Pre-Employ Blog

Tennessee Recovers Over $15 Million in Fraudulent Jobless Benefits

Posted by admin on June 14, 2013

States have fought with force against those who fraudulently obtain unemployment insurance benefits. The latest such example of this came in the form of more than $15 million a Tennessee agency announced the state had recouped from individuals who illegally obtained jobless benefits.


Benefits recovered through wage garnishing
Recently, the Tennessee Department of Labor and Workforce Development announced it had recovered $15.3 million in fraudulently obtained unemployment benefits as a result of the Treasury Offset Program, which allows agencies to garnish federal tax returns of state workers.

The recovery of the illegally procured funds signals progress for the state department after The Tennessean reported an audit released earlier this year revealed Tennessee had built up roughly $73 million in jobless benefit overpayments and payouts related to fraud. The source said the report leveled particular criticism of the state's efforts to recoup fraudulent benefits payments.

"The ability to reclaim these funds that were fraudulently collected is extremely important to the business community because the health of the Unemployment Trust Fund affects the amount of taxes an employer pays," said Burns Phillips, acting labor commissioner.

The department said overpayments most often occur when benefit claimants continue to file for unemployment insurance even though they may have returned to work or concealed earnings.

A previous report showed concealment of earnings led to $2.2 billion in fraudulent UI benefits payments nationwide in 2011.

The Tennessee agency said roughly half of overpayments in the state were directly related to wages that were underreported or not reported on at all. Another common source of UI fraud stemmed from employers or third party partners not providing the state with timely data on why employment had been terminated.

Unemployment insurance fraud (UI claims fraud) is a growing problem across the nation, and employers must do all they can to avoid falling victim to fraud. Working with an HR partner who stresses compliance and efficiency can sufficiently prepare a business for handling UI obligations.

Subscribe to our blog so you don't miss any important employer compliance updates:

Subscribe to Pre-employ Blog

Topics: Tennessee, HR Compliance, Unemployment