Introduction

Unemployment compensation serves as a critical safety net for Ohio workers who lose their jobs through no fault of their own. However, this system depends on claimants providing accurate information about their circumstances, particularly regarding any wages they earn while receiving benefits. The recent case of Mikhelson v. Director of Ohio Department of Job and Family Services, 2025-Ohio-2524 (8th Dist. 2025), illustrates how even seemingly innocent mistakes in reporting can lead to serious fraud determinations with lasting consequences.

The Legal Framework for Unemployment Fraud in Ohio

Ohio Revised Code 4141.35(A) governs fraudulent misrepresentation in unemployment compensation cases. This statute provides that when the director of job and family services finds that any fraudulent misrepresentation has been made by an applicant or recipient with the object of obtaining benefits to which they were not entitled, severe consequences follow.

The current legal standard for fraud in Ohio unemployment cases represents a significant departure from traditional common law fraud requirements. Following legislative changes in 2005, Ohio no longer requires proof of specific subjective intent to defraud. Instead, fraud under R.C. 4141.35(A) simply refers to making a statement that is false, where the party making the statement does or should know that it is false.

This lower threshold means that claimants cannot simply claim ignorance or mistake as an automatic defense. Courts may infer fraudulent intent from intrinsic or extrinsic evidence, as well as from the surrounding circumstances. The question becomes not whether the claimant specifically intended to defraud the state, but whether they made false statements they knew or should have known were false.

The Mikhelson Case: When Mistakes Become Fraud

Igor Mikhelson's situation, as detailed in Mikhelson v. Director of Ohio Department of Job and Family Services, 2025-Ohio-2524 (8th Dist. 2025), provides a cautionary tale for all unemployment claimants. After losing his primary job at Shulte Hospitality Group due to COVID-19 in March 2020, Mikhelson applied for and received unemployment benefits. However, he continued working part-time at M&Y Care, L.L.C., and was required to report those earnings weekly.

For 22 weeks between August 2020 and April 2021, Mikhelson consistently underreported his earnings by reporting his net pay rather than his gross pay. The differences ranged from $24 to $70 per week. When questioned at his hearing about why he reported net instead of gross wages when the form clearly asked for gross earnings, Mikhelson's response was simply that he "just didn't look" at the instructions.

The Ohio Unemployment Compensation Review Commission found this explanation unreasonable. Despite Mikhelson's claims of confusion and language barriers, the Commission determined that repeatedly making the same error week after week, when the form clearly requested gross wages, constituted fraudulent misrepresentation. The appellate court upheld this determination, noting that Mikhelson's testimony at the hearing showed he could speak and understand English appropriately.

The Severe Consequences of Fraud Determinations

When fraud is established under Ohio law, the consequences are automatic and severe. The director must reject or cancel the entire weekly claim for benefits that was fraudulently claimed. This means even a small misrepresentation can result in the loss of the entire week's benefits, not just the difference between what was received and what should have been received.

Additionally, for each week of fraudulent claims, the claimant becomes ineligible for two otherwise valid weekly claims for benefits within the subsequent six years. This creates a multiplier effect where 22 weeks of fraudulent claims, as in Mikhelson's case, could result in 44 weeks of future ineligibility for benefits.

The financial penalties are equally harsh. Claimants must repay the total amount of benefits that were rejected or canceled before becoming eligible for any future benefits. On top of repayment, the law imposes a mandatory penalty equal to 25 percent of the total amount of fraudulently received benefits. For Mikhelson, this meant owing over $9,000 in repayments and penalties.

Common Pitfalls and How to Avoid Them

The Mikhelson case highlights several critical lessons for unemployment claimants. First and foremost, the distinction between gross and net wages is fundamental. Gross wages means total earnings before any deductions for taxes, insurance, or other withholdings. Net wages refers to take-home pay after deductions. Ohio unemployment law requires reporting gross wages, and consistently reporting net wages instead can constitute fraud even if done mistakenly.

