Co-authored by J. Bradley Clair

On May 17, the U.S. Department of Labor delivered a draft of the Unemployment Compensation Act of 2010 to Congress. The Act is designed to help states fight employer fraud that results in payments of excess unemployment benefits. The Act would permit states to deposit up to 5% of recovered unemployment compensation overpayments in a fund from which money may be withdrawn to “deter, detect and collect” erroneous payments to individuals, the misclassification of employees as independent contactors, or other violations of state law relating to employer fraud or evasion of contributions. States would also be required to assess a penalty of at least 15% of the amount of the erroneous payment that resulted from claimant fraud. When announcing the draft, Secretary of Labor Hilda Solis stated, “The Unemployment Compensation Integrity Act would give states the additional resources and tools they need to guarantee that only those who are eligible for benefits receive them and employers who defraud the system pay their fair share of taxes.”

To read the text of the draft, click here.