Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High-Risk Areas Increased to $45.6 Billion (DOL OIG, September…

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An alert memorandum issued September 21, 2022 by the U.S. Department of Labor Office of Inspector General to the Acting Assistant Secretary for Employment and Training, Report Number: 19-22-005-03-315. It reports that potentially fraudulent unemployment insurance pandemic benefits identified in high-risk areas rose to $45.6 billion for March 2020 to April 2022, an increase of $29.6 billion over the more than $16 billion reported earlier. A table gives $28,967,047,154 for multistate claimants, $139,483,136 for deceased persons, $16,265,578,304 for suspicious email accounts and $267,382,013 for federal prisoners. The memorandum states the Employment and Training Administration has not taken sufficient action on prior recommendations and describes delays in obtaining state data under 20 C.F.R. Part 603.

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U.S. Department of Labor 
Office of Inspector General 
 
 
Washington, D.C. 20210 
 
Working for America’s Workforce 
September 21, 2022 
 
 
 
MEMORANDUM FOR: 
BRENT PARTON 
 
 
 
 
Acting Assistant Secretary 
  for Employment and Training 
 
                                          
 
FROM: 
 
 
CAROLYN R. HANTZ 
Assistant Inspector General 
  for Audit 
 
 
SUBJECT: 
Alert Memorandum: Potentially Fraudulent 
Unemployment Insurance Payments in 
High-Risk Areas Increased to $45.6 Billion 
 
Report Number: 19-22-005-03-315 
 
The purpose of this memorandum is to alert you to concerns the Office of 
Inspector General (OIG) has determined needs immediate action. In 
February1 and June2 2021, the OIG issued alert memoranda to the Employment 
and Training Administration (ETA) that cumulatively identified more than 
$16 billion3 in potentially fraudulent unemployment insurance (UI) pandemic 
benefits paid in four specific high-risk areas, to individuals with Social Security 
numbers: (1) filed in multiple states, (2) of deceased persons, (3) used to file UI 
claims with suspicious email accounts, and (4) of federal prisoners. Since then, 
the OIG has identified an increase of $29.6 billion in potentially fraudulent 
                                            
1 Alert Memorandum: The Employment and Training Administration (ETA) Needs to Ensure State 
Workforce Agencies (SWA) Implement Effective Unemployment Insurance Program Fraud 
Controls for High Risk Areas, Report No. 19-21-002-03-315 (February 22, 2021), available at: 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf  
2 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 No. 19-21-005-03-315 (June 16, 2021), available at: 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf 
3 The two alert memoranda to ETA identified a cumulative total of nearly $17 billion, including 
about $915 million in potential fraud that was identified under more than one area, resulting in 
more than $16 billion paid in potentially fraudulent UI benefits. 

 
 
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payments within three of the areas4 previously analyzed, raising the cumulative 
total for these high-risk areas to $45.6 billion.5  
 
The total potential fraud covers the period of March 2020 to April 2022. 
In 2021, the OIG shared with ETA the data and methodology used to identify 
potential fraud as well as recommended ETA take corrective actions and 
implement controls that would help mitigate and prevent fraud from occurring 
within the high-risk areas of the UI program. Specifically, in February 2021, the 
OIG recommended ETA: (1) establish effective controls, in collaboration with 
State Workforce Agencies (SWA or state), to mitigate fraud and other improper 
payments to ineligible claimants; and (2) work with Congress to establish 
legislation requiring SWAs to cross-match high-risk areas. As of the date of this 
alert memorandum, ETA has not taken sufficient action to implement these 
recommendations.  
 
ETA’s lack of sufficient action significantly increases the risk of even more 
UI payments to ineligible claimants. Our identification of the additional potentially 
fraudulent payments emphasizes the need for increased ETA engagement and 
assistance to mitigate fraud and protect the UI program’s integrity. 
 
