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What is Unemployment Insurance Fraud?

What is Unemployment Insurance Fraud?

Unemployment benefits were created to help employees through a hard time. Understanding how the system works and ensuring that the rules are properly adhered to cuts down on fraud and allows the right people to get the benefits they are owed. Unfortunately, sometimes the guidelines of unemployment insurance can be confusing and lead some to commit unemployment insurance fraud almost accidentally. Read on to learn more on this pertinent topic: 

What is Unemployment Insurance Fraud?

Unemployment insurance fraud occurs when an applicant supplies either incomplete or false information to obtain unemployment benefits to which they are not legally owed. According to California Insurance Code 2101, unemployment insurance fraud is defined as:

“To willfully make a false statement or representation, to knowingly fail to disclose a material fact, or to use a false name, false social security number, or other false identification to obtain, increase, reduce, or defeat any benefit or payment, whether for the maker or for any other person.”

Unemployment fraud can take place on both the employer and employee side of things. An employer can be complicit to fraud if they supply false information so that former or current employees are denied rightful benefits. 

How Do People Commit Unemployment Insurance Fraud?

The following is a breakdown of some common types of unemployment insurance fraud:

As an Employee: 

  • Using a false social security number, false name, or false employment information while simultaneously working and continuing to receive unemployment benefits.
  • Working (even freelance) while collecting unemployment insurance and then not reporting that income to the Employment Development Department (EDD) of California, which is the agency that oversees the unemployment insurance program within the state. 
  • Living in one state and trying to obtain fraudulent benefits in another state.
  • Cashing another individual’s unemployment check without getting their authorization. 
  • Creating a fictitious employer and then listing oneself as the employee who is then eligible to receive benefits. 
  • Collecting other types of compensation like workers’ compensation benefits or pension without reporting to the EDD, which could also be a violation of California’s compensation fraud laws.
  • Falsifying the reasons one is no longer working, such as stating one is laid-off as a result of cut-backs but who was really fired due to poor job performance. 
  • Fabricating work-search efforts, meaning that one states they are looking for work when they are in fact not trying to find another job. 

As an Employer: 

  • Willingly failing to pay employees EDD and knowingly withholding deductions from employees.
  • Providing false information intentionally about why an employee was terminated as a way to avoid having to contribute to unemployment. 

Potential Penalties in California

If a person is found guilty of unemployment insurance fraud, either on the employee or employer side, this is a serious offense. The following are potential penalties in the state of California:

  • Losing the ability to ever collect unemployment benefits or unemployment insurance in the future.
  • Forfeiting future income tax refunds.
  • Penalties and fines along with repayment of the unemployment benefits collected.
  • Prison or jail sentences.
  • Prosecution by government authorities. 

When to Contact a Lawyer

Thankfully, if you realize you have either intentionally or unintentionally committed unemployment insurance fraud, an experienced lawyer can help. If you think you have committed any of the examples of fraud listed above, and believe any of the following points fit your case, you need to contact a lawyer as soon as possible:

  • You believe you have submitted a legitimate claim even though you are being charged with fraud. 
  • You were unaware you had to report freelance or other income to the EDD when drawing unemployment and are now facing fraud charges.
  • You accidentally provided falsified information like the wrong social security number or name. 

Contact a Lawyer Today

With the increase of people drawing unemployment during the pandemic caused by COVID-19, there has been a statewide uptick in insurance fraud cases. In some cases, people knowingly committed these crimes. In others, they had no idea they were breaking any rule. Many stipulations allow for people who simply didn’t understand the law adequately. However, ignoring the problem, hoping it will go away won’t solve anything. If you find yourself facing a fraud charge and are unsure how to fight back, contact Premier Criminal Defense today for aggressive defense from an experienced San Diego fraud attorney. Our attorneys are experts in unemployment insurance fraud and can often uncover critical facts that will exonerate any falsely accused individual. Contact us today by filling out our online form or call (619) 439-0252 for a FREE case review.