Leave Fraud Investigation: Detecting and Addressing Policy Violations

Leave fraud represents one of the most challenging integrity issues facing human resources departments, costing organizations an estimated $2.8 billion annually in the United States alone. While the vast majority of employees use leave benefits honestly and appropriately, a small percentage engage in fraudulent behaviors that undermine policy effectiveness, increase costs, damage team morale, and create legal liability.

Leave fraud encompasses a spectrum of violations from minor policy misuse to sophisticated schemes involving falsified documentation, medical provider collusion, and coordinated deception. Research indicates that 3-7% of leave claims contain fraudulent elements, with certain leave types—particularly short-term disability, workers’ compensation, and FMLA— experiencing higher fraud rates due to their extended duration and verification challenges.