Despite the OIG’s continued efforts to identify potentially fraudulent payments to 
ineligible claimants, we continue to experience delays in obtaining the needed UI 
data. These delays impede our ability to perform our statutory duty to effectively 
and timely conduct audits and investigations of the UI program. The Department 
of Labor’s (DOL or the Department) reading of applicable federal regulations, 
which ETA has adopted, contributes to the delays. Specifically, the Department 
interprets regulations at 20 Code of Federal Regulations (C.F.R.) Part 603 as 
prohibiting ETA from informing SWAs they are required to provide UI data to the 
OIG for both audit and investigative purposes. Under the Coronavirus Aid, Relief, 
and Economic Security (CARES) Act and the American Rescue Plan Act of 2021 
(ARPA), ETA issued guidance providing for both audit and investigative access, 
but only on a temporary basis.6 This interpretation and subsequent guidance to 
                                            
4 For this current alert memorandum and analysis, the OIG did not have access to the 
Department of Justice’s Bureau of Prisons (BOP) data to determine the increase in potentially 
fraudulent payments. Therefore, the $45.6 billion only includes the BOP amount reported in the 
June 2021 alert memorandum. 
5 This $45.6 billion is comprised of benefits paid to claimants from March 2020 through 
April 2022, in accordance with the Coronavirus Aid, Relief, and Economic Security Act, American 
Rescue Plan Act of 2021, and Consolidated Appropriations Act, 2021. 
6 UIPL No. 04-17, Change 1, Requirement for States to Refer Allegations of Unemployment 
Compensation (UC) Fraud, Waste, Abuse, Mismanagement, or Misconduct to the Department of 
Labor’s (Department) Office of Inspector General’s (DOL-OIG) and to Disclose Information 
Related to the Coronavirus Aid, Relief, and Economic Security (CARES) Act to DOL-OIG for 
Purposes of UC Fraud Investigation and Audits, issued August 3, 2021; UIPL No. 22-21, Grant 
Opportunity to Support States with Fraud Detection and Prevention, Including Identity Verification 
and Overpayment Recovery Activities, in All Unemployment Compensation (UC) Programs, 
issued August 11, 2021. 

 
 
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SWAs contradict the Inspector General Act of 1978, as amended (IG Act), § 
6(a)(1) and § 6(a)(3), which authorizes mandatory OIG access to DOL grantee 
information, including state UI data. 
 
In our June 2021 alert memorandum, we recommended ETA amend 
20 C.F.R. § 603.5 and § 603.6(a) through the rulemaking process to reinforce 
that state UI information must be provided to the OIG for all Inspector General 
engagements authorized under the IG Act, including audits, evaluations, and 
investigations. ETA implemented a temporary solution.  
 
In August 2021, ETA issued Unemployment Insurance Program Letter (UIPL) 
No. 04-17, Change 1, requiring states to disclose UI data to the OIG for audits 
and investigations during the pandemic period.7 ETA also awarded fraud 
prevention grants to states conditioned on requiring OIG access to their UI data 
for audit and investigative purposes through December 31, 2023.8 However, 
ETA’s actions were not sufficient to resolve the OIG’s concerns regarding 
unimpeded access to SWA UI data.  
 
In response to our recommendation, ETA informed us it is considering 
comprehensive updates to 20 C.F.R. Part 603. Although we met with ETA 
numerous times and requested a written plan with projected timelines, none was 
provided until July 2022, more than one year after we made the 
recommendation. The Department estimates the projected effective date of the 
updated regulations will be in February 2025, creating a 14-month gap from the 
December 31, 2023, expiration of the grants that temporarily expanded OIG 
access.9 During this 14-month period, the OIG’s access to state UI data will 
again be impeded, in violation of the IG Act.  
 
Although ETA stated it is exploring options for interim solutions to close the gap, 
the lack of timely, affirmative plans prevents us from ensuring the continued 
availability of data critical to identifying additional fraudulent UI benefit payments. 
ETA needs to amend its regulations and immediately issue guidance to notify 
states of the OIG’s authority to access information for both audits and 
investigations without interruption or impediment.10 While ETA issued guidance 
to states on September 15, 2022, asserting the OIG’s authority to access state UI 
                                            
7 UIPL No. 04-17, Change 1, defined the pandemic period as approximately from 
January 27, 2020, to September 6, 2021. 
8 See footnote 6. 
9 UIPL No. 22-21, Grant Opportunity to Support States with Fraud Detection and Prevention, 
Including Identity Verification and Overpayment Recovery Activities, in All Unemployment 
Compensation (UC) Programs, issued August 11, 2021 
10 The Supreme Court of the United States has upheld the Department’s authority to revise 
interpretations of its own regulations in this manner—see Perez v. Mortg. Bankers Ass’n, 
575 U.S. 92, 100 (2015)—as well as the principle that changes in interpretations are valid, 
provided they are consistent with the underlying regulations. See Shalala v. Guernsey Mem’l 
Hosp., 514 U.S. 87, 100–02 (1995). 

