Alert Memorandum: ETA Needs to Issue Guidance to Ensure State Workforce Agencies Provide UI Data to the OIG (DOL OIG, June 2021)

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Summary

An alert memorandum dated June 16, 2021 from the Assistant Inspector General for Audit of the U.S. Department of Labor Office of Inspector General to the Principal Deputy Assistant Secretary for Employment and Training, Report Number 19-21-005-03-315. The memorandum states that the Department's interpretation of 20 CFR § 603.6 and guidance in UIPL 04-17, issued December 16, 2016, limit State Workforce Agencies' mandatory sharing of Unemployment Insurance data to investigations of suspected fraud. It states that this is contrary to the Inspector General Act of 1978 and that the OIG had to issue two subpoenas to each agency, on June 19, 2020 and December 11, 2020, to obtain claim and wage data. It reports that the Employment and Training Administration has committed to issue a new UIPL requiring disclosure for audit purposes through September 6, 2021 and to revise UIPL 04-17.

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Attachment 1 
U.S. Department of Labor 
Office of Inspector General 
Washington, D.C. 20210 
 
 
June 16, 2021    
 
 
 
MEMORANDUM FOR: 
SUZAN G. LEVINE  
Principal Deputy Assistant Secretary for 
  Employment and Training 
 
 
FROM: 
CAROLYN R. HANTZ 
Assistant Inspector General  
  for Audit 
 
 
SUBJECT: 
Alert Memorandum: The Employment and 
Training Administration Needs to Issue 
Guidance to Ensure State Workforce Agencies 
Provide Requested Unemployment Insurance 
Data to the Office of Inspector General  
Report Number: 19-21-005-03-315 
 
The purpose of this memorandum is to alert you to a concern the Office of Inspector 
General (OIG) has determined needs immediate action. Specifically, the Department of 
Labor’s (DOL)  interpretation of federal regulations and the Employment and Training 
Administration’s (ETA) subsequent guidance to State Workforce Agencies (SWA) limit 
the SWAs’ mandatory sharing of Unemployment Insurance (UI) information in only 
those circumstances where the OIG is conducting an investigation into a particular 
instance of suspected UI fraud. This is contrary to the Inspector General Act of 1978 (IG 
Act) which authorizes the OIG to obtain UI information for all purposes (e.g. audit and 
investigative) to prevent and detect fraud, waste and abuse within the UI program. 
Further, contrary to federal regulation, 20 CFR § 603.6, governing ETA’s UI information 
disclosure, ETA’s pre-pandemic guidance set forth in UIPL 04-17, “Disclosure of 
Confidential Unemployment Compensation Information to the Department of Labor’s 
Office of Inspector General,” requires SWAs to enter into an agreement with the OIG 
before any disclosures of confidential UI information.  
 
These disclosure limitations have prevented the OIG from obtaining critical UI claim and 
wage data needed to conduct timely investigative and audit work and fulfill our oversight 
responsibilities. To obtain the data, the OIG has had to issue two Inspector General 
Subpoenas to each SWA to date, on June 19, 2020 and December 11, 2020. Issuing 

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subpoenas to each SWA is a time and labor-intensive effort. The delays associated with 
subpoena issuance versus direct unencumbered access to data equates to the lack of 
detection and prevention of billions of dollars in potentially fraudulent claims at the 
earliest opportunity. 
 
In response to a draft of this memorandum, ETA has committed to corrective action that 
will partly address our concerns. ETA will issue a new UIPL requiring SWAs to disclose 
UI information to the OIG for audit purposes through the end of the period covered by 
the Coronavirus Aid, Relief, and Economic Security (CARES Act), September 6, 2021. 
ETA said the UIPL will note that the data cannot be used for purposes other than audits 
and may not be disclosed outside of the U.S. government. ETA will also revise UIPL 04-
17 to better clarify that SWAs are to share UI information with the OIG for fraud 
investigation purposes at all times, not just limited to the CARES Act period. The new 
and revised UIPLs will also inform SWAs that data sharing agreements are no longer 
required before sharing UI information with the OIG for audits and investigations.  
 
