Senate Committee Approves Harsher Unemployment Fraud Penalties

A bill that would increase penalties for defrauding the state’s unemployment insurance system passed a Senate committee Wednesday morning.

Under the bill, people who are convicted of unemployment insurance fraud will face penalties ranging from a fine to imprisonment and a felony.

Opponents say the bill victimizes people who commit unintentional fraud.

“What we are very concerned about — because we see this regularly — is that workers who have made mistakes in navigating a complex system are being accused of fraud. And under this bill, they risk becoming felons,” said Vicky Selkowe, legislative director at Legal Action of Wisconsin.

According to a Legislative Audit Bureau report published in December 2014, 85 percent of state unemployment insurance overpayment was due to a claimant’s mistake. Only 9.5 percent of cases were due to intentional fraud. Intentional fraud, however, was more expensive to the system: It cost the state $86 million, compared to $62 million for unintentional cases.

Rep. Samantha Kerkman, R-Salem, sponsored the plan. She said it makes the system stronger, and brings unemployment fraud penalties in line with other kinds of theft.

“If you’re stealing from a bank and you’re stealing from the unemployment system, I want it to be similar. I want it to be the same,” Kerkman said.

Kerkman also sponsored a “two strikes and you’re out” bill this session, which would bar people from getting unemployment benefits for seven years if they’re convicted of defrauding the system twice.

Both bills now await votes by the full Senate, which is scheduled to return to Madison on March 15.