 
 
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data, the guidance does not require states to provide the OIG with such access. 
ETA has authority to reinterpret 20 C.F.R. Part 603 in order to facilitate the OIG’s 
access during the 14-month period that 20 C.F.R. Part 603 is being amended.11 
 
Potentially Fraudulent UI Benefits Continue to Increase in High-Risk Areas  
 
The OIG estimates a total of $872.5 billion in pandemic-related UI funding since 
the COVID-19 pandemic began in March 2020.12 In our June 2021 alert 
memorandum, the OIG utilized UI data from March 2020 to October 2020 to alert 
ETA to more than $16 billion13 in potentially fraudulent UI pandemic benefits paid 
in four specific high-risk areas, to individuals with Social Security numbers: 
(1) filed in multiple states, (2) of deceased persons, (3) used to file UI claims with 
suspicious email accounts, and (4) of federal prisoners. 
 
In August 2021, the OIG issued another request for updated data to ETA and 
SWAs via an OIG Form 202 request,14 and once received, analyzed data 
covering pandemic benefits paid during the period of March 2020 through 
April 2022. Our analysis identified a total of $45.6 billion15 paid in potentially 
fraudulent UI benefits, with increases in three of the aforementioned four 
high-risk areas (see Table 1). Those areas include payments to individuals with 
Social Security numbers: (1) filed in multiple states, (2) of deceased persons, and 
(3) used to file for UI claims with suspicious email accounts.  
 
As previously stated, the OIG does not have current federal prisoner data. The 
OIG requested updated prisoner information from the U.S. Department of 
Justice, Federal Bureau of Prisons (BOP) for the pandemic period, but BOP 
declined “due to the burden created on BOP’s resources and technological 
platform, which BOP prioritized for BOP operational requirements.” However, we 
and other federal OIGs are currently working with BOP to determine if their 
policies and procedures can be expanded to sharing data with other OIGs. As a 
                                            
11 This would be consistent with the Administrative Procedure Act and the plain language of the 
regulations. Specifically, 20 C.F.R. § 603.5(i) and § 603.6(a) and 29 C.F.R. § 96.41, when read 
consistently with one another and with the IG Act, require SWAs to disclose UI information for 
audits, evaluations, and investigations. 
12 Reported on the DOL OIG’s public-facing website at 
https://www.oig.dol.gov/doloiguioversightwork.htm (last updated on June 13, 2022, at the time of 
this memorandum’s issuance), and in the OIG’s Pandemic Response Oversight Plan (updated 
March 21, 2022), which is available at: 
https://www.oig.dol.gov/public/oaprojects/Updated%20Pandemic%20Response%20Oversight%2
0Plan%202022%20for%20Publication.pdf. 
13 The $16 billion does not include about $915 million in potential fraud that was identified under 
more than one area. 
14 Form 202 is the Notification of OIG Requirement for DOL Electronic Information form used to 
request recurring information from each SWA. 
15 The OIG will share with ETA the data and methodology used to identify this potential fraud so 
that ETA can share the methodology with the SWAs to assist with fraud mitigation and 
identification.  

 
 
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result of the lack of updated data, the total dollar amount for federal prisoners 
remained the same from our previous analysis of prisoner data.  
 
Table 1: High-Risk Data Comparison between June 2021 and 
April 2022 
 
High-Risk Area 
Total Potential Fraud 
Reported in June 202116 
Total Potential Fraud 
Reported through 
April 2022 
Multistate Claimants 
$12,100,212,752 
$28,967,047,154 
Deceased Persons 
$94,562,937 
$139,483,136 
Suspicious Emails 
$3,595,842,652 
$16,265,578,304 
Federal Prisoners17 
$267,382,013 
$267,382,013 
Total 
$16,058,000,354 
$45,639,490,607 
Source: SWA data acquired, aggregated, and interpreted by the OIG Data Analytics team. Total 
amounts do not include duplicates that were identified in one or more areas. The total duplicate 
amount is $7,399,611,229, including duplicates identified from previous Federal Prisoner amount 
reported in the June 2021 alert memorandum.  
 
