Unemployment insurance fraud occurs when an individual provides false information, deliberately conceals material facts or provides false identification designed to obtain or to increase benefits, or to deny any benefit to an otherwise eligible employee.
Below our unemployment insurance fraud defense attorneys explain the details of this law for unemployment insurance fraud1.
Explanation Of Unemployment Insurance
Unemployment insurance is a program designed to help persons who become unemployed through no fault of their own to have some financial security while they seek other work.
There are some exceptions when a person voluntarily quits or is fired under certain circumstances.
The maximum amount anyone can recover is $450 per week and the program can last for more than one year. Unemployment insurance is a joint state and federal program administered by the California Employment Development Department or EDD.
When Is Unemployment Insurance Fraud?
When Are You Eligible for Unemployment Benefits?
You may qualify for unemployment compensation under the following conditions:
- Have received enough wages during the base period to establish a claim.2
- You are presently unemployed3
- You are actively seeking employment
- You are ready, willing and able to work immediately
Fraud can be committed by both workers and employers.
Examples Of Employee Fraud
There are various examples of workers who are obtaining unemployment benefits illegally.
You may be committing fraud if you do the following:
- Work full or even part-time while continuing to collect unemployment compensation4
- Fail to advise EDD that you are collecting workers’ compensation (which can be workers compensation fraud) or funds from a retirement plan
- Fail to report wages during a week when it was collected
- Use a false identity to collect unemployment while continuing to work under another name or identity
- Cash and appropriate the funds from the unemployment check of another person without authority
- You are not actively seeking employment but indicating that you are and falsifying information about employers you have allegedly contacted
- Use a fictitious employer and naming yourself as an employee eligible to receive benefits5
- Receive or attempting to collect unemployment compensation from another state where you do not live6
- Present a false justification or reason for qualifying for unemployment
Examples Of Employer Fraud
Employers also commit fraud when they take steps to deny benefits to a former employee who is eligible for compensation in order to defraud the EDD. These include:
- Failing to submit payments to the EDD after deducting funds from an employee’s pay for unemployment as required by law7.
- Deliberately giving false information to the EDD about why an employee was terminated or about the wages the employee was receiving8.
How Does The Prosecutor Prove Fraud
Depending on the type of fraud suspected, the EDD will investigate suspicious cases. It may note a false seal or employer identity for example and simply contact the alleged employer to see if it exists or to determine if you were employed by them for the period you specified.
Falsely Reporting That You Were Actively Seeking Work
If you falsely reported that you were actively seeking work, an EDD employee can contact any of the potential employers you allegedly applied to for work and see if you did or not.
Using Someone Else’s Identity
Should you be suspected of using someone else’s identity, an EDD investigator can easily trace the identity to someone else. Other methods to catch fraud include checking wage records submitted to the state’s tax division, use of surveillance videos or operations and encouraging people to call anonymously on a hotline.
Prosecutors can use these records to bring charges and inquire further if an anonymous caller reports someone who is involved in fraud.
Penalty For Unemployment Insurance Fraud
Most fraud cases that are prosecuted in California are wobbler offenses and may be charged as either a misdemeanor or felony in California, depending on
- The amount of the fraud,
- Nature of the offense and if the
- Offender has prior convictions for the same or similar offense.
What Code Sections Can A Prosecutor Charge You With?
You can be charged and convicted of unemployment fraud under Unemployment Insurance Code Section 2101 or Penal Code 550.
Under Unemployment Insurance Code Section 2101, it is
- Unlawful to willfully make a false statement,
- Knowingly conceal a material fact, or
- Use a false identity such as a phony Social Security Number, to obtain, increase or to deny or defeat a benefit or payment.
Penalties For Unemployment Insurance Code Section 2101
This is a wobbler so that if convicted as a California misdemeanor, you face:
- Informal probation
- Up to one year in county jail
- A fine not to exceed $20,000
Should the prosecutor elect to charge you under PC 550, you are subject to conviction as a California misdemeanor or felony if the amount of the fraud exceeds $950
The amount of the fraud includes all funds that are the subject of the fraud during a 12-month period.
