- Unemployment misconduct is any action that misuses the unemployment insurance program. This includes concealing, misrepresenting and distorting facts to manipulate the system. It also includes intentionally subverting the regulations of your state's labor laws to abuse the system. For example, all states require an active job search to collect unemployment benefits. If you intentionally only apply to jobs that you know you have no experience for so you can stay on unemployment, you're circumventing the spirit of the rules. That's considered misconduct.
Prevention and Detection Measures
- Although unemployment misconduct can be a subtle problem, the state does everything within its power to prevent it. This starts with verifying the information you provide on your initial claim and your subsequent weekly claims. As an additional measure, each state also performs regular random audits of claims to review for signs of misconduct or fraud. Most states also provide a hotline or website for citizens to report unemployment fraud with some even offer rewards for tips.
- Whether your unemployment misconduct was intentional or not, if it resulted in a benefit overpayment, you must repay it. The state sends you a bill of the total overpayment as soon as it realizes you received benefits you weren't entitled to receive. Some states offer a payment plan. If you don't pay off the overpayment or set up a payment plan with 90 days, your debt will likely go to a collection agency. From there, it can appear on your credit report and, depending on the laws of your state, prevent you from conducting business with the state, including obtaining a drivers license or receiving tax refunds.
- Repaying your benefit overpayment isn't a punishment. It's just rectifying the overpayment. When the unemployment misconduct is intentional, your state may punish you by giving you penalty weeks. A penalty week is a week you qualify for unemployment and should receive it, but don't as a punishment for previous misconduct. If your misconduct involved a large amount of money or blatant disrespect for the system, your state may decide it's severe enough to prosecute. Depending on your state laws, you can receive jail time or additional monetary fines from an unemployment compensation fraud conviction.