Advisory Report: CARES Act — Initial Areas of Concern Regarding Implementation of Unemployment Insurance Provisions (DOL OIG, 2020)

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EMPLOYMENT AND TRAINING 
ADMINISTRATION                                  
ADVISORY REPORT 
 
CARES ACT: INITIAL AREAS OF 
CONCERN REGARDING 
IMPLEMENTATION OF 
UNEMPLOYMENT INSURANCE 
PROVISIONS 
DATE ISSUED: APRIL 21, 2020
REPORT NUMBER: 19-20-001-03-315

U.S. Department of Labor – Office of Inspector General  
TABLE OF CONTENTS 
INSPECTOR GENERAL’S REPORT .................................................................... 1 
 
 
 
-i-  
RESULTS ............................................................................................................. 2 
State Preparedness ................................................................................... 2 
Initial Eligibility Determination ..................................................................... 4 
Benefit Amount ........................................................................................... 7 
Return to Work ........................................................................................... 8 
Improper Payment Detection and Recovery............................................. 10 
Program Monitoring .................................................................................. 11 
OIG OVERSIGHT OF PANDEMIC RESPONSE................................................. 13 
CONCLUSION .................................................................................................... 13 
 
 
 

U.S. Department of Labor 
Office of Inspector General 
 
 
Washington, D.C. 20210 
INSPECTOR GENERAL’S REPORT 
CARES ACT: UNEMPLOYMENT INSURANCE ADVISORY REPORT 
 
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John P. Pallasch 
Assistant Secretary 
  for Employment and Training 
U.S. Department of Labor 
200 Constitution Ave, NW 
Washington, DC 20210 
 
This advisory report presents the Office of Inspector General’s (OIG) initial areas 
of concern the Department of Labor (DOL) and the states should consider given 
the implementation of the unemployment insurance (UI) provisions included in 
the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. UI is a 
joint federal-state program with DOL’s Employment and Training Administration 
(ETA) responsible for providing state oversight. The concerns presented in this 
report represent years of oversight work relating to DOL’s UI program, including 
the use of prior stimulus funds and the Department’s response to past natural 
disasters.    
 
Since the coronavirus (COVID-19) pandemic first infiltrated the United States in 
early 2020, it has had a major impact on unemployment compensation claims. 
DOL reported more than 22 million additional workers have filed initial jobless 
claims since March 14, the largest increase since the Department began tracking 
the data in 1967.  
 
The CARES Act, which became law on March 27, 2020, provides three major 
changes to existing UI coverage, which could total hundreds of billions of dollars 
in additional payments. The new Pandemic Unemployment Assistance (PUA) 
program extends unemployment benefits to self-employed, independent 
contractors, those with limited work history, and other individuals not traditionally 
eligible for unemployment benefits who are unable to work as a direct result of 
COVID-19. The CARES Act also provides an additional 13 weeks of 
unemployment compensation available to those individuals who have exhausted 
their regular unemployment benefits. Finally, the CARES Act provides a 
supplemental payment of $600 per week for up to four months.  

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The substantial increase in unemployment benefits requires that ETA and state 
agencies establish strong controls to ensure the use of the funding meets the 
intent of the CARES Act and helps to support workers and the economy. 
RESULTS  
The OIG has published numerous audit reports identifying areas for improvement 
and fraud prevention within DOL’s UI program. Based on these reports, we 
identified initial areas of concern that ETA and the states should consider as they 
implement the UI provisions included in the CARES Act. These areas include: 
 
• State Preparedness 
• Initial Eligibility Determination 
• Benefit Amount 
• Return to Work 
• Improper Payment Detection and Recovery  
• Program Monitoring 
    
Our past audit work included recommendations to address deficiencies identified 
in each of these areas. In most cases, ETA initiated corrective actions, including 
improvements in its oversight, as well as state operations. However, initiating 
corrective actions does not assure such actions are effective or will continue to 
be effective in addressing program risks and weaknesses. As ETA and the states 
implement the relevant CARES Act provisions and in light of the unprecedented 
demands on the unemployment system, more needs to be done to ensure those 
receiving compensation are eligible and receive accurate and timely payment. 
ETA and the states also need to develop effective fraud prevention measures 
and ensure any overpayments are detected and recovered. 
STATE PREPAREDNESS 
Two issues of state preparedness to successfully implement the expansion of UI 
benefits—staffing and system capabilities—have been long-standing concerns 
underlying many issues noted in prior OIG reports. These issues have been 
particularly evident in prior periods of increased stress on the unemployment 
program due to major disasters or periods of significant economic downturn. 
 
