Unemployment insurance fraud occurs when an individual provides false, incomplete or misleading information, intentionally conceals facts or provides wrong identification for obtaining, increasing or denying benefits.
California Unemployment Insurance Laws and The EDD
In California the Employment Development Department (EDD), which is a combination of both state and federal programs, is managing unemployment benefits system. California unemployment insurance assists people who become unemployed through no fault of their own to keep financial security while they seek new job. There are some circumstances under which a person can qualify for benefits.
- Person is currently unemployed or have had his hours cut to below full time
- Person’s last day of employment was not more than eighteen months ago
- Person is ready and willing to work but is unable to find a job
- Person is actively searching new employment
A person can recover a maximum of $450 per week and the program can’t last more than one year.
Types of Unemployment Insurance Fraud in California
In California both employees and employers can be accused of committing unemployment insurance fraud.
Here are some examples of unemployment insurance fraud committed by employees:
- Double dipping – collecting benefits and not reporting to the EDD.
- Failing to actively seeking new job but claiming you are diligently looking for work
- Failing to report other forms of compensation you are receiving such as social security, pension payments and workers comp
- Collecting benefits from different states simultaneously
- Lying about the reasons of becoming unemployed
- Working and continuing to receive unemployment benefits
- Giving wrongful information to qualify for unemployment benefits
Unemployment Insurance Fraud Committed Employers
Employers are committing unemployment insurance fraud when they try to deny benefits to a former employee for defrauding the EDD, these include:
- Purposefully withholding deductions and failing to paying them to the EDD
- Intentionally providing wrongful information about the unemployment claim, such as why the employee was no longer working or about the wages the he was receiving
California Unemployment Fraud Investigation Process
The California EDD collects information mostly from public fraud report hotline and their field offices that gather unemployment fraud applications. After gathering information EDD assigns alleged cases to a special investigation unit. In case unit manages to find adequate evidence that fraud has taken place they are will file unemployment insurance fraud charges. If they don’t get enough evidence they will drop the case or work for obtaining further information.
Penalties for California Unemployment Insurance Fraud
Unemployment insurance fraud is considered a wobbler and can be charged as either a misdemeanor or a felony, based on the case circumstances, the amount of the fraud and the defendant’s criminal history. Defendant can be charged either under Unemployment Insurance Code Section 2101 or California Penal Code Section 550
Unemployment Insurance Code Section 2101
Pursuant to the California Unemployment Insurance Code Section 2101 (a): It is a violation of this chapter to willfully make a false statement or representation, to knowingly fail to disclose a material fact, or to use a false name, false social security number, or other false identification to obtain, increase, reduce, or defeat any benefit or payment, whether for the maker or for any other person, under any of the following statutes administered by the department:
Penalties for Misdemeanor Conviction: Unemployment Insurance Code Section 2101
Penalties for misdemeanor conviction for violating Unemployment Insurance Code Section 2101 include the following:
- Up to one year in a county jail
- A fine up to $20,000.
Penalties for Felony Conviction: Unemployment Insurance Code Section 2101
Penalties for felony conviction for violating Unemployment Insurance Code Section 2101 include the following:
- Sixteen months, two or three years in California state prison
- A fine up to $20,000
General Insurance Fraud: California Penal Code 550
Penalties for Misdemeanor Penal Code Section 550 Conviction:
In case the total amount of the fraud is $950 or less the crime is considered a misdemeanor, punishable by:
- Up to six months in a country jail
- A fine up to $1,000
In case the total amount of the fraud is more than $950 the crime is considered wobbler.
Penalties for Felony Penal Code 550 Conviction
- Two, three, or five years in a country jail
- A fine up to $50,000 or double the total amount of the fraud, whichever is greater