Any willful misrepresentation by a worker for the purpose of obtaining unemployment benefits is fraud. Fraud ultimately costs employers more in taxes. Taxes are deposited into the Unemployment Compensation Trust Fund, from which benefits are paid. Factors that can raise an employer's tax rate include benefits paid to former workers (claimants) that are charged to the employer's account and the balance of the Trust Fund.

A fraudulent claim results when a claimant files for unemployment benefits while:

• Working and not reporting earnings or not reporting the correct amount of earnings;
• Not being able to work;
• Operating their own business and not being available for work;
• Refusing work; and/or
• Leaving work while claiming benefits without notifying the Division.

If an employer has information which it believes would cause an individual to be held ineligible or disqualified from receiving benefits, it should immediately notify the Division's Regional Claims Center where the claim was filed. The employer must timely protest any separation issue after being notified of the filing of an initial claim and cannot wait until receiving the quarterly Statement of Benefit Charges to raise the issue.

The Division of Employment Security investigates overpaid benefits. The primary means of detecting overpayments are cross-matches with new hire data and quarterly wages reported for the claimants by employers. When a match is made, the Division sends an Audit and Investigation form to the employer to confirm whether or not benefits were overpaid.

An employer can help by:

• Responding to Claims Notices as applicable;
• Completing the Audit and Investigation forms providing wages earned during each week the worker claimed benefits;
• Reviewing Benefit Charge Statements for accuracy; and
• Notifying the Division if they suspect someone of receiving unemployment insurance benefits fraudulently.

Claimants are required to pay back overpaid benefits, and payments are deposited back into the Trust Fund. Some overpayments are the result of honest mistakes. However, if the claimant committed fraud in obtaining benefits, he or she can be charged an additional monetary penalty as well.

If an employer commits fraud by misrepresenting, misstating or failing to disclose information in order to deny benefits to a worker, the employer may also be assessed a penalty. An employer may also be found guilty of a misdemeanor and subject to a fine or imprisonment for making a false statement or knowingly failing to disclose a material fact to prevent or reduce the payment of benefits.