New Jersey Unemployment Penalties


It’s illegal to claim unemployment benefits from the New Jersey Department of Labor and Workforce Development if you are employed, and it’s also illegal to withhold information about other earnings in order to receive a larger benefit. Because the severity of unemployment fraud varies case by case, beneficiaries who fraudulently receive benefits face penalties that range from reduced benefit amounts to jail time. Because unemployment insurance funds are managed by the state, New Jersey prosecutes some fraud cases as if the worker stole from the state.

Unreported Income and Overpayments

Beneficiaries who receive unemployment benefits greater than those they are entitled to are required to report the overpayment to the Department of Labor and Workforce Development to return the funds. The state may use collection methods such as reduction of the amount of future benefits until the overpayment is repaid, deductions from state income tax reductions or garnishment of future wages. In case a worker doesn’t report additional income on his weekly basis, he will see future benefits reduced, may be barred from receiving benefits for a period determined by the board and may be subject to criminal penalties.

Minor Theft

Beneficiaries who work and receive benefits may face much stiffer penalties for receiving unemployment funds fraudulently, and state laws allow for civil and criminal penalties for theft of state funds in amounts as small as $200. A worker who receives more than $200 in fraudulent unemployment benefits may face a fine as large as $10,000 and up to 18 months in jail, or both. People who accept $500 or more fraudulently may be jailed for three to five years and may be fined up to $15,000.

Major Theft

If a beneficiary receives $75,000 or more, he commits second degree theft by deception, a felony charge. Sentencing guidelines call for a prison sentence of five to 10 years, and fines may be imposed of up to $150,000. With the Department of Labor and Workforce Development capping weekly claims amounts at $600 and most claimants only receiving 26 weeks of benefits, defrauding the state of $75,000 or more in benefits – the equivalent of 125 weekly maximum benefits – requires long term fraud schemes.

Tracking and Combatting Fraud

The Department of Labor and Workforce Development implemented a computerized system to crosscheck workers who receive unemployment benefits against the names of new employees in New Jersey. Because employers must report the names, identification information such as Social Security numbers and earnings of new employees to the state by law, workers who continue to claim unemployment benefits after returning to work or working at a part time job are flagged by the state’s computers, and fraud investigations launch.

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