UI benefits are generally funded by state employer taxes with administrative 
costs funded by the federal government. Expansions of coverage and benefits, 

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such as by the CARES Act, are generally funded by the federal government. 
Each state administers a separate UI program, but all states follow the same 
general guidelines established by federal law. Each state sets its own additional 
requirements for eligibility, benefit amounts, and length of time benefits can be 
paid. Each state also manages the staffing and system resources needed to 
administer the program. These resources are critical to all aspects of the UI 
program and affect each area of concern discussed in this report.  
 
Staffing  
 
Funding provided under the CARES Act necessitates that states have sufficient 
staffing and system resources to manage the extraordinary increases in the 
number of claims and payments. The CARES Act specifically provides states 
with temporary, limited flexibility to hire temporary staff, re-hire former staff, or 
take other steps to process unemployment claims quickly.  
 
Our work related to past funding for emergency staffing under the 2009 Recovery 
Act showed that states took over a year to spend the majority of funds available 
for hiring; and at least 40 percent of the available funds were unspent after 15 
months.1 State officials said they did not have sufficient staff because they were 
already working at low staffing levels prior to receiving the Recovery Act funding 
and hiring efforts were delayed due to state-imposed hiring freezes that required 
exemptions to bypass. ETA’s intent was for states to hire quickly as its guidance 
stated that the majority of available funds should be spent within the first year. 
ETA did not provide sufficient monitoring and oversight to ensure this occurred.  
 
Systems 
 
States have been slow to modernize unemployment systems, which has resulted 
in processing delays and inaccurate unemployment compensation payments. 
States that do not have modernized unemployment systems may need 
alternative controls to compensate for the limitations imposed by outdated 
systems, including hiring additional staff.  
 
The Recovery Act provided $7 billion states could use to modernize legacy 
systems for processing UI claims. However, an audit in 2010 found that $2 billion 
was used to pay benefits (an allowable option under the legislation) and another 
$1.3 billion would likely not have been spent before their period of availability 
                                            
1 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment 
Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011; 
Report No. 18-11-005-03-315) 
 

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expired.2 States cited increased costs for benefit payments and the political 
difficulty of making the required changes to state laws as the primary reasons 
they would not apply for the funding. Additionally, the audit disclosed that states 
with $39 million in available administrative grant funds to modernize their 
systems did not have plans in place to spend those funds.  
 
ETA took action to address our prior audit recommendations on staffing and 
system modernization. However, the OIG remains concerned that staffing 
challenges, coupled with the state of legacy systems, will continue to impede the 
management and oversight of UI benefits. Heightened oversight and assistance 
from ETA and compensating controls by the states are required to ensure the 
concerns from past audits, as discussed in this advisory report, are adequately 
addressed. 
INITIAL ELIGIBILITY DETERMINATION 
A key challenge faced by states is ensuring unemployment compensation 
benefits are paid to only those individuals eligible under program 
requirements. Accurate initial determinations of eligibility are critical to 
ensuring that benefits are granted only to those intended by the programs. For 
claimants covered by the regular UI program, this means obtaining necessary 
separation information from the employer. For claimants not traditionally 
covered by UI, states will need to ensure self-certifications are not abused and 
methods to detect fraud and recover improper payments are established. 
 
