Labor Department Winning Battles against Unemployment Fraud

The Connecticut Labor Department (DOL) is making excellent progress in its initiatives to detect and prevent fraud, and prevent the overpayment of benefits—saving Connecticut businesses millions in the process. 

And with a little help from the business community, the DOL could achieve even more savings in the coming years. 

Some of the new tools the agency is using:

Benefits ‘Intercepts'

In 2012, the DOL began a partnership with the IRS and U.S. Department of Labor in the Treasury Offset Program to intercept federal tax returns of individuals who received unemployment benefits they shouldn’t have.

Since this program began, $7.8 million dollars have been recovered.

The effort complements a similar State Income Tax Intercept program.  Since 2012, the program has already recovered $9.9 million in improperly paid benefits by intercepting state income tax refunds. 

The state DOL also established an email address to report unemployment compensation fraud. The email address, in conjunction with a new surveillance program has resulted in an estimated savings of more than $1 million.

Individuals with knowledge of unemployment compensation fraud can report it to dol.bpcu@ct.gov.

E-Garnishments

The department’s E-Filing Garnishments, or electronic garnishment method, has successfully recovered 93% more in owed unemployment insurance payments than the manual process previously used by the department.

Each year, the E-filing system recovers nearly $2 million in fraudulently collected unemployment benefits. 

The DOL has also installed fraud detection software that gives the agency the ability to scan thousands of unemployment compensation records to detect odd or unusual claim filing patterns. 

Also, DOL has received media notice in recent months for its new partnership with the chief state’s attorney’s office to fight unemployment compensation fraud and prosecuting offenders who collect benefits to which they were not entitled.

Since the start of the program in June 2013, 80 people have been convicted for fraudulently obtaining $2.2 million dollars in overpaid in unemployment benefits.  Additionally, over $556,000 dollars has been recovered through this initiative. 

Employers' Role

DOL’s efforts to promote integrity have produced results–but the business community can help them achieve even more. 

According to Daryle Dudzinski, DOL’s acting director of labor operations, “The number one thing employers can do to help reduce the cost of unemployment taxes is to report new hires and rehires to the labor department on the employee’s first day of employment. 

“This will help to eliminate or prevent unemployment fraud and reduce pooled costs for the program and will benefit all employers.

The Labor Department immediately reviews that information, which prevents improper payments to people who are now back to work and attempt to file their weekly claim.

When the labor department and the business community work together, we can reduce fraud and limit all employers’ liability for unemployment taxes.”

Hopefully, the DOL’s efforts, with a little help from employers, will continue to improve the integrity of the state’s unemployment system, reduce fraud, and promote savings for Connecticut’s business community.

For more information, contact CBIA’s Eric Gjede at 860.244.1931 | eric.gjede@cbia.com | @egjede