Kansas lawmakers working toward business protections for unemployment fraud

Legislation in both chambers would pay back businesses and unemployment fund for bogus claims, but doesn’t help individuals

Sen. Tom Holland, a Kansas City Democrat, raised concerns about a senate bill that will update the state's unemployment system during the Senate Commerce Committee on Thursday. (Screen capture by Kansas Reflector)

TOPEKA — After a year of growing problems and an overwhelmed state unemployment system because of COVID-19, lawmakers are focused on making adjustments that improve the unemployment claim process and limit fraud. 

Proponents of the bills moving through both House and Senate committees are seeking to address several issues with the current system. The legislation would ensure that employers are held harmless for any fraudulent unemployment claims filed in the business’ name. It would also establish a panel to oversee the development of a new IT system for the labor department. 

Neither the House Committee on Commerce, Labor and Economic Development nor the Senate Commerce Committee took any votes on the bills Thursday. Both committees plan to continue to meet with various stakeholders and revisit the bills next week to amend and potentially pass them out of committee. 

Beyond the IT improvements, the legislation would prevent employer accounts from being charged for any bogus benefit claims between March 15, 2020, and Dec. 31, 2021. In addition, employers who have paid for claims since March 15 are to be refunded. Also, the bill authorizes reimbursement to the unemployment insurance trust fund from the state general fund for improper benefits paid during the pandemic.

Sen. Tom Holland, a Baldwin City Democrat, said he is concerned employers won’t be as vigilant about weeding out fraudulent claims because the state is backstopping the program. 

“One of the things I am uneasy with is starting to bring the state general fund in,” he said. “It’s kind of like making the Kansas taxpayer, the state general fund, the backstop for this program. I want to be sure the business community knows that I understand that they have to pay for this and we have to protect their contributions to this.”

Since the pandemic began, the Kansas Department of Labor has been flooded by a historic number of unemployment claims. The department — now on its fourth secretary in under a year — is struggling to resolve a growing number of fraudulent claims filed across the state.

Ty Dragoo, Kansas legislative director for the International Association of Sheet Metal, Air, Rail and Transportation Workers, said labor supports the legislation but would like to see more protections for employees that are victims of fraudulent claims filed in their name. 

“There are provisions in the bill that protect employers from fraudulent claims and being made whole, and we agree with that,” he said. “No one should be a victim of fraud and be penalized for that, but this doesn’t address what happens to the employee.” 

Rep. Tom Burroughs, a Kansas City Democrat, said the department should get additional funds and support to move as quickly as they can to help Kansans filing for unemployment. 

“My constituents, too, are having issues with the Department of Labor,” he said. “I can go back a number of years and state as I have all along that the problem lies with the Legislature in not approving the dollars to upgrade the system when we had the chance to do so.”

Burroughs said the bill is complex and will take time to amend, pass, sign into law and then implement, but there are issues with the system that need to be addressed soon.

“This bill is really getting heavy on the employer side, but I’m more concerned with how it’s affecting our constituents,” Burroughs said. “We’re loading down a bill that’s going to take a while to implement and in the meantime we still have issues with getting those monies into the hands of our constituents.”