Regular Unemployment Benefits 
 
Past OIG audits have shown the need for better strategies to increase 
employer participation in efforts to determine initial eligibility. States need 
employers to confirm the employee worked for them for a sufficient length of 
time and lost their job through no fault of their own. The most efficient method 
for employers to exchange separation information is the State Information 
Data Exchange System (SIDES). SIDES is a standardized computer to 
computer system designed to enable more rapid and accurate communication 
between states and employers compared to mailed requests. A 2017 audit 
found that almost all states used the SIDES, an effective automated tool to 
obtain timely and accurate information from employers on the reasons 
individuals separated from employment.3 This information is key to 
                                            
2 DOL OIG, “Recovery Act: More Than $1.3 Billion in Unemployment Insurance Modernization 
Incentive Payments Are Unlikely To Be Claimed By States,” (September 30, 2010; Report No. 18-
10-012-03-315) 
3 DOL OIG, ““Better Strategies Needed to Increase Employer Participation in the State 
Information Data Exchange System,” (March 31, 2017; Report No. 04-17-003-03-315) 

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determining initial eligibility, compensation amounts, validity of self-
certifications, and the enforcement of voluntary quit provisions that in nearly all 
instances render the claimant ineligible.  
 
We found that improper payment rates for each of the five State Workforce 
Agencies (SWA) we reviewed declined after implementing SIDES. In those 
instances where SIDES was used, it resulted in better initial eligibility 
determinations and a reduction in improper payments. However, we found that 
there was missed opportunity to maximize the utilization of the system. 
Specifically, better strategies were needed to address the following: 
• Only 19.8 percent of employers covered by the five SWAs we reviewed 
signed up to use SIDES. 
• Employers that did sign up to use SIDES did not respond to 41 percent 
of the 4.2 million SWA requests for employee separation information. 
• State marketing did not increase employer participation in SIDES. 
• SIDES infrastructure presented technical challenges. 
 
We recommended ETA work with SWAs to increase the number of employers 
using SIDES and resolve technical challenges with the system. We found that 
SIDES was most effective when used by employers who had a higher number of 
unemployment claims. Significantly more employers will fit this profile due to 
COVID-19. ETA generally agreed with our recommendations and issued 
additional guidance to SWAs encouraging the use of SIDES. Further, ETA 
required the use of SIDES for UI modernization funding, held conferences and 
Webinars, and created a new marketing and outreach tool kit. However, we 
remain concerned that some states may not have effectively increased employer 
use of SIDES. This could require greater reliance on compensating controls, as 
well as greater attention to detection of improper payments. 
 
Pandemic Unemployment Assistance 
 
The new PUA program extends benefits to those who are classified as self-
employed, independent contractors, those with limited work history, and other 
individuals not traditionally eligible for unemployment benefits who are unable to 
work as a direct result of COVID-19. PUA is similar to the Disaster 
Unemployment Assistance (DUA) program, which the OIG has audited.  
 
A DUA audit conducted in response to a major weather-related disaster 
underscores some of challenges the PUA program will face.4 After the disaster, 
                                            
4 DOL OIG, ““Audit of Florida Disaster Unemployment Assistance Grant Number 1359 - DR,” 
(March 26, 2004; Report No. 04-04-004-03-315) 
 

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claimants had to show they were not eligible for benefits under the State’s 
regular unemployment program and lost their jobs due to the disaster.  
 
Our audit in one state found improper payments to over 71 percent of the 420 
sampled claims, many for more than one reason. Payments were made to 
claimants who: 
  
• were not unemployed due to the disaster, or  
 
• did not have adequate documentation of their continuing eligibility or 
were paid due to other administrative errors. 
  
Based on a statistical projection from our sample, we estimated the total amount 
of improper payments was at least $1.7 million. ETA did not provide adequate 
monitoring to ensure state officials implemented DUA policies that were 
consistent with program requirements. We recommended ETA require the state 
to establish administrative policies and procedures that comply with federal filing 
and eligibility guidelines. As previously noted, the risk of fraud and improper 
payments is even higher under PUA because claimants can self-certify their UI 
qualifications. ETA needs to establish methods to detect fraud and recover 
improper payments.    
 
