If you watch TV commercials, you may have noticed a lot of recent ads promoting payroll tax refunds available to employers through the Employee Retention…
We first told you about fraudulent unemployment claims a couple of months ago, and their prevalence has increased since then. The Kansas Department of Labor (KDOL) reports they have stopped more than 100,000 fraudulent claims to date, with more pouring in. As you can imagine, the demand for unemployment payments has skyrocketed during the pandemic – since March 15, 2020, KDOL reports receiving 3.4 million unemployment claims totaling $2.4 billion.
Where there’s money, there are criminals, and unemployment fraud is big business. And now that unemployment benefits have been extended and increased, look for fraudulent activity to continue. It’s not just Kansas, but all states – this issue has caught the attention of the US Secret Service, the FBI, and the US Attorneys General. Even so, it’s up to each employer and affected employee to report and take steps to protect themselves.
What can you do?
If you receive an unemployment claim for an employee who still works for you, immediately report it to the KDOL through normal channels as well as using www.reportfraud.ks.gov, and notify your employee. This is always an indication that the employee’s identity has been stolen, and they should follow the steps outlined on the KDOL website. The Federal Trade Commission also has a dedicated website with additional resources – you can find it by clicking here.
You may receive more than one unemployment claim for the same employee, but don’t assume it’s a duplication – report all fraudulent claims. The initial report is supposed to freeze the employee’s account, but KDOL is currently working from two different systems, one for regular employees, and the separate Pandemic Unemployment Assistance (PUA) system for “gig” workers such as Uber drivers, who are eligible for COVID-related unemployment payments. The two systems don’t talk to each other as well as they could.
Other Indications of Unemployment Fraud
As we move into the beginning of 2021, your employees may receive a Form 1099-G reporting they have received unemployment compensation in 2020. If this occurs (even without an earlier unemployment claim), they should report it to the KDOL. Employers should review their annual unemployment charge statement to ensure the list of employees charged against their account is accurate – but realize that the statement only goes through 6/30/20 and any claims after that won’t show up until 2021.
What’s the KDOL Doing About This?
KDOL is beefing up the validation process for unemployment applicants, including requiring documentation of employment (not just self-certification) and identity verification. They will also begin requiring applicants to look for work, as that condition was suspended last March.
KDOL is also opening a specialized call center to answer employer questions. The number is 888.396.3725, and it is open M-F from 8 a.m. to 4:30 p.m.
Kansas Needs a New System
The KDOL unemployment system was in need of an upgrade before the pandemic hit, and it was never built for the demands placed on it in the past few months. Contact your Kansas legislators to encourage them to spend the money necessary to modernize the system.