Unemployment

As state and federal agencies ramp up efforts to curb unemployment fraud, employers are facing greater scrutiny and steeper consequences for compliance gaps. But fraud isn’t the only risk on the rise. The end of 2025 brought major regulatory shifts that impact tax credits, employment eligibility, and payroll compliance—making it critical for HR and payroll teams to approach 2026 with clear strategy and up-to-date tools. Watch the webinar on-demand: Don’t miss our combined session, “Dangers of UI Fraud” and the Q4 Regulatory & Legislative Update. You’ll get expert commentary on fraud trends, policy shifts, and employer action steps. Access the webinar replay here Identity Theft Is Still the Top UI Fraud Threat In our UI Fraud webinar, Experian experts confirmed that identity theft remains the #1 type of unemployment insurance fraud, especially in remote and hybrid workforce models. Claims filed under the names of active employees or fake identities can go undetected—until the employer gets hit with the tax consequences. Two common types include: Stolen Identity Claims: Fraudsters file under real employee names using stolen credentials. Claim Hijacking: A legitimate claimant’s benefits are redirected after their account is accessed fraudulently. Employers must act quickly when fraud is suspected—report it to the state and advise employees to monitor or freeze credit. New Wave: Fake Employers, Bigger Payouts In addition to fraudulent claims, state agencies are now targeting fictitious employers—shell companies created to submit fake wage reports and collect benefits for non-existent employees. These schemes are more sophisticated and harder to catch without employer cooperation during wage audits. The Cost of Fraud: You Pay the Price UI fraud doesn’t just harm state trust funds—it directly impacts employers through: Increased unemployment tax rates Audit triggers Delays in legitimate claims Reputational damage in state systems Even though only 1.3% of overpayments are caused by employers, late or incorrect responses can have costly consequences. Shutdowns and Enforcement: Compliance Doesn’t Sleep While the federal government endured a record-breaking shutdown in late 2025, enforcement didn’t stop. In fact: ICE and DHS continued audits and E-Verify processing IRS deadlines remained in effect States expanded wage theft and unemployment laws The message is clear: compliance responsibilities remain active, even during federal disruptions. State Law Spotlight: Wage Theft, AI, and UI Expansion Employers must also prepare for new state laws, including: Rhode Island: New-hire wage theft notice requirements starting 2026 Illinois: AI restrictions in hiring if discrimination is detected Washington & Oregon: New UI benefits for striking workers, increasing trust fund pressure And these changes aren’t outliers—over 1,000 AI-related bills were introduced nationwide in 2025, with paid leave and wage transparency laws also gaining traction. Preventing Fraud Is a Team Effort: What You Can Do Experian recommends a multi-pronged approach: Respond quickly to all UI claims Audit payroll, separation processes, and seasonal hiring protocols Watch for claims from current employees or unknown names Report suspicious activity to state agencies Verify employee identity before completing I-9s Educate teams to recognize and flag red flags And most importantly—implement or strengthen your internal I-9 audit process. A reliable electronic I-9 system with audit trails, E-Verify integration, and correction workflows is essential in today’s enforcement environment. Regulatory Look Ahead: I-9, WOTC, and Tax Compliance In tandem with fraud risk, 2025 delivered high-impact policy changes, including: Elimination of auto-extensions for EADs, increasing document expiration risks A new W-4 and W-2 draft for 2026, requiring updated payroll processes and tip tracking under the One Big Beautiful Act (OBBA) A pending decision on WOTC renewal, which expired 12/31/25. No bill has passed, but retroactive approval is likely—employers should continue capturing WOTC data. Unemployment trust funds also remain underfunded in most states, which may lead to taxable wage base increases and higher FUTA taxes in 2026 and beyond. Final Takeaways: Your 2026 Fraud & Compliance Readiness Checklist Begin or expand internal I-9 and UI auditsUse electronic I-9 platforms with real-time E-VerifyTrack WOTC applicants even if renewal is delayedTrain staff to spot identity and payroll fraudMonitor state laws affecting payroll, hiring, and separationReview IRS changes to W-4 and W-2 ahead of 2026 Get prepared now—not after you’ve been hit with an audit or fraudulent claim. Watch our webinar replay to hear directly from compliance and unemployment experts. For ongoing insights, tools, and thought leadership, visit the Experian Employer Services Blog.

