Employment insurance fraud is a crime that can result in a number of penalties, which may vary by jurisdiction. The crime is committed when individuals fail to report earnings in order to qualify for unemployment benefits or make false statements or purposefully omit information to get benefits. Penalties for committing the fraud include prosecution and a fine or imprisonment, a ban on filing for benefits for a period of time, and repayment of benefits that were obtained by fraud, plus interest. Employers may also be guilty of employment insurance fraud and are often subject to repayment of the penalties as a result. Some jurisdictions classify the violation based on the amount of money that the individual gained by committing the fraud, ranging from minor, or a misdemeanor, to very serious, or a felony.
Many regions prosecute those who are accused of employment insurance fraud, because it robs taxpayers who fund the employment insurance. The labor department or similar government agency often works with district attorneys, police officers, and other law enforcement to bring about charges and arrest those who are accused of the fraud. These criminal trials often serve three purposes, which are to recover the money stolen, to deter others from committing fraud, and to punish the defendant. The consequences of prosecution are imprisonment, a fine, or both. Whether an individual is sentenced to serve jail time depends on the violation, because minor fraud crimes do not often result in imprisonment.
Employers don’t often face imprisonment for committing employment insurance fraud. Corporate directors who lower gross earnings or falsify the paperwork in order for the former employee to receive benefits are also not subject to imprisonment in most jurisdictions. They pay a fine, up to a maximum amount set out in the employment insurance law statutes.
Individuals who commit employment insurance fraud are often not allowed to file for any more benefits once the fraud is discovered. It can be for as much as one year starting with the date that the fraud was committed. Some jurisdictions spread the ban over two years by prohibiting the individual from applying for benefits during the first 26 qualified weeks of the first and second years. Individuals facing a ban may not be able to apply once the time period expires until they pay the benefits they collected by fraud, with any interest that accrued. For example, an unemployed worker may have to wait for 52 weeks to apply for benefits, but the application would be declined if the person doesn’t also pay the benefits that she owes the region.