Fraudulent Claim Prevention and Detection 
 
The OIG is concerned ETA and the states have not developed sufficient systems 
to prevent fraud during initial eligibility determinations and detect fraud if those 
systems fail. An Investigative Advisory Report issued by the OIG’s Office of 
Investigations in 2015 identified systemic weaknesses that make the UI program 
more susceptible to fraudulent activity.5 The information presented is even more 
relevant due to the expanded benefits provided under the CARES Act and the 
increased volume of claims. The systemic weaknesses identified include the 
following: 
 
• State systems that allow individuals to file unemployment insurance 
claims in multiple states during the same timeframe using the same 
personal information. 
 
• State systems that auto-populate the application with the claimant's 
employment history, making it easier for the claimant to complete the 
application process, but also making it easier for someone to make 
                                            
5 DOL OIG, “Weaknesses Contributing to Fraud in the Unemployment Insurance Program,” 
(July 24, 2015; Investigative Advisory Report) 

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fraudulent claims. 
 
• State systems that allow individuals to file claims online using 
anonymous IP addresses, internet hotspots and stolen internet 
connections, making it difficult to validate the identity of the claimant. 
 
• Non-state issued pre-paid debit cards available through retail outlets, 
provide anonymity to those who are submitting fraudulent claims and 
make it difficult to trace the activity and use of the funds. 
 
• Inconsistent or unstructured communication between state tax and 
employment departments, making it difficult to validate claims using 
corporate unemployment insurance tax filings. 
ETA and the states need to consider these systemic weaknesses as they 
develop methods to prevent and detect fraud in the UI program. 
BENEFIT AMOUNT 
The OIG is concerned ETA and states do not have sufficient systems, alternative 
controls, and oversight in place to ensure appropriate payment durations and 
amounts. The CARES Act will significantly increase the number of 
unemployment compensation claims because provisions include payment to 
those not traditionally eligible for unemployment benefits. Furthermore, 
provisions to provide an additional 13 weeks of unemployment compensation 
and an additional $600 per week will significantly increase the duration and 
amount of unemployment compensation payments.  
 
The 2009 Recovery Act included a weekly benefit augmentation similar to the 
CARES Act, but instead of $600 it was the significantly lesser amount of $25. 
ETA estimated the total cost of the $25 additional payments would exceed $8 
billion. Our audit identified system limitations and control weaknesses that 
affected states ability to properly pay the additional $25 per week to eligible 
unemployed recipients.6 We determined that some states paid the $25 
additional compensation to ineligible claimants, and that overpayments by the 
10 states we reviewed ranged from $160,000 to about $2.5 million. Moreover, 
some states did not attempt to identify and recover overpayments or compile 
and report overpayment information to ETA as required. For these states, 
                                            
6 DOL OIG, “Recovery Act: States Have Aggressively Implemented the $25 Weekly 
Supplemental Unemployment Benefit but Some Challenges Remain,” (September 30, 2009; 
Report No. 18-09-004-03-315) 
 

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overpayments were considered lost and ETA did not have the information 
needed to provide adequate oversight and control.  
 
ETA concurred with our conclusions in this report and addressed concerns in 
the states audited. ETA also issued guidance to all states to reaffirm the 
requirements for managing and controlling the $25 per week additional 
compensation. However, our audit did not cover all states and we are 
concerned that state system limitations and control weaknesses still exist. 
Addressing these weaknesses where needed is especially critical due to the 
much higher $600 per week provided by the CARES Act.   
 
Additionally, a series of audits we conducted in response to past disasters 
identified systemic control weakness that ETA should consider as it oversees 
CARES Act provisions.7 Our audits found that two states affected by 
Hurricanes Katrina and Rita made rapid unemployment compensation 
payments without ensuring claimants were eligible. For example, both states 
failed to verify social security numbers or crossmatch payment information to 
prevent duplicate payments. One state disregarded the requirement to 
determine the correct benefit amount based on prior wages and granted all 
beneficiaries the maximum amount without regard to prior earnings. Based on 
our review, we determined that the two states potentially overpaid about $100 
million in unemployment compensation. 
 
