Alert Memorandum — PUA Self-Certification Renders $110 Billion Program Vulnerable to Fraud

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An alert memorandum dated May 26, 2020 from the U.S. Department of Labor Office of Inspector General's Assistant Inspector General for Audit to the Assistant Secretary of the Employment and Training Administration, Report Number 19-20-002-03-315. It raises a concern that Pandemic Unemployment Assistance benefits under the CARES Act rest on claimant self-certification, with costs estimated at nearly 110 billion dollars. The memorandum contrasts ETA guidance with Disaster Unemployment Assistance rules at 20 C.F.R. § 625.6(e)(1), which require documentation of wages within 21 days. The OIG states that reliance on self-certification alone leaves the program highly vulnerable to improper payments and fraud. It suggests ETA seek clarification from Congress or use tools under § 2104(f), and requests a written response by June 2, 2020.

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U.S. Department of Labor 
Office of Inspector General 
 
 
Washington, D.C. 20210 
 
 
 
 
Working for America’s Workforce 
May 26, 2020 
 
 
 
 
MEMORANDUM FOR: 
JOHN P. PALLASCH 
 
 
 
 
Assistant Secretary of Employment and Training  
 
 
 
 
Administration 
 
      
 
 
FROM: 
 
 
ELLIOT P. LEWIS 
 
 
 
 
Assistant Inspector General Office of Audit 
 
SUBJECT: 
Alert Memorandum: The Pandemic 
Unemployment Assistance Program Needs 
Proactive Measures to Detect and Prevent 
Improper Payments and Fraud 
 
Report Number: 19-20-002-03-315   
 
 
 
The purpose of this memorandum is to alert you to a concern we identified during 
our ongoing audit of the Department of Labor’s (DOL) response to the 
Unemployment Insurance (UI) Program’s expansion under the CARES Act. 
 
The CARES Act’s Pandemic Unemployment Assistance (PUA) program 
expanded UI eligibility to individuals who are not typically qualified to receive 
such benefits. To establish eligibility, the CARES Act requires individuals to self-
certify that they have lost employment income due to a COVID-19 related reason 
specified within the statute. This self-certification renders the individual eligible to 
receive payments immediately.  
 
Costs for PUA benefits are currently estimated to total nearly 110 billion1 dollars. 
The associated risk of improper payments and fraud is significant, as the UI 
program historically experiences some of the highest improper payment rates 
within the federal government. The Office of Inspector General (OIG) believes 
state’s reliance on self-certifications alone to ensure eligibility for PUA will lead to 
increased improper payments and fraud. 
                                                 
1 This includes an estimated $61.5 billion for the Federal Pandemic Unemployment 
Compensation (FPUC) portion of the PUA program. 

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PUA Self-Certification 
 
The CARES Act (§ 2102(a)(3)) provides PUA coverage to individuals who are not 
normally eligible for UI benefits and who self-certify that they are able and 
available for work but are unemployed due to a COVID-19 related reason. This 
includes individuals who: have exhausted eligibility for regular UI benefits; are 
self-employed; are gig workers; are members of clergy; or were not previously 
covered by UI programs. Claimants must self-certify one of the criteria identified 
within § 2102 applies to be eligible for PUA benefits. Claimants generally self-
certify by checking a box next to a qualifying criterion on the form submitted to 
state workforce agencies. The individual is also required to acknowledge a 
warning that intentional misrepresentation to obtain PUA benefits constitutes 
fraud. 
 
The following are examples of COVID-19 related reasons that qualify individuals 
for PUA program benefits:  
 
• place of employment is closed as a direct result of COVID-19; 
• unable to reach place of employment due to COVID-19; 
• was scheduled to commence employment but does not have a job as a 
direct result of COVID-19; 
• was diagnosed with COVID-19 or has experienced symptoms and is 
seeking medical diagnosis; 
• providing care for a family or household member who has been diagnosed 
with COVID-19; or  
• a child or other household member for which the individual has primary 
caregiving responsibility is unable to attend school or another facility that 
is closed due to COVID-19. 
 
Individuals who qualify for PUA per CARES Act § 2102 are eligible to receive 
weekly benefits equivalent to the state’s regular unemployment compensation 
plus an additional $600 weekly payment under CARES Act § 2104.  
 
Disaster Unemployment Assistance Program Requirements Apply to PUA 
  
The CARES Act (§ 2102(h)) states that federal regulations2 governing the 
Disaster Unemployment Assistance (DUA) program apply to the PUA program 
unless there is a conflict between the regulations and CARES Act § 2102, or an 
express provision in § 2102 applies. The DUA regulations at 20 C.F.R. § 625.6(e) 
require states to immediately determine eligibility upon an initial application 
based on the individual’s statement of employment/self-employment.  
Furthermore, states are required to make an immediate determination of a 
                                                 
2 20 C.F.R § 625.6 

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weekly benefit amount (WBA) based on documentation provided, at the time of 
initial application, or if not available, on any state agency records of employment 
or self-employment and related earnings; or on an individual’s statement of 
employment or self-employment wages earned. DUA regulations at 20 C.F.R. 
§ 625.6(e)(1) state that individuals receiving a benefit payment based solely on 
the claimant’s statements are required to submit documentation to substantiate 
employment or self-employment wages within 21 days of the initial filing. 
Documentation accepted to validate DUA program eligibility include: 
   
• pay stubs, 
• business records, 
• business licenses, 
• tax returns, and 
• letters or email from an employer acknowledging the individual was    
scheduled to commence employment. 
 
