State targets unemployment insurance fraud

The Employment Security Department (ESD) uncovered $3.7 million and prevented another $2 million in unemployment-insurance fraud in the first quarter of 2006.

“There are a lot of people out there trying to make a quick buck off of the unemployment system without earning it, and we are working hard to fight back,” said ESD Commissioner Karen Lee. “We have an aggressive anti-fraud program and we’re adding new tools all the time.”

The agency uses a variety of techniques to catch people who collect unemployment benefits to which they are not entitled, including cross-matching records with the Social Security Administration and the state Department of Labor & Industries. ESD also compares unemployment records to the national list of new hires and investigates tips from the public.

The most common types of fraud include failing to look for work, not reporting income and continuing to collect benefits after returning to work.

Lee said that employers can help reduce fraud by unemployment claimants by filing accurate tax and wage reports and by responding to notices from ESD, particularly those related to the reason a worker left the job.

“We could avoid a lot of payment errors if employers would respond quicker when we ask them about their former workers,” Lee said. “It’s hard to get unemployment payments back after the check has been cashed, and those costs end up being paid by all employers.”

Employers are required to report all new employees to the Department of Social and Health Services within 20 days of hire. Proper reporting reduces unemployment and workers’ compensation fraud and helps the state collect child support. Employers can report new hires on the Internet at or by calling (800) 562-0479, option 3.

On July 1, ESD will launch a new anti-fraud program that targets employers who try to manipulate their tax rates.