Employment Law -- Employee

What Will Happen if I Draw Unemployment Benefits While I Am Working?

Drawing unemployment benefits while working in Alabama is called an overpayment of benefits. This occurs when you are paid unemployment benefits and the state later determines you did not qualify to receive them for reasons such as:

  • Fraudulently filing a weekly unemployment claim certification while employed
  • Giving incorrect or untrue answers on your claim
  • Failing to report any gross or deductible income
  • Failing to report a condition or situation that might make you unable to work

In some cases, you may be able to repay the benefits or have them waived. However if you fraudulently received the unemployment benefits while working, you may be facing a criminal charge and consider consulting with an experienced attorney to help you work through this legal issue.

Unemployment Benefit Fraud Detection

Like other states, Alabama has a number of ways to detect overpayments of unemployment benefits or fraud. Even if you were legitimately eligible for unemployment, if you continue to draw unemployment insurance benefits once you are no longer eligible for unemployment benefits, issues will arise. Drawing unemployment benefits while working may be detected through a fraud protection program such as:

  • Benefit payment audits
  • Employer wage records
  • Reports through state and national hire programs
  • Report through the Department of Labor fraud hotline
  • Quality assurance audits

If the state determines you receive benefits you do not qualify for based on their eligibility requirements, you will receive a Notice of Determination of Overpayment. This notice states the amount of unqualified state unemployment benefits you received with an explanation of the reason behind the overpayment.

Voluntary Repayment of Overpaid Benefits

After you are notified of the overpayment of benefits, you have the option to voluntarily pay back the state. The Alabama Department of Labor allows payments to be made online or by mail via money order, personal check, cashier’s check, or certified check.

If you cannot afford to pay the amount back in full, the Alabama Department of Labor allows you to contact the Benefit Control Section to arrange a repayment agreement, which must be in writing. Or so long as the overpayment was not the result of fraud, by law the state may offset your weekly benefit payment until the overpaid amount is repaid.

Waiver for Overpaid Benefits

If you received unemployment benefits while working through no fault of your own, you may request your overpayment be waived by the Alabama Department of Labor’s Waiver Committee.

Fraud and Overpaid Unemployment Benefits

In cases of fraud, the state may deduct funds from your state or federal tax refund to repay the unqualified benefit you received.

Unemployment Benefits and Defrauding the State

If the state discovers you are still receiving unemployment benefits while working, you may be charged with the criminal offense of fraud. Even receiving as little as one week of extra benefits you did not qualify for can constitute willfully defrauding the state.

Under the Unemployment Insurance Law, anyone fraudulently claiming unemployment benefits is guilty of a misdemeanor, whether the benefit or payment is received or not. Each week claimed is a separate criminal offense.

Penalties for Unemployment Benefit Fraud

The total amount of benefits you fraudulently received are added up to an aggregate amount which determines the degree of the charge you are facing.

  • Less than $500 is a Class A misdemeanor punishable by up to one year imprisonment
  • $500 to $2500 is a Class C felony punishable by one to ten years imprisonment
  • Over $2,500 is a Class B felony punishable by two to 20 years imprisonment

If convicted, the state requires you to pay restitution to the Department of Labor instead of the criminal penalty of fines, with the minimum amount being the amount of benefits you fraudulently obtained.

COVID-19 and Unemployment Benefits

During the COVID-19 pandemic, those applying for unemployment benefits in Alabama may qualify for programs such as:

  • Unemployment Insurance (UI)
  • Unemployment Compensation for Federal Employees (UCFE)
  • Unemployment Compensation for Ex-Servicemembers (UCX)
  • Pandemic Emergency Unemployment Compensation (PEUC)
  • Pandemic Unemployment Assistance (PUA)
  • Extended Benefits (EB)
  • Trade Readjustment Allowances (TRA)
  • Unemployment Compensation (PEUC) program
  • Lost Wages Assistance (LWA) Program

Qualifying for COVID-19 Unemployment Benefits

To qualify for unemployment benefits in Alabama, you must be out of work through no fault of your own and the requirement still rings true during the COVID-19 pandemic. However, you might qualify for unemployment benefits through someCOVID-19 related circumstances such as:

  • Being laid off due to loss of production from COVID-19
  • Your employer shut down operations and no work is available
  • Becoming ill from COVID-19
  • Mandatory quarantining for suspicion of having COVID-19
  • Being COVID-19 asymptomatic and self-quarantining
  • Caring for an immediate family member diagnosed with COVID-19
  • Working reduced hours due to a COVID-19 related issue

Each claim is reviewed by the CARES Act guidelines to determine eligibility and any criteria or exceptions that may apply.

Alabama has seen a significant increase in unemployment claims since the pandemic, triggering more fraud detection audits to ensure benefits are going to those who truly qualify. The state is considering those who quit their jobs to try to receive unemployment benefits or extra COVID-19 unemployment benefits as fraud.