Unemployment Insurance (UI) Fraud - Kentucky Career Center

NOTE: This information is specifically for Unemployment Insurance (UI) fraud. Learn about and report Identity Fraud here.

Report Unemployment Insurance (UI) Fraud

If you know of anyone collecting unemployment insurance benefits while working, while unable to work, or when not eligible to receive benefits, please visit this webpage and report them using the Anonymous Tip option.

Claimant Fraud

Examples of UI Claimant Fraud

Returning to work but continuing to collect UI benefits without reporting employment status or wages
Not reporting wages during any week that work was performed
Working a temporary or part-time job but not reporting employment status or wages
Withholding information or providing false information to OUI
Helping others claim benefits that they are not entitled to
Reporting inaccurate hours and earnings
Collecting benefits based on false or inaccurate information
Claiming benefits while unable or available for work
Claiming benefits without looking for work
Claiming benefits using someone else’s identity

Claimants can lower their risk of committing fraud by following these guidelines:

Accurately report the reason you are unemployed

Accurately report your reason for separation from your job when you initially file your claim for benefits. After a claim is filed, the separating or most recent employer is sent a Notice of Claim Filing and Request for Separation Information.

Report any wages you have earned

You must report your gross wages (earnings before taxes and other deductions) for each week you work and claim unemployment benefits, even if you have not actually been paid for the work. This includes part-time or temporary work. OUI uses a quarterly wage cross-match system. This system compares benefits paid to wages reported by employers under the same Social Security Number during the same quarter.

Report when you are not able or available to seek or accept work

You must be physically able and available to perform some type of work (even if it is not your regular field of work). Notify OUI if you are not ready, willing, and able to work (e.g., out of the area, on vacation, sick, suffering total disability) while collecting UI benefits. This information is self-reported during your weekly certification.

Avoid errors and ensure proper payment of benefits

To prevent errors that may result in an overpayment, read about your Rights and Responsibilities. In the event that you receive a benefits overpayment, visit KCC’s Make a Payment page to pay the balance in part or full.

Stop claiming unemployment benefits as soon as you begin working

As soon as you begin working, simply stop filing a weekly claim. Do not wait until you receive your first paycheck.

Actively search for work

Claimants are required to conduct an active work search for each week they claim UI benefits unless they are exempt. Visit KCC’s Resume and Job Search page to learn about work search requirements and more.

Know your responsibilities and ask for help

Navigating the UI system can be confusing. Don’t risk losing your benefits because you don’t know your Rights and Responsibilities. If you have a question, UI customer service representatives can help. Contact the UI Call Center at (502) 564-2900 between 9 a.m. and 5 p.m. ET, Monday through Friday.

Employer Fraud

Examples of Employer Fraud

Helping another person file a false claim
Paying employees secretly (off-the-record, off-the-books, or under-the-table) or not properly reporting their wages
Not reporting new employees upon hiring
Reporting incorrect start dates for employees
Misclassifying employees (W-2) as independent contractors (1099) to avoid paying UI contributions
Failing to report or inaccurately reporting employee wages
Moving workers between employer payrolls to incorrectly qualify for a lower UI contribution rate
Providing false information to prevent a claimant from receiving benefits
Failing to pay UI taxes
Failing to file reports

Employers can prevent fraud and strengthen the integrity of the UI program by following these guidelines:

Proper Classification of Workers

For tax purposes, an employer must classify its workers as either employees (paid on a W-2 form) or independent contractors (paid on a 1099 form). Employers are required to pay unemployment tax on employees' earnings but not on independent contractors’. If a worker is misclassified as an independent contractor, unemployment taxes will not be paid and the worker's wages will not be reported. A wage and liability investigation of the employer will be initiated by OUI to determine proper classification. If OUI finds that misclassification occurred, the employer may be liable for payment of all back taxes with interest and penalties.

Review Quarterly Statements of Benefit Charges

At the end of each quarter, most employers receive a copy of all UI benefits charged against their account for that quarter. Please review all benefit charges carefully, as they will affect your future unemployment tax rate. If you disagree with any of the benefit charges or find any errors, you must protest the charges within 30 days of the date the notice is mailed. You may submit your protest online using Kentucky's Unemployment Insurance Self-Service website.

Respond to Notice of Claim Filing and Request for Separation Information

When a former employee files for UI benefits, you can inform OUI of the reason the individual is now unemployed. You must respond to the department within 10 calendar days of receiving the notification to prevent a former employee from wrongfully receiving UI benefits.

Provide accurate wage information

Providing OUI with accurate wage information for your workers ensures that individuals are paid the correct amount of UI benefits.

Refrain from engaging in tax manipulation schemes

Under the experience rating system, employers pay unemployment taxes at rates proportionate with claims activities by their employees. Employers with high unemployment activity pay higher unemployment tax rates, and employers with lower activity pay less. Employers who engage in SUTA Dumping or other tax manipulation schemes to avoid paying their fair share unfairly shift their costs to other employers.

Respond to Unemployment Insurance cross-match audits

The OUI conducts random cross-match audits of claimant accounts four times a year. By responding to these requests for wage and possible separation information, you are helping to protect the integrity of the KY UI system.