Under the DUA regulations at 20 C.F.R. § 625.6(e)(2), an individual who fails to 
submit documentation to substantiate their statements regarding employment or 
self-employment wages is determined ineligible for the payment of benefits for 
any week of unemployment covered by the disaster declaration. 
 
The DUA and PUA programs are similar in that they both allow self-certification 
of employment/self-employment and associated wages. However, the CARES 
Act is silent on what should occur if an individual fails to submit documentation to 
support the claimant’s WBA. The OIG believes the provisions under DUA 
regulation 20 C.F.R. § 625.6(e)(1) apply and do not conflict with the PUA 
requirement that eligible claimants receive payments without a waiting period. 
Rather, OIG believes the aforementioned DUA regulation works in conjunction 
with the state agency requirements to justify the continuation of program benefits 
and the WBA.  
 
Authority to Apply Wage Determination Requirements of 20 C.F.R. 
§ 625.6(e)(2) 
 
Employment and Training Administration (ETA) guidance3 interpreting the 
CARES Act provides that the Act’s self-certification provision is sufficient in and 
of itself to establish entitlement to payment of initial benefits and the WBA. ETA 
maintains it lacks the authority to add additional criteria regulating the payment of 
the WBA. Consistent with this position, ETA issued guidance in April 2020 that 
                                                 
3UIPL 16-20 Change 1, entitled Coronavirus Aid, Relief, and Economic Security (CARES Act) of 
2020 –Pandemic Unemployment Assistance (PUA) Program Reporting Instructions and 
Questions and Answers 

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specifically informed states that the DUA regulations4 requiring employment 
documentation (including earnings) do not apply to the PUA program5.  
 
As ETA’s implementation of the PUA program currently stands, any individual 
may initially self-certify without evidence of wages earned and be approved for 
payment in accordance with the state’s UI regulations. If the individual fails to 
provide documentation within 21 days, they are not rendered ineligible for PUA 
benefits.6 Consequently, an individual could continue to receive an average of 
$775 per week based solely on an initial undocumented self-certification 
statement that one of the COVID-19 related reasons were met; and by 
acknowledging any intentional misrepresentation to obtain PUA benefits 
constitutes fraud.  
 
OIG is issuing this Alert Memorandum because states need to implement 
measures, such as requiring claimants to document earnings to substantiate the 
initial WBA determination, to establish and maintain integrity in the PUA program. 
We believe that reliance solely on claimant self-certifications without evidence of 
eligibility and wages renders the PUA program highly vulnerable to improper 
payments and fraud. Without additional tools such as those that already exist 
under the DUA regulations cited in this alert, the PUA program presents  
substantial risks of the likelihood of loss of millions of taxpayer dollars. 
Recognizing that ETA and the DOL Office of the Solicitor disagree with our 
assessment based upon their interpretation of the Act and underlying regulations 
– and given the UI program’s previously reported vulnerability to improper 
payments and the high risk of fraud – we suggest ETA seek additional guidance 
or clarification from Congress concerning whether a claimant is entitled to 
establish and continue to receive PUA payments without providing 
documentation at any point to support a WBA determination. Alternatively, we 
recommend ETA consider tools already available under the CARES Act such as 
those cited in § 2102(a)(3)(A)(i)(I)(kk) or § 2104(f)7 and change its guidance; or 
request legislative action to curtail improper or fraudulent PUA payments. 
 
                                                 
4 20 C.F.R  § 625 
5 See footnote 3 
6 Claimants will continue to receive payments at the minimum weekly benefit amount. This 
amount currently averages $175 plus the additional Federal Pandemic Unemployment 
Compensation (FPUC) amount of $600.  
7 § 2102(a)(3)(i)(I)(kk) states a covered individual means an individual who provides self-
certification that the individual is able to work and available to work within the meaning of 
applicable state law, except the individual is unemployed because the individual meets additional 
criteria established by the Secretary for unemployment assistance under this section.  § 2104 
states if an individual has knowingly made a false statement or material fact and as a result the 
individual receives FPUC then the individual is ineligible for further FPUC. 

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We would appreciate your written response addressing this alert memorandum 
and its recommendation by June 2, 2020. If you have any questions, please 
contact Dwight Gates, Audit Director, at (678) 637-4659. 
 
cc:  Gay Gilbert, Administrator, Office of Unemployment Insurance 
 
Jim Garner, Deputy Administrator, Office of Unemployment Insurance 
 
Laura P. Watson, Administrator, Office of Grants Management 
 
Greg Hitchcock, Special Assistant, Office of Grants Management 
 
Julie Cerruti, Audit Liaison

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