Unemployment insurance fraud is a growing, costly challenge for employers and employees. In 2024, the improper payment rate is estimated at nearly 16 percent, totaling over $5.6 billion.1 The impact extends beyond government programs to your employees’ identities, compliance standing, and bottom line.
As an employer, knowing how to identify fraud, respond quickly, and support your affected employees is critical. We’re here to help your organization understand the warning signs and take the right steps when fraud occurs.
Unemployment fraud is often discovered when an active employee receives a Form 1099-G for benefits not collected, your organization receives a claim for a current employee, or a terminated employee finds a claim already filed in their name. In every case, swift action is essential.
When fraud is detected or suspected, promptly notify the relevant State Workforce Agency. This step protects your employees from repayment liability and your organization from penalties. Instruct affected employees to freeze their credit with Equifax, Experian, and TransUnion. Have employees report the incident to the IRS and the Federal Trade Commission. If employees’ information has been compromised, guide them to the IRS Identity Protection PIN program for added security.
Employees who receive a Form 1099-G for benefits they did not collect should not ignore it. Failing to address a fraudulent 1099-G can result in unexpected tax liability, penalties, and interest. Employees should contact their State Workforce Agency directly to report the fraud, resolve the claim, and take steps to protect their financial and digital identity going forward.
Fraud affects real people at real moments in their lives. Our Employee Fraud Resource gives your employees the tools, information, and next steps they need to protect themselves and move forward.
Deciding to reduce your workforce is one of the most consequential decisions an organization can make. The financial, operational, and human impacts are significant, and the compliance obligations that come with them are easy to overlook under pressure. We help employers navigate every dimension of a workforce reduction, from understanding your unemployment cost exposure to ensuring your employees have the information and support they need.
Before proceeding with a reduction-in-force, it is worth exploring available alternatives. Work Share programs, available in select states, allow employers to reduce employee hours while enabling those employees to collect partial unemployment benefits to offset lost wages. This can be a practical option for organizations facing a temporary downturn while seeking to retain their workforce. Many states also allow employees whose hours have been reduced, outside of a formal Work Share program, to collect partial unemployment benefits if their earnings fall below their weekly benefit amount.
Many states require employers to provide formal, time-sensitive separation notices to any departing employee, regardless of the reason for separation. Failing to issue these notices can lead to penalties. We can help automate the generation and delivery of mandated separation notices across all jurisdictions, ensuring compliance without added administrative work. Explore our Offboarding Compliance expertise.
Federal and State WARN Act
The Worker Adjustment and Retraining Notification (WARN) Act requires employers with 100 or more employees to provide 60 days’ advance notice before a plant closing or mass layoff. Many states have enacted their own mini-WARN provisions with additional or differing requirements. Staying current on both federal and state obligations is essential to avoiding costly penalties.
State Unemployment Tax Rates
Workforce reductions affect your state unemployment tax account. Benefit charges for laid-off employees impact your experience rating. Timing a reduction can affect when rate increases begin. Understand each state’s calculation method for tax rates in advance to properly budget and assess the financial impact on future SUI costs. We can help. Explore our Employment Tax Services.
Severance and separation pay can affect an employee’s eligibility for unemployment benefits and should be considered in your reduction planning. Many employees may be filing unemployment claims for the first time. Thomas & Company covers 53 states and jurisdictions (including Washington, D.C., the U.S. Virgin Islands, and Puerto Rico) and can provide employees with information on state-specific benefit amounts, durations, waiting weeks, and work search requirements.
Workforce reductions come with complex unemployment-related compliance obligations. Our comprehensive, state-by-state Workforce Reduction Guide covers UI benefits, compliance requirements, and everything your organization needs to support impacted employees.
