What Kansas Employers Should Know About Rising Unemployment Fraud Claims

Fraudulent unemployment claims across the country have risen over the last year. Kansas has been hit particularly hard – in some of the opening weeks of 2021, Kansas received the third highest number of initial claims for unemployment benefits of any state, behind only California and Illinois. Some believe the high number of claims indicate that Kansas is experiencing a greater number of fraudulent claims than other states.

The Kansas Department of Labor recently divulged that the state’s unemployment insurance program paid what it believes to be around $140 million in fraudulent claim payments in 2020. The Kansas Department of Labor and Kansas lawmakers are analyzing multiple solutions to the issue, including an overhaul of the unemployment system and additional legal protections for employers.

Often, scammers are filing fraudulent claims using the names and personal information of people who have not lost their jobs. In many cases, scammers use personal information they obtain through buying stolen personally identifiable information or information that was released after a data breach. These fraudulent claims not only result in costs to the state, but also may result in problems for the employer and employees who were targeted in the scam.

What Should Employers Do To Mitigate Fraud?

A well-trained and vigilant human resources department can be your first line of defense against unemployment fraud. Fraudulent claims are often discovered when an employer receives a notice to verify the employment status of a current employee. Your human resources department should scrutinize unemployment notices to identify these claims.

Let your workforce know about these scams and educate employees on the importance of protecting personally identifiable information. Employees should watch for data breach notifications and take appropriate steps to change passwords and protect information if their information is impacted by a breach. Employees should also notify their employers if they think their information is being fraudulently used to obtain unemployment benefits.

If your human resources department discovers probable unemployment fraud, don’t ignore it! Your business should take the following actions:

  1. Notify the state unemployment administrator. Most states have both an online system for reporting fraud as well as a hotline. The Federal Trade Commission recommends reporting through your state’s online system when possible, because it will save you time and will be easier for the agency to process. If you receive a confirmation number or case number, keep a record of it. You can report fraud online to the Kansas Department of Labor at https://www.dol.ks.gov/fraud or the Fraud Hotline at (785) 291-6059.
  2. Notify the United States Department of Labor. In addition to notifying the Kansas Department of Labor, you should also notify the federal Department of Labor. The United States Department of Labor’s website has a form where you can report suspected unemployment benefits fraud. The form is accessible at https://www.oig.dol.gov/hotline.htm.
  3. Alert the employee. Don’t leave your employee in the dark! Employees may not know that scammers are using their identity to seek fraudulent benefits, so you should inform impacted employees and educate them on resources they can use to protect their identity. Employees should contact the Federal Trade Commission at www.identifytheft.gov and should also take steps to protect their credit. Employees may want to freeze their credit or place a fraud alert on their credit reports. Employees should also closely monitor their financial accounts for signs of fraud.
  4. Evaluate privacy and data security policies. If your human resources department discovers that multiple employees’ identities are being used by scammers, you should evaluate whether your systems housing employee personally identifiable information may have been accessed by an unauthorized individual. If it appears that a data breach may have occurred, you should reach out to an attorney to determine whether you have any legal obligations to notify potentially impacted individuals. 
Sarah Otto
Sarah Otto

Foulston Employment Law Attorney