Department of Labor works to stop unauthorized unemployment payments

Department of Labor works to stop unauthorized unemployment payments (Image 1)

Tennessee labor officials are campaigning to get more employers to use a web based tool to respond to unemployment claims.

The effort is in response, in part, to a state audit that uncovered $73.4 million in improper state unemployment benefit payments.

The department launched a web based program in March 2012 that allows employers to respond to claims electronically and track unemployment claims.

The Unemployment Insurance State Information Data Exchange System (SIDES) E-Response allows employers to respond to unemployment claims via a secure database.

They can fill out a required questionnaire, attached relevant documents electronically and track the unemployment claim.

The traditional method required employers to fill out a questionnaire and then mail or fax it back to the department of labor within seven days.

If employers missed the deadline then the employee received unemployment benefits.

In turn their unemployment insurance tax increased whenever the department awarded unemployment benefits to a former employee.

The audit found the fax and mail system lead to several problems, because claims were often overlooked or employees were not properly notified of an unemployment claim so they could dispute its validity.

“It is more time efficient, more cost effective and it is just a better way of doing business for the employers,” Melinda Williams said, the Administrator of Marketing and Communications with the Department of Labor.

“It will help reduce there rates of unemployment over charging,” she continued.

SIDES is free to small businesses.

It has been in operation since March 2012, but has gone largely unused. So far only 13 percent of Tennessee's 180,000 employers use the system to handle unemployment claims.

The department of labor has deployed its mobile career center to counties around the state to hold on site tutorials for business owners.

Department officials are focusing on rural counties for the tutorials.

“We feel that is the best way to get information out to our smaller more rural community,” Williams said. “It lets them see how easy it is to respond electronically versus doing the paper mail and waiting for the mail to be delivered.”

Participation in the program is voluntary currently, but the state could make it mandatory in the future as part of its comprehensive plan to address the issues uncovered in the comptroller's audit.

The audit gave the department 90 days to address all of its findings.

Other issues raised by the audit included:

Management not verifying social security numbers for a large number of claimants.

Management did not always identify fraudulent claims and did not correctly calculate the overpayments with penalties and interest.

Management allowed automated approvals of claims without any verification that the employees separated from employers.

Department collected only around 23 percent of overpayments on average.

To read the complete audit report click here.

For more information about the SIDES program click here.


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