What Happens if My Employee Commits SNAP Fraud?

What Happens if My Employee Commits SNAP Fraud?

Finding out an employee has committed SNAP fraud can be shocking and concerning for any employer. The Supplemental Nutrition Assistance Program (SNAP), formerly known as food stamps, provides crucial assistance to low-income families. While the vast majority of recipients use their benefits appropriately, SNAP fraud unfortunately does occur. As an employer, it’s important to understand the implications if your worker is involved in illegal activity related to SNAP benefits.

First, let’s review what constitutes SNAP fraud. There are a few main ways it can occur:

• An employee provides false information on their SNAP application, such as underreporting income or assets, to receive more benefits than they’re entitled to.
• An employee sells their SNAP benefits to someone else for cash, commonly called trafficking.
• An employee uses someone else’s SNAP benefits without permission.
• An employee accepts SNAP benefits as payment for ineligible items at a retail business, like alcohol or cigarettes.

Employees may engage in SNAP fraud for personal gain, or retailers may allow it to increase profits. Either way, SNAP fraud is illegal under federal law and can result in fines, loss of benefits, and even criminal prosecution.

Potential Employer Liability

Generally, employers are not directly liable if an employee commits SNAP fraud on their own time without the employer’s knowledge. However, there are some risks employers should be aware of:

• If the fraud occurs at work, such as illegally trading benefits for cash, the employer could potentially face criminal charges or civil liability.
• SNAP fraud could be a sign of broader misconduct issues with an employee that may expose the company to other risks.
• If the fraud involves misreporting income, it could raise questions about the accuracy of the employer’s payroll reporting and tax withholding.

While rare, the USDA has pursued retailers before when employees were found trafficking benefits. So employers do have some vulnerability if worker’s SNAP fraud happens on company time or property.

Steps if You Suspect Employee Fraud

If you have reason to believe an employee may be abusing SNAP, here are some recommended actions:

1. Review your personnel policies and applicable laws regarding investigations, privacy, and employment actions.
2. Consult with legal counsel experienced in employment law before taking any action.
3. Gather documentation, such as written complaints, surveillance footage, or other evidence.
4. Interview witnesses who may have knowledge of the suspected fraud.
5. Consider suspending the employee until you complete an internal investigation.
6. Confront the employee in question and give them a chance to explain the allegations.
7. If fraud is confirmed, terminate employment immediately per company policy.
8. Contact state and/or federal authorities to report the SNAP fraud.

Taking prompt action shows authorities you do not tolerate abuse of SNAP benefits. It also protects the company from potential liability risks.

What Happens After SNAP Fraud is Reported

Once SNAP fraud is reported, here is a typical process of what happens next:

1. The state SNAP agency will investigate the allegations and gather evidence.
2. If fraud is substantiated, the employee will be disqualified from receiving SNAP benefits for 12 months to permanently, depending on severity.
3. The employee will be required to repay all illegally obtained benefits, usually by having future benefits reduced until repaid in full.
4. State prosecutors may choose to bring criminal charges against the employee, such as SNAP fraud or theft.
5. If convicted of criminal charges, penalties can include fines, probation, and even jail time in severe cases.
6. The employee may be added to the USDA’s national disqualified recipient database.
7. Retailers implicated in trafficking benefits face permanent disqualification, fines, and civil penalties.

As you can see, SNAP fraud allegations trigger a formal investigative and enforcement process. The employee will likely face consequences from the state SNAP agency and possibly criminal prosecution.

Avoiding SNAP Fraud in Your Business

While employers are not generally liable for individual employee’s misconduct, there are some best practices to avoid SNAP fraud issues:

• Train staff on SNAP program rules and what constitutes fraud.
• Implement internal controls around transactions involving EBT cards.
• Monitor inventory closely to detect trafficking or other abuse.
• Post signage reminding customers SNAP benefits can only be used for eligible foods.
• Report any suspected employee or customer fraud immediately.

Following SNAP rules and creating a culture of compliance protects your business and employees.

Getting Legal Help

SNAP fraud situations require very careful handling by employers to avoid potential liabilities. Consult with an attorney experienced in employment law before taking any action against a worker suspected of fraud. They can guide you in properly investigating while respecting employee rights. An attorney can also represent your business if authorities pursue any penalties or charges related to employee misconduct. With proper preparation, you can demonstrate your company acted responsibly and did not enable any SNAP fraud.

While a challenging situation, addressing SNAP abuse head on is critical. This protects your business’s reputation and deters further misconduct. With the right legal advice, you can move forward in the best interests of your company, employees, and customers.

Sources:

• https://www.fns.usda.gov/snap/fraud
• https://www.fns.usda.gov/snap/state-agency-liability-employee-fraud
• https://dwss.nv.gov/Home/Features/ReportWelfareFraudInNV/