Dealing with Unemployment Fraud? Best Practice Tips from Honigman
The Michigan Unemployment Insurance Agency (“UIA”) has reported an increase in fraudulent claims for unemployment benefits. An example is an unemployment claim by an imposter for a worker who is still employed. For Michigan employers, this trend can have wide reaching impact as the employer’s experience rating impacts its unemployment contribution rate. Generally, the more workers claiming unemployment benefits, the higher the experience rating and the higher the unemployment contribution rate.
To avoid a higher tax rate, employers should follow these best practices if faced with a suspected fraudulent claim:
- Object to the Claim: An employer receiving a suspected fraudulent claim should notify the UIA via the MiWAM online filing system and object to the claim made for each Monetary Determination (Form 1575E) that it receives. The employer may respond via fax, but it should retain a copy of the fax confirmation for its records. If the employer uses a third-party provider for UIA compliance, it should alert the provider to the suspected fraudulent claim to coordinate the appropriate response.
- Report the Fraud: An employer should also notify the UIA of the fraud using the UIA toll-free fraud hotline (1-855-UI-CRIME) or the online Fraud Reporting Form.
- Track the Claims: An employer should track each claim to ensure it is flagged as fraudulent because if not, the employer’s experience rating may increase without proper designation. Carefully monitor your Bi-Weekly Statement of Charges/Credits to Employer’s Account, in addition to your quarterly statement. If the tax rate increases due to the number of suspected fraudulent claims, the employer must protest the rate increase within 30 days via the MiWAM system. This must be done in addition to protesting each fraudulent Monetary Determination.
- Notify the Employee: An employer who receives a suspected fraudulent claim should also notify the employee in writing. The employee should also be encouraged to protest the UIA claim by completing a Statement (or Affidavit) of Identity Theft (Form 6349 or 6349A) and submitting it to the UIA via mail or fax. For an unemployment claim to be filed, the filer must know the employee’s name and Social Security number, so employees may want to take additional steps to help protect themselves from identify theft.
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