Having spent decades working with unemployment programs across the country—from state agencies to employer groups to TPAs—I’ve seen many changes in how states administer unemployment claims. Some changes feel routine. Others signal a shift toward modernization. New Jersey’s recent passage of S.2357 falls into the second category. The law is designed to improve communication between employers and the New Jersey Department of Labor (NJDOL) by ensuring the state receives separation details sooner and more consistently. Recently, the Association of Unemployment Tax Organizations (AUTO) asked NJDOL to clarify several operational questions. The department’s written responses finally give employers a clearer picture of what to expect as the state moves forward with implementation. Below is a practical, easy-to-digest summary of what New Jersey employers should know. 1. The Heart of S.2357: Two Options for Employers NJDOL has confirmed that employers have two ways to meet the new requirement. Employers do not have to do both—just one. You must either: Option 1 — Respond to the UI claim notice within 7 days, or Option 2 — Provide the separation information in the employer portal within 7 days of separation. Either option satisfies the requirement on its own. Submitting the separation information at the time of separation is preferred because it gives the agency a head start and often leads to quicker, more accurate determinations. However, NJDOL emphasized that this is not mandatory.  If an employer simply responds to the initial claim notice within the 7-day timeframe, the requirement is considered met. This clarification should bring relief to many employers who feared the law imposed two separate, and potentially duplicative, steps. 2. About That $500 Penalty… You may have heard S.2357 includes a $500 penalty for failing to provide separation information. Here’s what NJDOL shared: The penalty remains part of the statute. NJDOL is not enforcing it at this time. The agency wants to give employers time to adjust to the new system. Enforcement could begin at a later date once the system is fully operational. In short, the penalty exists, but employers should focus on learning the process rather than worrying about fines right now. 3. Employer Access (EA) Portal Registration: The First Step To participate in the new reporting process, employers must activate their Employer Access (EA) account within the MyNewJersey system. NJDOL clarified the following: Employers need a unique authorization code to register. These codes were mailed to employers in July 2024. A follow-up statewide mailing is planned for January 2026 for employers who didn’t receive or misplaced their code. Employers must register before a TPA can link to their account. After the employer registers, the TPA can request access using the employer’s EIN and authorization code. The employer then approves (or denies) the request via email. Registration is truly the gateway to everything else. Without it, employers and TPAs cannot begin using the new separation reporting system. 4. Submitting Separation Details Early: How NJDOL Uses the Data Many employers asked how the state will handle separation information submitted before a former employee files a UI claim. NJDOL shared the following helpful process: Early separation details will be stored in the system but not acted upon immediately. The system will crossmatch this information daily against new UI claims. When a match occurs, the claimant will receive a fact-finding questionnaire that includes the employer’s earlier statement. If the employee never files for benefits, nothing is sent to the individual—and the information simply remains on record. This optional early submission can improve accuracy and reduce back-and-forth between employers, claimants, and the agency. 5. Practical Advice Moving Forward Based on NJDOL's responses, here’s what I would advise employers right now: Register your EA account as soon as you have your authorization code—this unlocks everything. Choose the approach that best fits your workflow: respond to the claim within 7 days OR post the separation at the time of separation. Don’t stress about penalties right now but do build good habits early. Stay in communication with your TPA so responsibilities are clear and aligned. Expect further refinement, as with any modernization effort, changes may continue as the system evolves. New Jersey’s intent is not to burden employers but to create a more consistent and efficient UI process. With clear expectations and the ability to choose the method that works best for your organization, compliance should feel manageable—not overwhelming. Experian Employer Services will continue to provide updates and best practices as available.