Multistate Claimants 
 
According to the CARES Act, a claimant who worked in more than one state and 
became unemployed due to COVID-19-related reasons can only collect 
UI benefits in one state. The OIG reviewed UI pandemic benefits paid from 
March 2020 to April 2022 to individuals with Social Security numbers filed in two 
or more states, resulting in benefits collected from more than one state. This 
analysis revealed individuals used a total of 991,793 Social Security numbers to 
receive potentially fraudulent UI benefits totaling more than $28.9 billion. 
 
Deceased Persons 
 
We determined 205,766 Social Security numbers of deceased persons were 
used to file claims for UI pandemic benefits. To identify potentially fraudulent 
benefit payments, the OIG identified cases where benefit claims were submitted 
after the date of death associated with certain Social Security numbers. Scrutiny 
                                            
16 The total benefits amounts reported in this memorandum includes the total cumulative amount 
reported in 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 No. 19-21-005-03-315 (June 16, 2021), available 
at: https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf. 
17 The OIG did not have access to BOP data to conduct additional analysis for this memorandum. 
The amount remains the same as what we reported in the June 2021 alert memorandum. 

 
 
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of the data identified $139.4 million in potentially fraudulent benefits paid to 
claimants using these Social Security numbers.  
 
Suspicious Email Accounts 
 
We found potentially fraudulent UI benefits were paid to individuals using Social 
Security numbers to file claims with suspicious email accounts. The OIG 
identified several methods for using certain types of email accounts to aid in 
suspected fraudulent UI claims. These particular account types enable users to 
establish email addresses that can hide personal information, including the user’s 
identity. The suspicious email addresses can also be used to apply for multiple 
UI claims.  
 
Email service providers that supplied accounts offering anonymity were used 
extensively to file UI claims. In total, we determined 1,714,188 Social Security 
numbers associated with suspicious email addresses were used to file for 
$16.2 billion in UI benefits. 
 
Federal Prisoners 
 
As previously reported in the June 2021 alert memorandum, we found Social 
Security numbers of potentially ineligible federal prisoners were used to file for 
UI claims that paid out more than $267.3 million in UI benefits. ETA needs to 
ensure SWAs implement controls that can cross-match federal prisoner UI data 
to mitigate fraud. As previously mentioned, due to the OIG not having current 
federal prisoner data, there is no updated data as of the issuance of this 
memorandum. 
 
The OIG Continues to Experience Delays in Obtaining UI Data from SWAs  
 
Since the CARES Act was implemented in March 2020, we have worked to gain 
timely access to SWA UI data in an effort to prevent and detect fraud, waste, and 
abuse in the UI program. Through its endeavors, the OIG encountered numerous 
issues, including: (1) SWAs not providing access for each request, until 
subpoenas were issued to each SWA, (2) the OIG receiving data months after 
the request, and (3) the OIG receiving unusable and incomplete data.  
 
In addition, we encountered difficulties obtaining data after ETA issued guidance 
directing SWAs to disclose UI data to the OIG. For example, some SWAs had 
difficulty creating a data connection or encrypting data, and some SWA 
management assumed the request was handled and did not follow up with their 
technical staff. Figure 1 illustrates the timeline of OIG data requests via 
subpoenas and via Form 202 to SWAs, as well as the responses from SWAs. 
 

 
 
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Figure 1: Timeline of OIG Data Requests and Inspector General Subpoenas 
 
 
Source: Based on OIG – Office of Investigations communication with ETA and SWA officials 
 
As previously stated, upon eventual receipt of SWA data, we encountered 
instances where data files were not in the requested format, were incomplete, or 
were not the data required by the OIG. Each SWA also manages recurring data 
submissions to the OIG differently, which poses a risk to the OIG when analyzing 
UI data timely and accurately. Unfettered access to SWA UI data would help 
mitigate the delays experienced by the OIG when requesting data and enable the 
OIG to more efficiently conduct fieldwork and issue reports timely. Unfettered 
access to UI data would also significantly reduce the time and resources that 
SWAs expend on recurring data transfers to the OIG. 
 