We recommended ETA develop a nationally coordinated contingency plan to 
provide alternatives for individual states to process claims when disasters or 
other reasons disrupt normal processing. This included developing alternative 
controls for instances when states suspend established eligibility and benefit 
payment controls. ETA agreed with our recommendations and worked with 
states to develop a nationally coordinated contingency plan. However, ETA 
has not implemented the contingency plan during an emergency on the scale 
of COVID-19. 
RETURN TO WORK 
To ensure unemployment compensation payments stop at the appropriate time it 
is critical that states identify when claimants have returned to work. A key control 
for doing so is effective use of the National Directory of New Hires (NDNH). 
States will need to perform crossmatches of the NDNH against state claims 
databases, including PUA claimants, to ensure the continued eligibility of all 
                                            
7 DOL OIG, “Lack of Contingency Plans Contributed To More Than $100 Million in Potential 
Overpayments of Hurricane-Related Unemployment Benefits,” (June 12, 2008; Report No. 06-08-
001-03-315) 

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benefit recipients. This is especially important given large numbers of claimants 
are expected to return to work once COVID-19 subsides and some may continue 
to collect benefits after successful reemployment. 
 
In Fiscal Year 2017, DOL estimated the UI program improperly paid more than 
$1 billion to claimants who were ineligible for benefits because they had returned 
to work. ETA classifies these types of overpayments as “benefit year earnings 
(BYE) overpayments.” Since 2011, ETA has mandated that states use the NDNH 
to detect and prevent BYE improper payments. States also use the State 
Directory of New Hires (SDNH) to identify BYE overpayments. 
 
OIG audit work has found that states generally used these new hire detection 
tools to reduce BYE overpayments, but ETA could do more to assist states 
efforts.8 Despite an 8 percent reduction in overpayments, states underutilized 
new hire directories. Further, states did not make timely overpayment 
determinations of new hire investigations and did not report complete and 
accurate results of new hire investigations, as required. These areas of concern 
will make the effective management of CARES Act funding difficult if ETA does 
not ensure states take action to enhance state controls over identifying return to 
work.  
 
Our recommendations included that ETA: 
 
• Develop and implement new procedures to identify states that are 
underutilizing NDNH and the SDNH tools and target those states for 
additional technical assistance. 
 
• Revise and redistribute recommended operating procedures for state 
and national new hire cross-matching that includes the use of 
Enhanced NDNH procedures. 
 
• Develop and implement improved oversight procedures to ensure the 
results of NDNH and SDNH investigations reported on the ETA 227 
Overpayment Detection and Recovery Activities quarterly report are 
complete and accurate.  
 
ETA implemented these recommendations. However, ETA now needs to focus 
the expenditure of CARES Act funding on eligible recipients only, enabling the 
funding to impact a greater population of those in need.  
                                            
8 DOL OIG, “Improved Oversight of States' Use of New Hire Tools Would Help Reduce Improper 
Payments,” (September 27, 2018; Report No. 04-18-003-03-315). 

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Furthermore, the CARES Act presents additional challenges for the 
unemployment program. For example, the provisions for small business loans, 
under the Paycheck Protection Program, enable some employers to reopen and 
offer employees their jobs back. As conditions improve, states face the challenge 
of identifying situations where employees refuse to return to work because the 
additional $600 per week under the Emergency Increase in Unemployment 
Compensation Benefits may result in sufficiently comparable payment to 
employment. Situations may also arise where small businesses use the loans to 
provide back pay to employees that received unemployment compensation for 
the same period. ETA needs to work with the states to develop processes to 
discontinue benefits when appropriate or detect and recover any overpayments.  
IMPROPER PAYMENT DETECTION AND 
RECOVERY 
In this report, we have discussed the need for states to have in place preventive 
controls to ensure eligible people are receiving the correct amount of benefits for 
the correct period of eligibility in order to prevent the occurrence of improper 
payments. However, states need to establish controls to detect any improper 
payments made in case preventive controls fail. Furthermore, states need to 
establish processes to ensure they recover any detected overpayments. 
 
The OIG continues to report the Department’s ability to measure, report, and 
reduce improper payments in its UI program as a significant concern.9 The UI 
program, designed to provide benefits to individuals out of work, has one of the 
highest improper payment rates of all government programs. The UI program 
paid benefits totaling $26.91 billion during the period July 1, 2018, to June 30, 
2019. Of this, estimated improper payments totaled $2.86 billion, making the 
estimated improper payment rate 10.61 percent.  
 