Explore the 2026 unemployment tax changes and learn what’s new from 2025. Get insights on wage bases, rate schedules, and strategies to manage UI costs effectively.

An update on FUTA Credit Reductions may affect the unemployment tax owed by employers doing business in certain key states.

Unemployment fraud is rising again. Learn how HR and payroll teams can minimize risk to protect their employees and UI tax rates.

Discover how you can overcome unemployment management pain points like vendor delays, poor reporting, and confusing platforms in this blog.

Understand termination letter and separation notice requirements for each applicable U.S. state with this helpful guide to stay compliant.

Train managers to handle terminations and unemployment claims the right way with expert tips on compliance, documentation, and reducing employer risk.

Learn why the USDOL's Unemployment Trust Fund Solvency Report has important implications for employer taxes in certain states.

Employers in California, Connecticut and New York should be aware of how a Benefit Cost Rate could increase their FUTA Tax for 2025.

President Biden declared a major disaster in California due to wildfires, a crucial step in providing much-needed federal assistance to support local recovery efforts.

FUTA Credit Reductions can eliminate an employer's 5.4% FUTA tax rate credit if your state has an outstanding trust fund balance.

The Kansas Department of Labor (KSDOL), Division of Unemployment Insurance recently posted a notification on its site informing employers of an upcoming technology enhancement. The current Employer Services portal will be made unavailable starting Wednesday, November 13, 2024, at 5 pm central time.  It will reopen Tuesday, November 19, 2024, at 8 am central time. The Kansas Unemployment Insurance Technology Enhancement Project The Unemployment Insurance Technology Enhancement (UITE) project is a multi-year initiative which focuses on delivering a transformational unemployment insurance experience to businesses and workers of Kansas. In a press release, Governor Laura Kelly stated that access to unemployment benefits has depended on an outdated computer system that caused problems during the Great Recession and pandemic for residents. The purpose of the enhancement project is to provide a more seamless experience to Kansas employers and the workforce. The new system is intended to provide a number of improvements: Streamlining operations through improved workflow efficiency and adaptability, data management, and collaborations with other agencies; Enhancing user experience through adoption of advanced customer relationship[ management systems and personalized communication channels, more self-service options, and improved mobile-friendly access for claimants; and Upgrading data security and compliance with enhanced cybersecurity measures to safeguard data and ensure regulatory compliance. IMPORTANT INFORMATION FOR EMPLOYERS On November 19, 2024, there will be a new online account setup functionality available to employers. All active employers are required to establish a username and password to access the new portal.  If you had login credentials in the prior portal, they can be reused in the new. They will not automatically be carried forward, however.  Employers will maintain their current state unemployment insurance account number, but going forward, it will be in a 10-digit format, with on zero (0) at the beginning and three zeroes (000) at the end.  Even if an employer works with a Third-Party Administrator (TPA), KS DOL recommends establishing an online account. This will ensure constant access to correspondence or account information.  Employers may have multiple authorized users as part of the Unemployment Services for Employers set up process. The timeline below was included in the announcement on the KS DOL, Division of Unemployment Insurance site. It represents an overview of the transition and when to expect an impact on workflow. Please make certain any staff who currently utilizes the state’s portal is aware of these changes and that new usernames are established on the appropriate timeframe. For additional information about this change, please visit the KSDOL site. 

Wayne Rottger recaps the biggest issues concerning unemployment insurance covered at this year's NASWA's Annual Summit.

Following a disaster, there are employer next steps to best manage federal aid including disaster unemployment assistance.

Explore the essential differences between exempt and nonexempt employees, including overtime eligibility, job duties and salary thresholds.

How often do employees win unemployment appeals? The success rate varies greatly depending on several factors. Learn how to increase your chances of winning.

As a business owner, you know the federal unemployment tax rate affects costs. Learn how we can help you navigate your unemployment management needs.