US Department of Labor delivers Unemployment Compensation Integrity Act draft legislation to Congress

WASHINGTON – The U.S. Department of Labor announced the transmittal of the Unemployment Compensation Integrity Act of 2010 to Congress. The draft legislation, if enacted, will help states fight employer fraud and reduce improper benefit payments.

"Reducing improper payments and fighting employer fraud are crucial for improving the integrity of the Unemployment Compensation program," said Secretary of Labor Hilda L. Solis. "The Unemployment Compensation Integrity Act would give states the additional resources and tools they need to guarantee that only those who are eligible for benefits receive them and employers who defraud the system pay their fair share of taxes."

Among several provisions, the act would permit states to use up to five percent of recovered unemployment compensation overpayments to deter and detect benefit overpayments. It also would allow states to use up to five percent of contributions collected due to employer fraud or tax evasion – including misclassification of employees – to combat these problems.

Mandates would include requiring states to assess a penalty of not less than 15 percent of the amount overpaid on any overpayments that result from claimant fraud. The act also would give employers an incentive to provide timely, accurate and complete information about why their former employees no longer work for them – information that is critical for states to make proper benefit payment decisions. Additionally, the act would require employers to report the first day of earnings for new hires to the National Directory of New Hires. This step would help to reduce overpayments due to individuals who return to work but continue to collect unemployment compensation.

The Unemployment Compensation Integrity Act is one piece of a larger Obama Administration effort to reduce improper payments within federally administered programs. The estimated direct savings from this legislation would be $1.642 billion over ten years.

For more information on the federal-state unemployment insurance program and the range of Department of Labor employment and training programs, visit http://www.doleta.gov.