“Ask Sheila” Column

Dear Sheila,

We are receiving numerous notices of unemployment claims from the Texas Workforce Commission that are on behalf of employees who are still working here. I am the owner of my company, and we just got one for me! They all state “permanent layoff” as the reason for termination. What is going on? How should we respond? What is the TWC doing about these fraudulent claims?

Sincerely,
Still Employed

Dear Still Employed,

Thousands of employers across Texas and the US have received these recently. One of my clients just got seven in one day, including for the HR Director himself. Another, an owner of a company, got one for himself. A representative of the TWC called the fraudulent claims coming in a “tidal wave” and says that the TWC currently has over 70,000 pending fraud/ID theft investigations going on right now. Times of crisis, like the pandemic, cause this type of fraud to grow, especially with the increased payments from the federal stimulus programs.

Employers need to respond to these claims, with a statement such as: “This individual is still working here, and we believe this is a fraudulent claim, as the individual has stated to us that he/she did not file a claim for unemployment.” On the Employer Response Form, be sure to check the “still employed” box.

Further, the TWC has requested that both employers and employees report fraud on its on-line portal in addition to responding to the claim. The TWC is proactively conducting fraud audits, but also states:

In addition to audits, TWC has become aware of the fraudulent activity through reports of individuals or businesses receiving correspondence from TWC when no claim has been filed and the individuals are employed. The agency encourages anyone who suspects potential fraudulent activity involving UI accounts to report it through the TWC UI fraud submission portal found on the TWC homepage. If you encounter difficulties with the portal, please email TWC.fraud@twc.state.tx.us or leave a message at the TWC Fraud Hotline at 800-252-3642.

Finally, consider advising the employee to check their credit report for identity theft in other areas.

The TWC is taking steps to try to mitigate this problem in the future, and it is a top priority going forward. State leadership is concerned, as many state agency heads and elected officials have received notices from the TWC that they have filed unemployment claims when they did not. The TWC’s Executive Director recently stated that the TWC recognizes the problem and is implementing new software and algorithms for earlier detection of fraudulent activity. Further, the TWC has recently begun using a new system for requiring claimants involved in pending identity theft investigations to confirm their identities using an on-line portal.

Bottom line, the TWC uses a decades-old system that is vulnerable. Funding has been approved for a completely new system built from scratch, as soon as government contracting procedures will allow. Also, the recently-passed federal American Rescue Plan Act allocates substantial funding to states to battle fraud. In the meantime, remain vigilant to possible fraud and report any claims using the guidance above.

“Ask Sheila” is prepared by Sheila Gladstone, Chair of the Firm’s Employment Law Practice Group. If you would like additional information or have questions related to this article or other employment matters, please contact Sheila at 512.322.5863 or sgladstone@lglawfirm.com.