The Department’s Guidance Interpreting 20 C.F.R. § 603.5 and § 603.6 Is 
Inconsistent with the Inspector General Act of 1978, as amended,18 and 
with 29 C.F.R. 96.41 
 
The Department’s guidance19 interpreting its unemployment compensation 
program regulations20 is inconsistent with the IG Act to the extent it only affords 
the OIG restricted access to UI data. The IG Act requires the OIG to have timely 
access to all records related to programs it oversees. DOL’s UI disclosure 
                                            
18 Inspector General Act of 1978, as amended, Pub. L. 95-452, 5 U.S.C. App. 3, § 2(2)-(3). 
19 UIPL No. 04-17 is the primary source of this impermissible interpretation; however, 
UIPL No. 04-17, Change 1, and UIPL No. 22-21 also interpret 20 C.F.R. Part 603 inconsistently 
with the IG Act. 
20 Federal-State Unemployment Compensation (UC) Program; Confidentiality and Disclosure of 
State UC Information, 20 C.F.R. §603.5 and § 603.6 (2021) 

 
 
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regulations require SWAs to disclose “all information necessary for the proper 
administration of the UC program.”21 The OIG maintains disclosures for OIG 
purposes (i.e., for audits, evaluations, and investigations) are mandatory. 
Consequently, the Department must construe and apply its regulations22 
consistently with the IG Act’s oversight mandate.23  
 
The Department’s interpretation24 of this regulation prior to August 2021 only 
required SWAs to disclose UI data to the OIG upon request when the OIG was 
conducting an investigation into a particular instance of suspected UI fraud. In 
subsequent guidance25 the Department interpreted the regulation consistently 
with the IG Act, by requiring SWAs to provide the OIG ongoing, recurring access 
to UI information for both investigations and audits. However, this new 
interpretation was temporary, lasting initially only through the end of the 
pandemic period (September 2021)26 and currently only until 
December 31, 2023,27 when the period of performance for SWA fraud prevention 
grants expires.  
 
The Department’s interpretation of other 20 C.F.R. Part 603 provisions28 also 
contradicts the subsequent guidance to SWAs29 as well as the IG Act and other 
applicable regulations30 authorizing OIG unimpeded access to state UI data. 
20 C.F.R. § 603.5(i) permits SWAs to disclose confidential UI information “to a 
federal official for purposes of UC program oversight and audits.31 As applied by 
the Department, this regulation does not require SWAs to comply with the IG Act 
or other applicable regulations requiring the OIG’s timely and complete access to 
state UI program information for audits.32 Without changes to remove ambiguities 
from 20 C.F.R. § 603.5(i), or adjustments to the Department’s interpretation of it, 
                                            
21 20 C.F.R. § 603.6(a) 
22 20 C.F.R. § 603.6(a) 
23 Inspector General Act of 1978, as amended, Pub. L. 95-452, 5 U.S.C. App. 3, § 2(2)-(3) (the 
OIG is required “to promote the economy, efficiency, and effectiveness in the administration of” 
DOL programs and to keep the Secretary and Congress “fully and currently informed about 
problems and deficiencies relating to the administration of such programs”) 
24 UIPL No. 04-17 (December 16, 2016) interpreting 20 C.F.R. § 603.6(a) 
25 UIPL No. 04-17, Change 1 (August 3, 2021); UIPL No. 22-21 (August 11, 2021) 
26 UIPL No. 04-17, Change 1 (August 3, 2021) 
27 UIPL No. 22-21 (August 11, 2021) 
28 UIPL No. 04-17 (December 16, 2016) interpreting 20 C.F.R. § 603.5(i) 
29 UIPL No. 04-17, Change 1 (August 3, 2021); UIPL No. 22-21 (August 11, 2021) 
30 Audit Requirements for Grants, Contracts, and Other Agreements, 29 C.F.R. § 96.41 (2021) 
31 This expressly includes disclosures under 29 C.F.R. § 96.41. 
32 29 C.F.R. § 96.41 provides that the Secretary and the OIG “shall have access to any books, 
documents, papers, and records (manual and automated) of the entity receiving funds from DOL 
and its sub-recipients/subcontractors for the purpose of making surveys, audits, examinations, 
excerpts, and transcripts.” 

