Unemployment benefits are set in place for those who need the extra financial assistance that their work or lack of work does not afford them. However, as applications for unemployment benefits are self-reported, people often misreport information, intentionally or unintentionally, to obtain those benefits. In today’s blog, we will address who is really eligible for unemployment benefits, common examples of unemployment fraud, and what such a charge might entail.
Who Is Eligible for Unemployment Benefits?
To collect unemployment benefits after being fired or quitting, your termination must have been for financial reasons. More specifically, if you seek unemployment benefits after quitting your job, you must have quit for good cause, such as:
- The job endangered your life or health, or the working environment was intolerable;
- The employer moved too far away for you to commute; or
- Another compelling personal reason, such as taking care of a sick relative.
Further, an employee termination for unintentional actions or because of a layoff may not exclude an employee from receiving unemployment benefits. Be aware, though, that in most cases, leaving your job because of dissatisfaction is not enough to apply for unemployment benefits.
Note that students, recent graduates who have never been employed, and self-employed individuals are not eligible to receive unemployment benefits.
Who Cannot Collect Benefits?
You cannot collect unemployment benefits if you were fired for misconduct that was deliberate and might cause injury to the employer’s business. Common types of misconduct might be:
- Frequent tardiness
- Unexcused absences
- Violation of workplace rules
- Intoxication on the job
- Sleeping on the job
- Extreme insubordination
- Sexual harassment
Misconduct does not include behavior that amounts only to poor performance, such as carelessness, lack of skill, or errors made in good faith.
Examples of Unemployment Fraud
Unemployment Insurance Benefits Fraud
Some common examples of fraudulent behavior for collecting unemployment insurance (UI) benefits include:
- deliberately failing to report amount of hours worked or amount of wages earned while continuing to draw UI benefits;
- deliberately making false statements that may alter or increase benefits;
- deliberately withholding information that may alter or increase benefits;
- knowingly reporting an incorrect employer as your separating employer;
- claiming and receiving benefits while incarcerated;
- returning to work but continuing to collect UI benefits without reporting the work and wages;
- working a part-time job but not reporting your earnings; or
- performing temporary work while collecting UI benefits, but not reporting these earnings.
Unemployment Insurance Tax Fraud
UI tax fraud is any deliberate action taken by an employer to evade full unemployment tax liability. This could look like:
- misclassifying employees as independent contractors;
- neglecting to report all wages paid and to pay payroll taxes;
- paying employees in cash or under-the-table to avoid paying taxes; or
- practicing rate manipulation schemes.
Overpayment is a common example of UI fraud, briefly mentioned above. Overpayments often occur when false information is submitted during an unemployment claimant's weekly certification. The two types of overpayment that Tennessee recognizes are non-fraud and fraud overpayment.
Non-fraud overpayment occurs when you are not at fault for receiving benefits to which you were not entitled. Generally, the penalty for such a case will simply be that you repay the non-fraud overpayments.
A fraud overpayment, on the other hand, occurs when you knowingly provide false information or withhold information to receive benefits you should not have. Withholding or giving false information to obtain UI benefits is a serious offense that could result in criminal prosecution, in addition to fines and the overpayments that must be repaid.
What are the Penalties for Unemployment Fraud?
Tennessee law sets severe penalties for anyone who commits UI fraud by deliberately providing false information or withholding information for the purpose of obtaining unemployment benefits. A UI fraud offense is considered a felony, and a convicted individual may incur the following penalties:
- prosecution by government authorities;
- 1 to 6 years of jail time;
- repayment of UI benefits collected, plus penalties and interest;
- up to $3,000 in fines;
- forfeiture of future income tax refunds; and
- loss of eligibility to collect UI benefits in the future.
Avoid Penalties for Unemployment Fraud
Some simple ways to avoid penalties for committing UI fraud in the first place are:
- reporting your wages or income before deductions during the week you work and not when you receive your pay;
- reporting all income, including self-employment and independent contractor work;
- keeping a record of the work and wages earned for each day to ensure accuracy.
State law requires that you report all earnings during weekly certification while claiming unemployment benefits. You must include the hours worked and income earned in employment, including self-employment, for each calendar week. Note that your hourly rate of pay times the total hours worked is the amount of gross pay you must report.
The laws around collecting unemployment benefits can be complex to navigate, especially when you work part-time or multiple under-paying jobs. Perhaps the most important thing to keep in mind when filing your weekly certification for UI benefits is that you report honest, appropriate information about your work hours and pay rate. An experienced fraud lawyer can provide useful assistance in this process. If you have questions about your eligibility for unemployment benefits, or if you fear you may have accidentally committed UI fraud, contact Eldridge & Blakney immediately. We can assess your situation and recommend next steps to clear your case.
Speak with an attorney at Eldridge & Blakney today for more information.