Our prior audit work revealed that the Department has not done enough to 
formally assess the various strategies and determine what issues persist, due in 
part to a lack of reliable state reported data. A leading cause of improper UI 
payments was states’ inability to determine a claimant’s benefit eligibility based 
                                            
9 DOL OIG, “Semi-Annual Report to Congress,” (Volume 82; April 1 – September 30, 2019). 
 

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on adequate base-year wages, or allowable reasons for separation10,11 
Furthermore, identity thieves and organized criminal groups have found ways to 
exploit program weaknesses. Thus, improper payments stemming from 
fraudulent activity continue to pose a significant threat to the integrity of the UI 
program.  
 
The Department needs to continue its ongoing work with states to implement 
strategies designed to reduce the UI improper payment rate, which would include 
sharing best practices identified among states. Under the CARES Act, DOL’s 
improper payment rate may increase if strong controls are not established. To 
ensure CARES Act funding can reach those eligible recipients in need of the 
assistance, it is paramount that states develop controls to detect and recover any 
improper payments. 
PROGRAM MONITORING 
ETA must ensure program monitoring over the use of the stimulus funding is 
sufficiently designed and executed and benefit outlays are accurately tracked 
and reported, at the state and federal level. Without this critical oversight and 
transparency, ETA cannot ensure its management of the billions of dollars in 
supplemental program funding has achieved the desired outcome and sufficiently 
met the requirements of the CARES Act. 
 
ETA is responsible for issuing operating instructions or other guidance to states 
as necessary. ETA can also waive requirements of the Paperwork Reduction Act 
to gather quickly the necessary information from states and more rapidly 
distribute funding appropriated under the CARES Act. While a great sense of 
urgency exists during COVID-19, past audit work has found that in the rush to 
disseminate stimulus funding, ETA was remiss in providing necessary, additional 
                                            
10 DOL OIG, “ETA Needs Stronger Controls to Ensure That Only Eligible Claimants Receive 
Unemployment Compensation for Federal Employees,” (March 28, 2016; Report No. 
04-16-001-03-315). 
 
11 DOL OIG, “Reporting Over the U.S. Department of Labor's FY 2018 Compliance with the 
Improper Payments Elimination and Recovery Act,” (Issued June 3, 2019; Report No. 
22-19-007-13-001). 
 

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guidance to direct spending more effectively and to track and report more 
meaningful results.12,13  
 
Specifically, prior audit work found that DOL moved quickly after the Recovery 
Act’s passage to allocate funds to states; and develop and issue general 
guidance on allowable spending categories and reporting formats. While DOL 
provided timely guidance to states, DOL did not consistently apply lessons 
learned to ensure the most efficient use of the stimulus funding. One audit found 
that DOL could have directed states to use reemployment services grants to 
correct claimant service-related weaknesses identified by several 
organizations.14   
 
Moreover, ETA guidance did not ensure the level of transparency and 
accountability the Recovery Act required. ETA guidance lacked results-oriented 
goals, objectives, and measurable outcomes. As a result, ETA could not provide 
a breakout of how the 54 states and territories spent the reemployment services 
funding.   
 
The lessons learned from implementing our audit recommendations could help 
ETA in the effective and efficient management of CARES Act funding. Those 
recommendations included: 
 
• Establishing priorities, outcome measures, and effective data collection 
systems for future UI program funding to address program 
weaknesses and better measure the services states provide to 
claimants. 
 
• Developing monitoring and financial reporting requirements to enable 
DOL to report how effectively states spent federal funds on 
employment and reemployment services. 
 
                                            
12 DOL OIG, “ETA Needs Stronger Controls to Ensure That Only Eligible Claimants Receive 
Unemployment Compensation for Federal Employees,” (March 28, 2016; Report No. 
04-16-001-03-315). 
 
