Introduction
The Alabama Department of Labor (“ADOL’) is working closely with the U.S. Department of Labor and various other state and federal law enforcement agencies around the country to share information regarding the unprecedented rise in unemployment insurance fraud. As a response, the ADOL is encouraging employers to advise their employees to take reasonable measures to protect personal information, establish PIN and passwords that are difficult for an outside person or computer to generate, and be vigilant in identifying any suspicious activity related to unemployment claims.
Indicators of Fraudulent Activity
The ADOL encourages employers to be vigilant in recognizing the various indicators of fraudulent activity and advising their employees accordingly. For example, receipt of mail from the ADOL notifying an employee of a claim in their name when they have not filed an unemployment claim is an early indicator of fraudulent activity. In addition, receiving an IRS Form 1099-G stating an employee has income from unemployment when they have not filed an unemployment claim is an indicator of fraudulent activity. If an employee filed for benefits, receipt of this form is to be expected as benefits are taxable income in most states. However, in some cases, this could be the first indication that a fraudulent claim has been made. Text messages from the ADOL asking an employee to verify their unemployment account is also an indication of fraudulent activity. Employees should be advised that the ADOL does not use text messages to correspond with claimants. Lastly, employers receiving claim notices on employees who do not exist or who never terminated employment with said employer is an indicator of fraudulent activity. If an employer or employee suspects any of the aforementioned indicators of fraudulent activity, they are asked to report it to the ADOL.
Reporting 1099-G Fraud
Employers should provide a gateway for employees to report fraudulent activity. For example, an employer may advise its employees to report to its HR Department if an employee receives an IRS Form 1099-G for fraudulent benefits. In addition, an employee should then be directed to report the fraud to the State Workforce Agency and to the Federal Trade Commission (“FTC”) at https://identitytheft.gov/. The FTC provides employees with a personalized recovery plan and can walk an employee through each step of the recovery process. Employees should also report the identity theft to the IRS. This allows employees to avoid paying taxes on the fraudulent income.
Reporting Fraud to ADOL
If your employee suspects fraudulent activity, they should be advised to report it to the ADOL at www.labor.alabama.gov. The ADOL conducts various types of fraud and abuse investigations on unemployment claims to ensure the accuracy of benefit payments. The ADOL allows an employee to report the following: (1) Report that they suspect someone has used their social security number to work or claim UI benefits, including those who have received a 1099-G but did not receive unemployment benefits; (2) Report any suspected UI benefit fraud and abuse; and (3) Report that they suspect an employee or employees receiving UI after returning to work, or of receiving PPP funds that may impact the individual’s eligibility for UI benefits.
Conclusion
Unemployment fraud is a national issue and the ADOL is working diligently to encourage employers to take reasonable measures to protect their employees in advising them to protect personal information and report any suspicion of unemployment fraud or abuse. We will continue to assess any developments implemented by the ADOL to protect the identities of employees. We are available if you have any questions.
Written By: Kristyn L. Hardy
We are available to address your individual circumstances and questions.
Trip Umbach 205-868-6072 or tumbach@starneslaw.com
Alfred Perkins 205-868-6024 or aperkins@starneslaw.com
Scott Stevens 251-405-5067 or sstevens@starneslaw.com
Breanna Young 205-868-6020 or byoung@starneslaw.com
Keith Stephens 205-868-6047 or kstephens@starneslaw.com
Kristyn Hardy 205-868-1759 or khardy@starneslaw.com
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