Overpayments can result from claimants not reporting new earnings. The Division of Employment Security (DES) conducts a benefit payment control program to detect and prevent improper payment (overpayment) of unemployment benefits. The primary means of detecting overpayments are crossmatches with new hire data and quarterly wages reported for claimants by employers. When a match is made, the DES sends an Audit and Investigation form to the employer to confirm whether or not unemployment benefits were overpaid.
It is very important for an employer to complete and return the Audit and Investigation forms providing wages earned during each week the worker claimed unemployment benefits.
Overpayment of unemployment benefits can affect an employer's tax rate. Benefits charged to the employer's account as well as the balance of the Unemployment Compensation Trust Fund are factors that can raise an employer's tax rate. Employer taxes are deposited into the Trust Fund, from which benefits are paid. Claimants are required to pay back overpaid unemployment benefits, those payments are returned to the Trust Fund. Benefit charges for overpaid amounts are removed from an employer's account.
When the DES determines a claimant receiving unemployment insurance (UI) benefits failed to report earnings, the claimant will be required to repay those benefits. Some overpayments are the result of honest mistakes. However, if the claimant committed fraud in obtaining UI benefits, he/she can be assessed an additional monetary penalty, as well as possibly having his/her benefit rights canceled and being arrested, fined and imprisoned.
If a claimant has received unemployment benefits and later receives legally required backpay for the same period, an overpayment results. If an overpayment is established under these circumstances, the employer is required to withhold the amount of the overpayment from the backpay. This amount is then paid to the DES by the employer. The employer should call the DES to find out the amount of the overpayment.
Example: A claimant is receiving unemployment benefits for the first three weeks of January 2014. A court determines that due to an existing contract, the claimant must receive his/her regular pay for those three weeks. The employer contacts the DES who determines what was paid out in unemployment benefits and the employer will withhold those amounts from the back pay to reimburse the DES for the overpayment as the claimant is not entitled to those benefits after the fact.