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Posted at 7:00 AM ET, 09/ 2/2010

Virginia's unemployment overpayments

By Paige Winfield Cunningham

Maybe Virginia's unemployment funds would have lasted longer if the state hadn't given 15 percent of its payments to unqualified claimants last year.

In October 2009, the state's unemployment money ran out and it had to borrow $347 million from the federal government. The same year, it paid $166 million to Virginians who didn't qualify for benefits at all, according to the U.S. Labor Department. That ranks Virginia ninth in the nation for how much states overpay.

Who are these claimants, and how do they manage to walk away with a check?

There are two main types: those who intend to commit fraud and those who might not, says George Wentworth, a policy analyst for the National Employment Law Project.

Many undeserved payments go to workers who do lack a job, but it's because they were fired -- not laid off. You're eligible for benefits only if your employer can't afford you anymore, not if you've given it reason to let you go.

But because the state needs to hear directly from the employer as to why a job was eliminated, it can take a long time to prove in court that a Virginian was fired. In the meantime, he or she can collect benefits, Wentworth says.

Deciding whether someone got fired or laid off can be somewhat subjective, and a decision against a former worker is not necessarily evidence of fraud. But what clearly is fraudulent is continuing to collect payments even after you've been hired somewhere. In 2008, 2.6 percent of benefits were paid to Virginians who had jobs.

The Virginia Employment Commission has more than ever on its plate as it struggles to handle an influx of unemployment claims. And granted, Virginia looks good compared with a state like Louisiana -- which overpaid 42 percent of benefits.

But a misspent $166 million? Not great, Virginia, not great.

Paige Winfield Cunningham is an investigative reporter and managing editor at Old Dominion Watchdog. The Local Blog Network is a group of bloggers from around the D.C. region who have agreed to make regular contributions to All Opinions Are Local.

By Paige Winfield Cunningham  | September 2, 2010; 7:00 AM ET
Categories:  Fairfax County, HotTopic, Local blog network, Prince William County, Tysons Corner, Virginia, economy  
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I have seen this over and over for 25 years as a CPA serving small businesses. It doesn't matter at all to the folks at the Virginia Employment Commission that the employee was fired for cause, or that the employer takes time off to testify and file all the paperwork necessary to prove the case. No matter how much documentation is offered that the employee was fired for cause, they grant unemployment benefits anyway. It is the same in DC. Taxpayers should be outraged.

Posted by: callahampc | September 5, 2010 8:06 AM | Report abuse

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