If convicted of a California felony under this section, the penalties are:
- Formal probation
- 16 months, 2 or 3 years in state prison
- Fine up to $20,0009
Penalties For Unemployment Insurance Fraud Under PC 550:
If the fraud amount is $950 or less, you are subject to
- 6 months in county jail and a
- fine of up to $1000.
If you are convicted of a misdemeanor as a wobbler, you face up to one year in county jail and a fine up to $10,00010.
- Formal probation
- 2, 3 or 5 years in jail
- A fine up to $50,000
- Or double the amount of the fraud, whichever is greater
Regarding a conviction for unemployment insurance fraud, you are subject to paying EDD back for the benefits you received illegally along with a 30% penalty on the amount and your eligibility to receive future benefits is revoked11.
In some cases, your attorney can make arrangements with the EDD for you to reimburse it for the payments you received in exchange for not filing criminal charges.
There are a number of defenses you can use:
Lacking Fraudulent Intent
Mistake or lack of understanding of the law on unemployment, while not technically a defense by itself, is nonetheless relevant in demonstrating lack of fraudulent intent. This would include your reasons for quitting your job or why you were terminated. You could have indicated the wrong Social Security Number or believed that you could work part-time and still be eligible for benefits.
There is Insufficient Evidence
You must be found guilty by proof that is beyond a reasonable doubt. This includes proof of intent as well as evidence that you were aware that a crime was being committed. For instance, if you were not involved in payroll for your employees and someone was deducting funds ostensibly to pay EDD but embezzled them, then there may be insufficient proof to charge or convict you.
Expungement For Unemployment Insurance
Convictions under Unemployment Code Section 2101 or under California Penal Code 550 are generally eligible for expungement since they call for county jail time instead of state prison.
Next Steps If You Need Help
If you have been arrested and would like to learn more about how attorneys charge.
If you want to understand why its important to have an attorney represent you.
If you would like to discuss a pending case with an attorney contact the Aizman Law Firm at 818-351-9555 for a free confidential consultation.
Request A Free Consultation
- Our California unemployment insurance fraud defense attorneys practice law in the following jurisdictions. Santa Clarita Valley, Antelope Valley, San Fernando Valley, San Gabriel Valley, Southern California, Los Angeles County, Santa Monica, Hollywood, Glendale, Sherman Oaks, Encino, Studio City, Burbank, Van Nuys, Chatsworth, San Fernando, Santa Clarita, Valencia, Palmdale, Lancaster, Pasadena, Alhambra, Malibu, Ventura County, Santa Barbara County, Orange County, San Bernadino County
- Employment Development Department (EDD)’s website. “Employers report wages to the EDD for each employee. The EDD uses this information to decide if an individual earned enough wages in a base period to establish a UI claim. A base period is a specific 12-month period. For example, if a claimant files a claim that begins in April, May, or June, the claim is calculated based on wages paid to the claimant between January 1 and December 31 of the prior year.”
- Employment Development Department (EDD)’s website.
- People v. Armstrong (1950) 100 Cal.App.2d Supp. 852.
- People v. Belnick (1986) 184 Cal.App.3d 1449; See also People v. Koch (1970) 4 Cal.App.3d 270; See Also California Unemployment Insurance Code 2114
- California Unemployment Insurance Code 2102 – See Statue
- California Unemployment Insurance Code 2110- See California Law
- California Unemployment Insurance Code 2101.5 – See California Law
- Unemployment Insurance Code 2122 UIC – Except as provided in Sections 2117, 2117.5, 2118, and 2118.5, a violation of this chapter is punishable by imprisonment in the county jail not to exceed one year, or in the state prison, or by a fine of not more than twenty thousand dollars ($20,000), or by both the fine and imprisonment, at the discretion of the court.
- California Penal Code 550(c)(2):
- See EDD Guide To Benefits And Employment Services