As thousands of new Hoosiers made unemployment claims when COVID-19 led to mass layoffs, suspicions of fraud also increased—and in some cases triggered long wait times for people who desperately needed help.
That’s why Rep. Dan Leonard, R-Huntington, said in a meeting of the House Employment, Labor and Pensions Committee Wednesday he’s submitting a bill to clarify what fraud looks like in unemployment claims. The goal: to help the Indiana Department of Workforce Development, which oversees unemployment payments and fraud investigations, work through its backlog of suspected fraudulent claims and get help to the right people faster.
“There’s a tremendous amount of fraud and abuse,” Leonard said. “We’re getting applications for unemployment from England, from Africa, from other states all over. And when that happens, it clogs up the whole system and doesn’t allow people who would normally qualify to get their benefits.”
Leonard’s bill, House Bill 1152, specifies that fraud occurs when someone fails to report earnings during any week they receive unemployment or when a person knowingly falsifies parts of their application. The House employment committee approved it Wednesday in an 8-4 party-line vote.
But the bill drew scrutiny from committee Democrats. Rep. Ryan Hatfield, D-Evansville, questioned whether the definition of “earnings” might be so vague it could punish people who receive one-time help from a family member or friend, like a check or cash.
Hatfield also argued there’s a bigger discussion to be had about improving Indiana’s unemployment system as a whole. He noted that because claims have to be made through an online portal and because that portal serves as the primary way for the department to send updates and communicate with citizens, the many people who don’t have home computers can have a difficult time getting assistance.
“There’s an awful lot of folks where the only computer they have access to is the public library, which has been closed down for months,” Hatfield said.
Like Hatfield, visitors who testified on the bill argued the unemployment system can be so complicated and technical that it can be difficult for everyday people to navigate applications correctly or understand the rules. And when people are desperate to pay rent or buy groceries, they might not have time to do their research.
Jennifer Terry of Indiana Legal Services referred to this in her testimony. She told the story of a client—a veteran and food service worker laid off during the pandemic—who’s facing a fraud claim because she didn’t know she had to report her income from a part-time job she picked up to make ends meet. Her former employer urged her to apply for unemployment but didn’t warn her about how or why she should report the extra income.
“These are the folks that we are concerned will be subject to greater penalties just by making a mistake when filling out their unemployment filings,” Terry said. She added groups that are at particular risk include low-wage workers, the elderly and those with limited education.
“About half of the folks coming to us right now are just having trouble navigating the system,” Terry said. “Their claims haven’t been properly handled. They’ve been subject to delays that they don’t understand.”
In a House Ways and Means Committee hearing Tuesday, Indiana Department of Workforce Development commissioner Fred Payne pointed to the fraud concern and other ways the pandemic has challenged the department.
Indiana’s overall unemployment rate is currently at 4.3%, Payne said, after peaking at 16.9% early in the pandemic. The state unemployment rate in January 2020 was 3.1%. The department has made thousands of unemployment payments during the pandemic, with its leaders estimating it has paid around 786,000 people totaling $4 billion. In 2019, the department paid only around $237 million in claims.
Erica Irish is the 2021 Russell Pulliam student editor for TheStatehouseFile.com, a news website powered by Franklin College journalism students.