The use of third party administrators (law firms) by employers, to challenge unemployment claims, is not only on the rise, but,  just like the mortgage fiasco, is starting to look like many cases are fraudulent.

Early this year, the Idaho Department of Labor sent a letter of complaint to one of the biggest third party administrators (TPA), Talx.  Talx, a division of Equifax,  represents Walmart, Home Depot, Marriot, Best Buy, FedEx and even PBS.

It was a PBS program, called Need to Know, that reported the growing problem of TPAs working to deny unemployment benefits for those who qualify.  Unemployment benefits are paid out to people who are laid off (and continue to meet requirements to keep getting the benefits, until they find a new job), or to people who’ve gone through a legal process which proves the were fired unjustly.  What’s happening is that many unemployment  benefits are being denied because the employers are falsely claiming the employee was fired, when they were laid off.  Or, in the case of wrongful firings, the TPAs are appealing those cases, even when it is obviously the fault of the employer.

The resulting court cases are, of course, partly paid for by taxpayers.

Some states claim that Talx intentionally delays unemployment claims, floods courts with protest letters and lies about how an employee lost their job.  In May, the Idaho Department of Labor announced that agreements were made with Talx.  Those agreements seem weak to me:

• Collaboration on training for Idaho employers on the state unemployment insurance system;
• Modification of documents used by both TALX and the state in the unemployment claims process;
• Development of performance expectations subject to ongoing review and analysis

These are things that should already be the norm.  Also, Idaho’s unemployment system, Idaho Job Service, is actually paid for by employers, and employers actually get money back for having low unemployment payouts (at least that’s how it was explained to me, by a Job Service employee who’s job it was to refund the employer’s money).

There was supposed to be a follow up meeting between Talx and the Idaho Dept. of Labor, in July, but I haven’t found any info on it.