The OIG appreciates ETA’s commitment to corrective action and encourages the 
agency to expeditiously issue the new and revised UIPLs. However, we continue to 
assert that the IG Act requires SWAs provide UI information to the OIG for investigative 
and audit purposes at all times, without any limitations related to the CARES Act period. 
Additionally, the OIG’s use of UI information cannot be constrained by ETA as any 
limitation would also be contrary to the IG Act.   
   
DOL’s Interpretation of 20 CFR § 603.6 (a) Does Not Comport with the IG Act or 
Other Agency Regulations 
 
Based on the DOL Office of the Solicitor’s (SOL) interpretation of 20 CFR § 603.6 (a), 
ETA issued UIPL 04-17 on December 16, 2016. This UIPL explains that pursuant to the 
regulations governing the disclosure of confidential Unemployment Compensation (UC) 
information, SWAs are required to disclose UI information to the OIG “solely for the 
purpose of investigating fraud in the UI program.” The UIPL also requires SWAs to enter 
into an agreement with the OIG’s Office of Investigations “before any disclosures of 
confidential UI information are made. However, ETA has provided no statutory authority 
that contradicts the IG Act and requires the OIG to request and use SWA UI information 
in a piecemeal fashion, or would allow ETA to preclude the OIG’s use of SWA UI 
information for audits. 
 
ETA cited 20 CFR § 603.6 (a) as the regulatory authority for ETA’s guidance to SWAs, 
making SWA disclosure of UI information mandatory for OIG investigations, but not for 
audits. The regulation states:  
 
(a) the Department of Labor interprets Section 303(a)(1), SSA, as 
requiring disclosure of all information necessary for the proper 
administration of the UC program. This includes disclosures to 
claimants, employers, the Internal Revenue Service (for purposes 
of UC tax administration), and the U.S. Citizenship and 

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Immigration Services (for purposes of verifying a claimant's 
immigration status). 
 
ETA applied SOL’s interpretation of this regulatory provision and issued UIPL 04-17, 
instructing the SWAs that: “Since investigations of fraud involving the UC program by 
claimants, employers, and state staff are necessary for the proper and efficient 
administration of the UC program, disclosure of confidential UC information to the DOL 
OIG [Office of Investigations]—solely for the purpose of investigating fraud in the UC 
program—is required.”  However, ETA’s UIPL 04-17, and the regulations at 20 CFR 
603.5 which speaks directly to audits, do not apply the same standard of “necessary for 
the proper and efficient administration of the UC program” to OIG audits; and therefore, 
does not require SWAs to disclose UI information to the OIG for audits.   
 
ETA’s current guidance to SWAs contradicts the IG Act. The OIG has the statutory duty 
and responsibility to conduct, supervise, and coordinate audits and investigations 
relating to DOL’s programs and operations, including all activities carried out by the 
Department for the purpose of preventing and detecting fraud and abuse. The IG Act 
contains no provision inhibiting DOL or the SWAs from sharing of information with the 
OIG, and does not distinguish ETA’s or the SWAs’ obligations with respect to 
information access to any particular component within the OIG. The Department’s 
interpretation of its regulations and subsequent guidance to SWAs has restricted the 
OIG’s ability to effectively and efficiently conduct, supervise, and coordinate audits and 
investigations relating to UI programs and operations within its establishment as 
required under the IG Act.  
 
Further, ETA is contradicting DOL regulations, specifically, where a permissive 
disclosure is made by a state under 20 CFR 603.5, 20 CFR 603.5(i). The regulations 
state, ”The confidentiality requirement does not apply to any disclosure to a Federal 
official for purposes of UC program oversight and audits, including disclosures under 20 
CFR part 601 and 29 CFR parts 96 and 97.” Further, DOL regulations at 29 CFR 
§96.41, “Access to records” states:  
 
The Secretary of Labor, the DOL Inspector General, the Comptroller General of 
the United States, or any of their duly authorized representatives (including 
certified public accountants under contract), shall have access to any books, 
documents, papers, and records (manual and automated) of the entity receiving 
funds from DOL and its subrecipients/subcontractors for the purpose of making 
surveys, audits, examinations, excerpts, and transcripts. [Emphasis added.] 
 