 
 
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the regulation will continue to impede OIG access authorities by preventing the 
OIG from requiring SWAs to disclose UI information for audits.33 
 
In response to a draft of this alert memorandum, ETA stated: “The regulations 
permit, but do not require, states to provide such data to the OIG for audit 
purposes.” ETA also stated that this “does not prevent the OIG from enforcing its 
authority under the Inspector General (IG) Act.” However, ETA’s guidance gives 
SWAs the option to decline OIG requests for information for audits, contrary to 
the IG Act. The Department cannot issue guidance that enhances ambiguities 
with other applicable Federal regulations, and permits SWAs to ignore the plain 
language of the IG Act.34 Regardless of whether the regulations are ambiguous, 
agencies may not interpret regulations in plain contradiction of superseding 
statutes.  
  
Cooperating with OIG audits and investigations is a necessary measure to help 
DOL and ETA ensure proper program administration, including UI program 
integrity. In issuing guidance35 in August 2021, the Department read the 
regulation36 as written to require disclosures to the OIG for audits and 
investigations as necessary for the proper administration of the UI program, but 
only during the pandemic period.37 
 
With the expiration of the period covered in that guidance,38 ETA reverted to its 
original interpretation39 where SWAs were only required to disclose UI 
information to the OIG’s Office of Investigations on a case-by-case basis, unless 
they accepted grant funds to combat fraud.40 If SWAs accepted grant funds, they 
were then only required to provide UI information to the OIG for audits and 
investigations through December 31, 2023. As long as SWAs continue to receive 
                                            
33 In UIPL No. 23-12 (issued June 25, 2012), ETA applied 20 C.F.R. § 603.5(i) to require SWAs to 
disclose UI information, including confidential wage and claim information DOL collected and 
used for Office of Management and Budget evaluations of UC programs. The guidance requires 
SWAs to disclose the portions of UI data necessary for specific DOL evaluations, similar to the 
OIG’s need for certain UI data for its audits.  
34 The Department’s interpretations of ambiguous regulations is permissible only if it is 
reasonable. See Kisor v. Wilkie, 139 U.S. 2400, 2415-16 (2019). Although 20 C.F.R. 603.5(i) is 
ambiguous due to the contradictions with 29 C.F.R. 96.41 identified above, agency interpretations 
of regulations that are unambiguous are entitled to even less deference and only to the extent 
they are persuasive. See United States v. Mead Corp., 533 U.S. 218 (2001); Christensen v. 
Harris County, 529 U.S. 576 (2000). 
35 UIPL No. 04-17, Change 1 (August 3, 2021) 
36 20 C.F.R. § 603.6(a) 
37 ETA necessarily interpreted 20 C.F.R. § 603.5(i) as requiring disclosures to the OIG for audits 
in UIPL No. 04-17, Change 1, because prior to this it maintained that disclosures to the OIG for 
audits under this provision were optional. As we stated in the June 2021 alert memorandum and 
do so again here, disclosures to the OIG under 20 C.F.R. § 603.5(i) were always mandatory 
because such disclosures include disclosures under 29 C.F.R. § 96.41. 
38 UIPL No. 04-17, Change 1 (August 3, 2021) 
39 UIPL No. 04-17 (December 16, 2016) 
40 UIPL No. 22-21 (August 11, 2021) 

 
 
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any federal grants to administer their unemployment programs, ETA must 
facilitate the OIG’s access to pertinent SWA information. Therefore, conditioning 
the OIG’s access on whether SWAs accepted an additional grant award and 
ending SWAs’ disclosure obligations when those funds expire contravenes the 
IG Act. 
 
The OIG notes that ETA’s issuance of the August 2021 guidance41 demonstrates 
the Department can circumvent the restrictions it had previously read into its 
regulations42 to require ongoing disclosures to the OIG for audits and 
investigations without amending those regulations. ETA issued the new 
guidance, citing § 2116 of the CARES Act, which provides authority for ETA to 
issue operating instructions or other guidance necessary to carry out the 
UI-related provisions of the CARES Act. ETA has relied on the CARES Act and 
SWAs’ conditional acceptance of fraud prevention grant funds43 to bypass what it 
interprets as limitations to OIG access for audits in its regulation.44 
 
Furthermore, neither the CARES Act nor other relevant statutes limit the OIG’s 
authority to access information to the dates that ETA set forth in its current 
guidance to the SWAs. Any limitation on the OIG’s access to UI information 
contravenes the IG Act. Reinterpreting the regulations as they are currently 
written while ETA works on a permanent solution of amending 
20 C.F.R. Part 603 will facilitate the OIG’s necessary ongoing access in the 
interim period during which the regulation is amended.45 
 
Although ETA has taken temporary steps to facilitate the OIG’s access to state 
UI data through December 31, 2023, the OIG needs a permanent solution for the 
timely and effective access to SWA UI data. 
 
