Fraud in unemployment claims is a serious issue. Claimants are required to report all work and earnings when filing their weekly continued claims. Work must be reported even if the claimant has not yet received the pay for it. When a claimant reports earnings, the earnings can reduce the unemployment insurance (UI) benefits otherwise payable for that week, which is why some claimants fail to report earnings. Failure to report work and earnings can lead to a fraud ruling. The result of claim fraud is that the claimant forfeits all rights to UI benefits from the date the fraud was first committed. Sometimes that leads to large overpayments if the fraud is discovered after the fact. If the employer is a private taxed employer, any such overpayment would significantly reduce (and possibly even completely eliminate) its chargeback liability, since chargebacks from overpaid benefits would be deleted from its tax account. Any employer suspecting that a claimant might be failing to report work and earnings should report that to any TWC office as soon as possible and should try to furnish as many specifics as are available, such as the name of the employer for whom the claimant is working and the address and phone number of the business. That way, TWC can more easily contact that employer and verify the information.
Sometimes, claim fraud goes hand in hand with tax fraud. That can happen when a claimant finds an employer that is willing to pay the claimant "cash under the table", usually in order to avoid paying state and federal unemployment taxes on the wages. Of course, those wages are not reported to either TWC or IRS. Tax-paying employers suffer because of such abuse of the system, so they should not hesitate to report suspected abuse to TWC. Reports do not have to be signed. The agency follows up on every such report.
How To Report Claim Fraud?
If you suspect that a claimant has found a job, but is not reporting the work or earnings to TWC, or if they are collecting workers' compensation benefits and possibly not reporting such benefits, you can contact TWC by the following means:
Call the TWC Fraud Hotline at 1-800-252-3642.
Call TWC's Tele-Center toll-free at 1-800-939-6631. For Telecommunications Devices for the Deaf (TDD), call Relay Texas at: 1-800-735-2989.
Report it anonymously using one of the phone numbers above or by sending a letter to "Fraud Control, Texas Workforce Commission, 101 E. 15th Street, Austin, TX, 78778".
Report it via e-mail by using the e-mail link on TWC's "Reporting Fraud" Web page at https://twc.texas.gov/reporting-fraud#howAndWhereToReportFraud. Be sure to read the caveat on that page before sending the information via e-mail.
Report it via the online portal at https://apps.twc.state.tx.us/UiFraudSubmission/uifs/uifraud.
In the special case of identity theft fraudulent claims, an employer should file a timely response to the claim notice, indicating that the claimant is either still working or has never worked there and that it is a case of identity theft, and then send an e-mail to firstname.lastname@example.org, listing the claimant's name, the last four digits of the claimant's SSN, the employer's name, the employer's TWC account number, and a brief description of the problem, i.e., that the claim is fraudulent, the claimant still works there or has never worked there, and that the claim is an instance of identity theft. With that information, TWC can lock the fraudulent claim down and flag it so that any attempted claim activity is referred to fraud investigators.
How New Hire Reporting Can Help Control Fraud
Another very important way that employers can help reduce claim fraud is by properly reporting all new hires and rehires under the new hire reporting law in Texas. As required by the federal law known as the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), employers must report all new hires and rehires to a designated state agency, the Texas Employer New Hire Reporting Operations Center. The report must include the employee's name, SSN, and address. TWC cross-matches the information from the new hire reports with its benefits claim records. Where there is a match, TWC checks to see whether the claimant reported that new work and any earnings from the new job on the benefit claims for the weeks in question. Any discrepancies are referred to the fraud detection unit for further investigation. For more details on new hire reporting, see the article titled "New Hire Reporting Laws" in the Hiring section of this book.
Helping control claim fraud benefits everyone. It benefits employers by reducing chargebacks and UI tax rates, and by occasionally detecting tax fraud on the part of unscrupulous companies, which can also keep tax rates lower. It benefits honest claimants and the public by ensuring that money needed for UI benefits will be there in the UI trust fund when needed. TWC and your fellow employers will appreciate every effort your company can make in this regard.
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