Massachusetts Loses $90 Million in Unemployment Fraud

Tuesday, April 17, 2012

GoLocal News Team

Massachusetts has lost more than $90 Million paying out unemployment benefits to people cheating the system.

Since 2008, the Bay State has written checks to unemployed residents, totaling $6.5 Billion. This does not include the extended benefits from the Federal Government.

Michelle Amante, Acting Director of Labor and Workforce Development said, “We have the lowest overpayment rate in the country, meaning we shouldn’t have made a payment to them or overpaid them.”

Amante said Massachusetts’ overpayment rate is 1.4%, while the National average is 2.51%. But even that small percentage of six billion dollars works out to be about 90 million dollars, that has been paid out in unemployment fraud in the last three years.

It is also unclear if that low rate is even really accurate because it is hard to track people collecting unemployment and working under the table.

Amante said her department relies on the public to be their watchdog in reporting people who are getting paid by the government and making money on the side and not reporting it. “We hope concerned citizens will help. We have a fraud hotline and an email box. We investigate every claim. We also have a cross match system. Everytime someone gets hired that company has to enter them into the national directory of new hires. We work with the Department of Revenue and we do audits.”

Underground Economy Taskforce

The cash businesses are the harder ones to track so the Department of Labor and Workforce Development created a special taskforce to deal with this problem. Amante said, “It is a problem for us, the Attorney General and Department of Revenue. We have a task force on the underground economy”. Last year that taskforce recovered $7 Million dollars.

Amante said businesses are also guilty of unemployment fraud. Amante said, “A lot of companies are giving employees 1099s and treating them like independent contractors in order to avoid paying unemployment tax. If someone is under your direction and control we consider them your employee and you need to pay that tax.” Amante said unemployment tax per employee is calculated on a rate system. It considers how much money you paid into the system, how many benefits the state paid out by that employer and we come up with a rate. Amante said it is anywhere between 1.26% of someone’s salary up to 12.27%. The maximum is $14,000 per employee.

With thousands of people out of work and desperately searching for a job, it is disconcerting that people would be cheating the system. Worcester County is still trying to pull itself out of the recession, meaning fewer jobs are popping up compared to the rest of the state.

Community activist and GoLocal MINDSETTER™ Grace Ross said, “Notoriously for folks, what we have is people with legitimate claims that get denied. I think my anger stays where people are wrongfully turned down. 1.4% for unemployment fraud is lower than the number of people who cheat on their taxes."

The Worcester Unemployment Action Group

A Worcester activist who had been involved in fighting foreclosures is now taking on cuts in jobless benefits. Chris Horton, previously an organizer with the Worcester Anti-Foreclosure Team, is now forming a new grassroots group to stand up for the tens of thousands of jobless in the city and across Central Massachusetts.

The Worcester Unemployment Action Group hopes to use protests and other tactics to raise awareness about the seriousness of the unemployment problem and the plight of the jobless who are now starting to get their benefits cut off.

“We have an unemployment crisis that is really deeper than anything that has happened since World War II,” Horton said. “Contrary to all the hopeful stuff you hear on the radio, it’s not going to go away anytime soon.”

Battling to help the jobless

Founded by Grace Ross, the Worcester Anti-Foreclosure Team launched protests at foreclosure auctions, succeeding in halting or delaying the proceedings and helping homeowners facing the boot to stay put.

Not alone, Horton is being joined in his new effort targeting the unemployment issue by other members of the Worcester Anti-Foreclosure Team.

He points to a massive demonstration by the jobless in Washington back during the Depression as an example of what protests can do. He noted the rally, which drew more 1.2 million people, put the desperation of the jobless on the nation’s radar for the first time.

In fact, the Worcester group is already eyeing its first battle, with plans by state officials to close unemployment assistance centers in Worcester and Milford.

While state officials peg the jobless rate at 6.9 percent, Horton contends the real rate, when all those who have given up looking for work and are no longer counted, is closer to 15 percent in Central Massachusetts. That amounts to 60,000 people without work – Horton calls that number “conservative.”

Plight of the long-term unemployed

Despite the reality of double-digit unemployment, Congress is steadily scaling back the amount of money it is sending to the states for unemployment benefits.

That is putting an increasing number of people in Worcester in desperate situations, with not enough money to pay their bills or keep a roof over their heads.

David Bentley, who lives in Worcester and has joined up with Horton’s protest group, lost his job in retail sales two years ago and has been unable to find anything since.

He got his last unemployment check last December and has had to move out of his apartment and in with a friend to make ends meet. At 53, stores are passing him over in favor of younger workers with little or no experience.

Bentley still has money for food thanks to food stamps, but that’s about it.

“I have been out of work for two years and I am completely cut off,” he said.

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