotlines can be found here.

Employers should familiarize themselves with their obligations under the applicable state and federal laws. They should also report any fraudulent activity of which they become aware.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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