Language barriers and confusion, while sympathetic circumstances, do not automatically excuse incorrect reporting. The Mikhelson case demonstrates that claimants who can navigate the hearing process in English will have difficulty claiming they could not understand the weekly certification forms. If genuine language barriers exist, claimants should seek assistance immediately rather than guessing at what information to provide.

The consistency of errors matters significantly. Making the same mistake week after week for months suggests either intentional misrepresentation or reckless disregard for accuracy. Courts and hearing officers expect that reasonable people will notice and correct honest mistakes, especially when dealing with government benefits.

The Evolution of Ohio's Fraud Standards

The 2005 legislative changes that repealed R.C. 4141.29(D)(2)(d) marked a watershed moment in Ohio unemployment fraud law. Prior to these changes, the law required proof of specific intent to obtain benefits fraudulently. The current standard is much broader, encompassing situations where claimants should have known their statements were false, regardless of actual intent.

This evolution reflects a policy decision to protect the integrity of the unemployment system by placing greater responsibility on claimants to ensure accuracy. While this may seem harsh, it recognizes that the unemployment system processes thousands of claims weekly and cannot thoroughly investigate every submission for potential errors.

Best Practices for Avoiding Fraud Determinations

Claimants should treat every weekly certification with the seriousness it deserves. Reading all instructions carefully, even if they seem repetitive or obvious, is essential. If any confusion exists about what information to report or how to calculate amounts, seeking clarification from ODJFS before submitting the certification is far better than guessing.

Maintaining personal records of all earnings, including pay stubs and work schedules, helps ensure accurate reporting. When in doubt, over-disclosure is safer than under-disclosure. Reporting slightly more than earned might result in reduced benefits for that week, but it won't lead to fraud charges.

For those with limited English proficiency or other barriers to understanding the forms, seeking assistance from family members, community organizations, or ODJFS directly is crucial. The system expects claimants to obtain help if needed rather than submitting incorrect information repeatedly.

The Role of Employers in Fraud Detection

The Mikhelson case also demonstrates how employer reporting plays a crucial role in detecting fraud. M&Y Care's human resources director testified about Mikhelson's actual wages, providing the evidence needed to establish the discrepancies. This highlights that fraudulent reporting will likely be discovered eventually, as employers must report wage information to the state for various purposes.

The systematic nature of modern unemployment administration means that discrepancies between claimant reports and employer records will eventually surface. What might seem like small weekly differences can accumulate into substantial fraud findings when discovered months or years later.

Challenging Fraud Determinations

While the Mikhelson case resulted in an unfavorable outcome for the claimant, it illustrates the importance of presenting strong evidence if challenging a fraud determination. Simply claiming mistake or confusion without supporting evidence is insufficient. Successful challenges typically require demonstrating that the false statements resulted from circumstances beyond the claimant's control or that the claimant took reasonable steps to ensure accuracy.

The hearing process provides an opportunity to present evidence and testimony, but preparation is crucial. Claimants should gather all relevant documentation, including any communications with ODJFS, evidence of language barriers or other impediments to accurate reporting, and any proof that they attempted to correct errors when discovered.

Conclusion

Ohio's unemployment fraud rules reflect a balance between protecting the integrity of the benefits system and ensuring that deserving claimants receive support. The Mikhelson case demonstrates that this balance currently tilts heavily toward system protection, with severe consequences for even unintentional misrepresentations.

The key takeaway for claimants is that accuracy in reporting is paramount. The excuse that one "just didn't look" at the instructions, as Mikhelson claimed, will not suffice when weeks of incorrect reporting are discovered. The current legal standard makes clear that claimants bear the responsibility for ensuring their submissions are accurate, regardless of intent.

For those navigating the unemployment system, treating each weekly certification as a legal document requiring careful attention can prevent the devastating financial and eligibility consequences that follow fraud determinations. When in doubt, seeking help or clarification is always preferable to guessing. The cost of getting it wrong, as Mikhelson discovered, can be measured not just in immediate repayments and penalties but in years of future ineligibility for benefits when they might be desperately needed.

Disclaimer: This post is for informational purposes only and does not constitute legal advice. For specific situations, consult with a qualified attorney or contact the Ohio Department of Job and Family Services.