Additionally, the OIG believes ETA cannot require the states to enter into agreements 
with the OIG as a condition precedent to the SWAs disclosure of information to the OIG, 
because it contradicts a Congressionally-enacted statute, the IG Act. Further, the 
requirement contradicts 20 CFR § 603.6 which requires SWAs to disclose UI 
information necessary for the proper administration of the UI program without an 
agreement. The OIG also believes that any state laws that would require such 
agreements would be preempted by federal law, including the IG Act and case law 

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precedence. UIPL 04-17 and ETA’s application of 20 CFR Part 603 creates an obstacle 
to the OIG’s ability to accomplish and execute Congressionally-enacted statutes, 
purposes and objectives under the IG Act.  
 
At the onset of our pandemic related oversight work, ETA asked the OIG to coordinate 
on ETA’s draft guidance to SWAs regarding disclosure of pandemic related UI 
information to the OIG for investigative purposes only. The OIG provided feedback to 
ETA and expressed that its current guidance to SWAs would not permit SWAs to 
provide OIG reoccurring access to SWA UI information for both audits and 
investigations. However, ETA did not amend its prior guidance in UIPL 04-17 and did 
not issue new guidance related to disclosure of pandemic unemployment information to 
the OIG, as it believed it lacked the authority to require SWAs to provide UI claim and 
wage data to the OIG except for limited instances. 
 
Billions of Dollars of UI Funds at Risk 
 
ETA’s guidance to the SWAs encumbered the OIG’s direct access to SWA data, 
creating unnecessary obstacles to the expeditious and efficient use of UI claims and 
wage data to combat fraud. Billions of dollars in potentially fraudulent claims are at risk 
of not being detected and improper payments stopped at the earliest opportunity. For 
example, in June of 2020, the OIG resorted to issuing 54 separate Inspector General 
Subpoenas to SWAs requiring them to provide UI claim and wage data covering the 
period, March through June 2020. It took about four months for all the SWAs to provide 
the data and for our data scientists to follow up with the SWAs to ensure the data was 
complete and in a usable format.  
 
Our investigators, auditors, and data scientists worked together to analyze the data and 
identified $5.4 billion in potentially fraudulent UI benefits paid to individuals with social 
security numbers filed in multiple states, to individuals using social security numbers of 
deceased persons and federal inmates, and to individuals with social security numbers 
used to file for UI claims with suspicious email accounts. We issued an alert 
memorandum notifying ETA it needed to take immediate action and increase its efforts 
to ensure SWAs implement effective controls to mitigate fraud in these high risk areas.1 
ETA agreed and is taking corrective action, including providing our analytics 
methodology and claim specific details to the SWAs for follow-up purposes. However, 
the delays caused by the need to issue subpoenas and the late responses allowed 
months to pass before these corrective actions were initiated. Significant fraud that may 
have been prevented is likely occurring because of the delays. 
 
The significant risk to UI funds is further illustrated by a second round of subpoenas the 
OIG issued to the 54 SWAs on December 11, 2020. These subpoenas required the 
SWAs to provide UI claim and wage data covering the four month period, July 2020 
through October 2020. It took over three months for all the SWAs to provide usable 
                                                            
1 ETA Needs to Ensure SWAs Implement Effective Unemployment Insurance Program Fraud Controls for 
High Risk Areas, Report Number: 19-21-002-03-315 

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data. Our analysis of this data identified an additional $8 billion2 in potential fraud and 
funds put to better use in the same areas discussed in our previously noted alert 
memorandum. Our previous memo recommended establishing effective controls in the 
four areas. This would help to prevent similar or even greater amounts of fraud and 
allow those funds to be put to better use. 
 