13 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment 
Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011; 
Report No. 18-11-005-03-315) 
 
14 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment 
Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011; 
Report No. 18-11-005-03-315) 
 

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• Determining from independent analysis what state experiences were 
and identifying best practices; areas for improvement; and short and 
long- term achievements, so DOL could then use this information to set 
goals and measures for outcomes and achievements for future 
funding. 
OIG OVERSIGHT OF PANDEMIC RESPONSE 
Federal agencies are tasked with a difficult charge–rapid implementation of 
programs in a manner that meets the intent of the CARES Act. Actions to fulfill 
the mandates of the CARES Act across government require an exceptional level 
of transparency to ensure the effective and efficient use of the estimated $2.3 
trillion funding, which includes keeping workers paid and employed; enhancing 
health care systems; and stabilizing the economy. Strong implementation plans 
and oversight controls are critical to ensure the use of funds as intended and 
ultimately achieving desired outcomes.  
 
Given the challenges to ETA and the states noted in this report, the actions each 
will need to take to address those challenges, and the magnitude of risk, the OIG 
will conduct extensive oversight to monitor and assess how well these challenges 
are being addressed. The OIG has issued a four-phased oversight plan for this 
purpose.15 Our efforts will include oversight of initial program implementation or 
change rollout; evaluation of intermediate implementation results; assessment of 
final program results; and a summary of overall lessons learned from all major 
impacted programs.  
 
The OIG will continue to monitor and assess DOL’s actions relating to COVID-19, 
as well as any new legislation enacted by Congress. Our Oversight Plan will 
evolve in response to new legislation, as well as to address areas of risk 
identified during the completion of our oversight efforts.  
CONCLUSION 
The rapid deployment of CARES Act funding is critical to help mitigate the impact 
of the COVID-19 pandemic and help workers in need. However, anticipating and 
addressing the increased risk that comes with the expanded funding is vital to 
meeting the intent of the Act. OIG’s prior recommendations in this area can help 
ETA with its risk assessment and response to COVID-19. As our prior audit work 
                                            
15 DOL OIG, “Pandemic Response Oversight Plan,” (Issued April 15, 2020) 

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has shown, rapid fund deployment can result in shortcomings in the effective and 
efficient implementation of stimulus programs and possible misuse of funds. To 
meet the requirements of the CARES Act, states must have sufficient staffing 
and system resources to manage the extraordinary increases in the number of 
claims and payments. The expanded coverage offered under the temporary PUA 
program will pose significant challenges to states as they implement processes 
to determine initial and continued program eligibility. ETA must ensure states 
establish strong controls for determining eligibility and consider past systemic 
weaknesses when developing fraud prevention measures. ETA must also ensure 
states establish procedures to detect and recover any improper payments made 
and redirect the funding to those eligible for the assistance. 
 
Our past audit work has included recommendations made to assist ETA in 
addressing deficiencies identified in these areas. In many cases, ETA 
implemented corrective actions, to include improving the extent of monitoring and 
oversight; and state-level operations and controls. However, as ETA implements 
the relevant CARES Act provisions, more needs to be done to ensure those 
receiving compensation are eligible and receive prompt payment; and to ensure 
overpayments are recovered and redirected to those in need. It is critical that 
ETA considers these areas of concern when implementing the stimulus program 
activities required for managing this unprecedented level of UI claims and 
increase in UI funding. 
 
 
 
 
Elliot P. Lewis 
Assistant Inspector General for Audit 
 
 
 

 
 
 
 
 
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TO THE DEPARTMENT OF LABOR 
 
 
 
 
Online 
http://www.oig.dol.gov/hotline.htm 
 
Telephone 
(800) 347-3756 or (202) 693-6999 
 
Fax 
(202) 693-7020 
 
Address 
Office of Inspector General 
U.S. Department of Labor 
200 Constitution Avenue, NW 
Room S-5506 
Washington, DC 20210

File and source

File

REPORT_DOL-OIG_cares-act-initial-areas-of-concern-regarding-implementation-of-unemplo_2020-04-21.pdf

Size

335,449 bytes

SHA-256

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Our copy

REPORT_DOL-OIG_cares-act-initial-areas-of-concern-regarding-implementation-of-unemplo_2020-04-21.pdf

Original

www.oig.dol.gov