labor lawAdivision of labor law center

Recently, an official at the Rhode Island Department of Labor was quoted as saying “Unemployment Insurance benefits not only help workers get by during times of unemployment, it helps stimulate our Rhode Island economy.”

He expanded further on his statement by adding, “With more than $101 million in benefits going out during the year, our state has given significant assistance to both workers and employers in 2006.”

The Rhode Island unemployment benefits fall under the taxable unearned income category, under federal and state laws both. Every year in January, the Rhode Island Department of Labor mails out statements of unemployment earnings called the 1099 form. It contains details about the unemployment benefits earned during the previous year and the amount of state and federal taxes withheld, as well as other deductions.

Unemployment beneficiaries are supposed to attach a copy of form 1099 with their tax returns, both state and federal. If someone has been receiving unemployment benefits, he or she should get the form 1099 by the mid of February at the latest.

If one does not receive a 1099 for by February 1, he or she should contact the nearest office of the Department of Labor. They would look into the reason why the form may not have reached the addressee. Then they would issue a duplicate 1099. They also have data regarding for previous years, and someone who has been collecting unemployment benefits can access the data for prior years as well, upon request.

Mostly, people opt for having their taxes withheld from their earnings. More than half of the people, who benefited from this amount chose to have their taxes withheld. The total amount of taxes withheld during 2006 neared $6 million. These numbers reflect regular unemployment insurance payments, Trade/Readjustment Assistance and any extensions to unemployment benefits for special circumstances.

The state of Rhode Island recently announced that both employees and employers would save more than $24 million in Rhode Island unemployment taxes in 2007, under a new state rate cut.

“This is good news for both employers and employees, and reflects the continued strength of the RI economy,” said Director Adelita S. Orefice. “Employers will see a reduction in the cost of doing business and workers will see a smaller deduction from their paychecks.”

The Director of the Department of Labor and Training announced today that a reduction in the Rhode Island unemployment insurance (UI) taxable wage base would allow employers to save an estimated $24 million in UI taxes next year. In addition, employees will see savings of over $12 million in their Temporary Disability Insurance (TDI) taxes for 2007 due to a reduction in the TDI contribution rate.

During 2006, the Employment Security fund balance grew by $20.1 million, as fewer Rhode Island workers were unemployed. Therefore, fewer workers filed for unemployment benefits. As of September 30, 2006, the Employment Security Fund held $189.1 million in reserves.

According to the law, if the Employment Security Fund balance is more than $175 million but less than $225 million on September 30th the taxable wage base will be $14,000 for the next calendar year. The wage base limits the amount of wages that are taxable.  Tax rates for individual employers also vary according to their experience with the Unemployment Insurance system. These rates will range from a low of 1.69% to a high of 9.79 % in 2007. Employers will be notified of their individual 2007 tax rates in December. The rate for first-time employers will be 2.41% in 2007.

The Rhode Island Unemployment Insurance program is administered by The Rhode Island Department of Labor and Training (DLT). The DLT offers a wide array of employment and training services to both the public and to individuals with unusual barriers to employment.

Rhode Island is tough on unemployment insurance fraud.  Adelita S. Orefice, Director of the Rhode Island Department of Labor and Training, (DLT), recently announced that DLT prosecuted 26 individuals for unemployment insurance fraud in 2006, resulting in recovery of $196,517.

The 26 cases prosecuted under the Rhode Island unemployment insurance fraud laws include 4 cases where more than $10,000 was recovered from each. Director Orefice noted that individuals who fraudulently collect unemployment insurance benefits would be aggressively pursued for criminal charges.

As of today, there are currently 59 cases of alleged Rhode Island unemployment insurance fraud pending final disposition from the court system, involving a total of $416,184. Director Orefice emphasized, “Prevention, detection, and elimination of fraud and abuse in the UI program are one of our top priorities. We want to ensure that eligible individuals receive unemployment benefits-we don’t want fraud and theft to eat away at this important safety net.”

Unemployment insurance (UI) compensates clients who are unemployed through no fault of their own and are actively seeking work. Raymond Filippone, Assistant Director for Income Support, confirmed, “If DLT discovers that claimants have received UI benefits through fraudulent means, we require immediate reimbursement of overpayments in order for those claimants to avoid criminal prosecution and conviction.”

Unemployment Insurance fraud is a serious crime that can result in a criminal record. DLT may seek penalties under the laws, which can include a felony charge for each offense. Conviction may result in incarceration and/or restitution, and may bring the additional charges of court costs and fines along with community service. Examples of fraud include giving false information, and failing to report earnings from self-employment or other work performed while collecting UI benefits.

The majority of this year’s cases under the Rhode Island unemployment insurance fraud laws involved individuals who collected unemployment while working. Most of the cases involved overpayments of $3,000 to $9,000, plus court costs.

Maintaining the integrity of Rhode Island’s Unemployment Insurance program is a key priority for the UI Administration,” reiterated Filippone. “We take a strong stand against anyone who tries to defraud the UI system. It is critical that we protect the integrity of the UI program in Rhode Island to ensure it remains financially secure and the funds are available to help those who are legitimately entitled to Unemployment Insurance benefits.”