The subpoena process is resource and time intensive and results in the delayed 
detection of potentially fraudulent claims. Moreover, SWA follow up to confirm actual 
fraud is also delayed potentially allowing billions of dollars being paid on fraudulent 
claims to continue during the delays. To expeditiously and efficiently combat fraud, the 
OIG needs direct access to each SWAs’ claim and wage data. 
 
ETA Committed to Corrective Action 
 
As noted, in response to our draft memorandum, ETA has now committed to corrective 
action that will partly address our concerns. According to ETA, the CARES Act, passed 
by Congress on March 27, 2020, provides ETA the authority to require SWAs to share 
UI data with the OIG for the purpose of audits, in addition to the UIPL guidance which 
already requires disclosing this information for fraud investigations. ETA stated that 
since their authority is provided by the CARES Act, its new UIPL will only require SWAs 
to disclose UI information to the OIG for audit purposes for weeks of unemployment 
beginning January 27, 2020 through September 6, 2021. ETA stated the UIPL will 
clarify that states are not required to enter into data sharing agreements before sharing 
data with the OIG for audits; and that the information cannot be used for purposes other 
than audits and may not be disclosed outside of the U.S. government.   
 
ETA also stated it would also revise UIPL 04-17, which currently requires SWAs to enter 
into data sharing agreements with the OIG before disclosing information for fraud 
investigations. The revised UIPL will notify SWAs that they are no longer required to 
enter into such agreements when sharing UI information with the OIG for fraud 
investigations. The revised UIPL will also make clear that SWAs are required to share 
confidential UC information with the OIG for fraud investigation purposes at all times, 
and not just limited to the CARES Act period.  
 
The OIG appreciates ETA taking action to require SWAs to provide UI information for 
audit purposes. However, we continue to assert that the IG Act requires SWAs provide 
UI information to the OIG for audit purposes at all times, without any limitations related 
to the CARES Act or any other periods. Further, the OIG’s use of UI information cannot 
be constrained by ETA as any purported limitation to OIG activities by an agency would 
also be contrary to the IG Act. We believe that the IG Act, Social Security Act, and 
current DOL regulations permit ETA to amend its guidance to SWAs to require the 
                                                            
2  For the period March 2020 to October 2020, our analysis of total potential fraud paid to individuals with 
social security numbers filed in multiple states, individuals with social security numbers of deceased 
persons and federal inmates, and individuals with social security numbers used to file claims with 
suspicious email accounts has amounted to $17 billion. To prevent double counting, we excluded 
duplicates totaling $9 billion. (See Attachment 1) 

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provision of UI claim and wage data to the OIG for use in our audits and investigations. 
As such, SOL’s interpretations and ETA’s planned guidance will continue to: (1) restrict 
OIG’s independence; (2) impede OIG’s access to critical UI information; and (3) hamper 
the OIG’s timely accomplishment of its mission. 
 
Legislation Authorizing Additional UI Funding 
 
The CARES Act and subsequent legislation have authorized approximately $872.5 
billion in UI funds to assist American citizens with pandemic-related employment issues 
and challenges. This includes approximately $202 billion added by the American 
Rescue Plan Act on March 11, 2021. The OIG is concerned UI program fraud and other 
related improper payments will continue to increase at an alarming and historical rate.  
 
ETA’s role is vital in ensuring SWAs disclose all UI information that will assist with the 
OIG’s mission to effectively identify fraud, waste and abuse in one of the Department’s 
most pressing programs, particularly under the CARES Act and subsequent legislation. 
In order for the OIG to prevent and mitigate further improper and fraudulent payments 
occurring in the UI program, ETA must remove any data access restrictions stated or 
implied in the regulations and UIPL 04-17 and require SWAs to comply with requests for 
UI data from the OIG without need for the OIG to issue a subpoena for every disclosure. 
In addition to access to historical UI data from SWA systems, we believe that real-time 
direct access to UI data would further assist the OIG to effectively and efficiently identify 
large-scale fraud, and expand its current efforts to share emerging fraud trends with 
state workforce partners in order to strengthen the UI program and likely prevent fraud 
before it occurs.  
 
