Texas legislature targets unemployment fraud with House Bill 3699 reforms

The Senate Committee on Economic Development convened on May 5, 2025, to address critical issues surrounding unemployment insurance fraud in Texas. The meeting highlighted a proposed legislative measure aimed at closing loopholes that have allowed fraudulent claims to proliferate, particularly in the wake of the COVID-19 pandemic.

The Texas Workforce Commission (TWC) reported a significant increase in unemployment insurance fraud during the pandemic, prompting the need for legislative action. The proposed House Bill 3699 seeks to amend the Texas Labor Code to redefine the term "last work." Currently, the definition allows claimants to potentially manipulate their employment history to qualify for benefits fraudulently. Specifically, the existing law permits individuals to claim a previous employer if they had worked at least 30 hours in a week, which can lead to exploitation of the system.

Under the new proposal, "last work" would be defined more strictly to mean the employer with a liable TWC tax account. This change aims to enhance the verification process for unemployment claims, enabling the TWC to better identify and eliminate fraudulent applications. The committee discussed the implications of this amendment, emphasizing its potential to strengthen the integrity of the unemployment insurance program.

Chuck Ross, the director of fraud deterrents and compliance monitoring at the TWC, was present to provide insights and answer questions regarding the implementation of the proposed changes. The committee members expressed interest in understanding how these adjustments would affect the overall unemployment insurance landscape in Texas.

As the meeting concluded, the committee opened the floor for public testimony, indicating a commitment to gathering diverse perspectives on the proposed legislation. The discussions underscored the importance of safeguarding the unemployment insurance system against fraud while ensuring that legitimate claimants receive the support they need. The next steps will involve further deliberation on the bill and its potential impact on Texas workers.