Texas speeds up unemployment checks for workers who lost their jobs

New law changes how Texas processes claims

Texas changed the rules on unemployment claims starting Jan. 1, 2026.

House Bill 3699 closes a loophole that let people game the system by creating a fake “last employer” to qualify for benefits they shouldn’t have received.

The Texas Workforce Commission spotted the problem and pushed for the fix itself.

Gov. Greg Abbott signed the bill into law in 2025 after it sailed through both chambers without a single vote against it.

How the claims process normally works

When someone files for unemployment in Texas, the Workforce Commission sends a notice to their most recent employer. That employer can then respond with details that might affect the claim, like why the worker left.

The idea is simple: both sides get a say before the state approves any payments.

That makes the definition of “last employer” a big deal, because whoever gets that label is the one who gets notified.

The old law left a gap

Under the old rules, if a claimant worked for at least 30 hours in a single week could count as their “last employer.”

That person didn’t even have to meet the legal definition of an employer under the Texas Unemployment Compensation Act.

So someone fired for cause from a real job could do a few days of work for a friend or neighbor, then list that person as their most recent employer.

The only information the state often received came from the claimant alone.

Workers used the gap to skip disqualification

Here’s how it played out. A worker gets fired for misconduct, which normally disqualifies them from benefits.

To get around that, they do 30 hours of odd jobs for someone they know, or even someone they made up. Then they file a claim saying they lost that short gig due to a lack of work.

Because the informal “employer” usually never responded to the Workforce Commission, the worker’s version of events went unchallenged, and benefits got approved.

HB 3699 removes the 30-hour rule

The new law strips out the 30-hour provision entirely.

Now, “last work” only refers to an employer as defined under the Texas Unemployment Compensation Act.

The bill also removes a reference to employer definitions under other states’ unemployment laws and adds language saying the definition applies unless state or federal law says otherwise.

Going forward, the Workforce Commission will only notify and consider actual statutory employers when it processes new claims.

Lawmakers approved the bill unanimously

State Rep. Hubert Vo, a Democrat, wrote the bill. It passed the Texas House 142-0 on April 30, 2025, and then cleared the Senate 31-0 on May 19, 2025.

That kind of unanimous support is rare, but both parties agreed the loophole needed to go. The law only applies to claims filed on or after Jan. 1, 2026.

Anyone who filed before that date still falls under the old rules.

Fraud detection became a top priority after 2020

The Workforce Commission has ramped up its fraud-fighting tools in recent years, using data analytics, identity checks, and law enforcement partnerships.

In Sept. 2025, a wave of fraudulent filings in Texas briefly threw off national unemployment numbers.

That spike involved identity fraud, which is a different problem than the loophole HB 3699 fixes, but it showed just how big the fraud challenge has become for the state.

The September spike shook national data

National initial unemployment claims hit a four-year high during the week ending Sept. 6, 2025. Texas accounted for roughly 15% of all national filings that week, with about 32,000 claims.

The Workforce Commission confirmed the jump came from a surge in fraudulent identity-based attempts, not actual job losses.

Economists noted the numbers didn’t reflect real layoffs, but the spike still rattled financial markets before the cause became clear.

Texas passed other workplace laws too

HB 3699 wasn’t the only employment law to come out of the 89th Legislature.

A separate bill, HB 199, created a sliding scale for how long workers can receive benefits based on the state’s unemployment rate.

Texas also passed HB 149, which sets up rules for how companies use artificial intelligence. And HB 2466, a Ban the Box law that limits when employers can ask about criminal history, took effect Sept. 1, 2025.

What workers filing claims should know

If you file an unemployment claim on or after Jan. 1, 2026, the new definition of “last employer” applies to you. But the law doesn’t change eligibility rules, benefit amounts, or how long you can collect.

Workers who lost a real job with a real employer have nothing to worry about. The change targets people who tried to manufacture a fake employment history.

The Workforce Commission asks anyone who suspects fraud to report it through the agency’s online portal.

This article was created with AI assistance and human editing.

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