ETA has committed to continuing to work with the OIG to find ways to help the OIG 
obtain the data it needs to conduct audits and fraud investigations of the UI program 
after the conclusion of the UI programs authorized by the CARES Act up to and 
including consideration of amending 20 CFR 603.5 and 603.6(a) through the rulemaking 
process. We look forward to continuing to work collaboratively with ETA, SWAs, and 
Congress to improve the efficiency and integrity of the UI program.  
  
Recommendations 
 
We recommend the Principal Deputy Assistant Secretary of Employment and Training: 
 
1. Amend 20 CFR 603.5 and 603.6(a) through the rulemaking process to 
reinforce that UI information must be provided to DOL OIG for all IG 
engagements authorized under the IG Act, including audits, evaluations, and 
investigations. 
 
2. Issue a new UIPL within 15 days of this memorandum to instruct SWAs that 
disclosure of information to the OIG for audits, evaluations, and investigations 
is mandatory without need for a subpoena, and that the OIG will notify SWAs 

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directly of current and future information disclosure requirements, to include 
data elements. 
 
3. Ensure the new UIPL guidance advises SWAs that they may not require the 
OIG to enter into data sharing agreements as a prerequisite to disclosure of 
information to the OIG for audits, consistent with the IG Act and federal law. 
 
4. Ensure revisions to UIPL 04-17 advise SWAs that data sharing agreements 
are not required when sharing UI claim and wage data with the OIG for fraud 
investigations. The revised UIPL should make clear that SWAs shall share UI 
claim and wage data with the OIG for fraud detection and investigative 
purposes, not limiting the sharing to investigations into a particular instance of 
suspected UI fraud. 
 
5. Continue to work with the OIG, and within 30 days of the memorandum, meet 
with the OIG to develop a permanent approach for OIG access to UI data. 
 
ETA provided us their response to the draft alert memorandum and recommendations.  
We have included ETA’s response to the alert memorandum. (See Attachment 2)  
 
 
Attachments 
 
cc: Jim Garner, Acting 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 
 
 

Attachment 1 
Funds for Better Use3 
Description 
Amount 
Area of Issue 
Page of Issue 
Reductions in future outlays: 
 
 
 
Multi-State Claimants 
$ 12,100,212,752 
SWA Controls 
5 
Social Security Numbers of the 
Deceased 
$105,184,399 
SWA Controls 
5 
Federal Prisoners 
$ 303,355,002 
SWA Controls 
5 
Suspicious E-mail Accounts 
$ 4,463,947,258 
SWA Controls 
5 
Total Reductions in Future4 
Outlays 
16,972,699,411 
 
 
  Total and Net Funds for Better Use: 
 
 
Total Funds for Better Use 
$ 16,972,699,411 
 
 
Less Duplicative Funds for 
Better Use5 
$8,986,673,794 
 
 
Net Funds for Better Use 
$ 7,986,025,617 
 
 
 
 
 
                                                            
3 As defined by the Inspector General Act, “funds for better use” means funds that could be used more 
efficiently or achieve greater program effectiveness if management took certain actions. These actions 
include reduction in future outlays and deobligation of funds from programs or operations. 
 
4 These dollar amounts represent the Office of Investigation’s analysis of fraudulent payments associated 
with Multi-State claimants, Social Security numbers of the deceased, Federal prisoners, and Suspicious 
Email Accounts for the period of March – October 2020.  
 
5 Duplicative funds for better use are any item of funds identified under more than one category include 
reduction in future outlays and deobligation of funds. The $8,986,673,794 in duplicates consists of 
$914,699,057 in data provided by the SWAs in response to the second subpoena, $5,409,966,198 
previously reported in Report Number 19-21-002-03-315 (issued February 22, 2021), and $2,662,008,539 
included in the $39.2 billion reported in Report Number 19-21-004-03-315 (issued May 28, 2021). 
 

Attachment 2 
 
 
 

Attachment 2 
 
 
 
 
 

Attachment 2 
 
 
 
 
 

Attachment 2

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