ETA’s Action in Response to Prior Recommendations Isn’t Sufficient to 
Provide the OIG Ongoing Access to SWA UI Data 
 
ETA must ensure consistency between its regulations, or it risks continued 
violation of federal law, undermining DOL’s goals, creating uncertainty, and 
increasing costs and burdens. Consequently, ETA must amend 
                                            
41 UIPL No. 04-17, Change 1 (August 3, 2021); UIPL No. 22-21 (August 11, 2021) 
42 20 C.F.R. §§ 603.5(i), 603.6(a) 
43 UIPL No. 22-21 (August 11, 2021) 
44 20 C.F.R. § 603.5(i) 
45 In response to a draft of this alert memorandum, ETA stated that any change to its 
interpretation of the regulations would require notice and comment rulemaking because it “would 
affect the rights and obligations of the regulated community and as such would be a legislative 
rule, not an interpretive rule.” ETA’s UIPLs referenced in this alert memorandum are interpretive 
rules that merely clarify existing duties for affected parties by interpreting the Department’s 
legislative rules (i.e., 20 C.F.R. Part 603; 29 C.F.R. § 96.41) that alter the rights and obligations of 
SWAs and UI claimants. Altering interpretive rules does not require notice and comment 
rulemaking, regardless of the impact of the change, so long as the underlying law is unchanged. 
See Stupp Corp. v. United States, 5 F.4th 1341, 1352 (Fed. Cir. 2021) 

 
 
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20 C.F.R. Part 603 provisions on federal oversight and audit authorities’ access 
to eliminate any ambiguity regarding OIG access to SWA information in the 
future. Since the beginning of the pandemic, the OIG and ETA have held 
recurring meetings to discuss access issues and other open recommendations. 
 
In July of 2022, ETA provided the OIG a specific timeline in which it is 
considering comprehensive updates to the unemployment compensation 
confidentiality regulation found at 20 C.F.R. Part 603, including requiring SWAs 
to provide ongoing access to state unemployment compensation data. According 
to the estimated timeline, the ruling effective date could be February 2025.  
ETA is exploring other options for interim solutions to address the gap between 
December 31, 2023, and the publication of amended regulations. 
 
While we recognize ETA’s efforts to take action addressing our 
recommendations and concerns, ETA’s plans are not sufficient to address our 
concerns and immediate action is still needed. ETA’s current proposed action 
results in a 14-month gap from when the period of performance for SWA fraud 
prevention grants expires to when the proposed rule will go into effect. ETA has 
not reached a final resolution on the OIG’s recommendations to amend both 
federal regulation and UIPL guidance that would give the OIG unfettered and 
on-going access to UI information. 
 
Conclusion 
 
As stated at the beginning of this alert memorandum, 18 months have elapsed 
since February 2021, when the OIG first alerted ETA to potentially fraudulent 
payments in the UI program within the four high-risk areas and recommended 
ETA take corrective actions. In June 2021, we further alerted ETA that the total 
had increased to $16 billion in these high-risk areas. Despite ETA’s concurrence 
to implement the OIG’s recommendations, sufficient action has not been taken or 
implemented that would help mitigate and prevent even more potential fraudulent 
payments from occurring. We have now identified an additional $29.6 billion in 
potentially fraudulent UI benefits paid, totaling a cumulative amount of $45.6 
billion.46 Additionally, the delays in providing the OIG accurate, timely, and 
ongoing access to UI data led to interruptions in identifying potentially fraudulent 
payments much earlier in the pandemic.  
 
Furthermore, 14 months has elapsed since the June 21 alert memorandum, 
when the OIG first recommended ETA amend its regulation and UIPL guidance. 
Adherence to our recommendations would give the OIG accurate and ongoing 
access to UI information and effectively help mitigate fraud, waste, and abuse 
                                            
46 Of the $45.6 billion total identified, the OIG had previously reported in prior OIG reports  
$16 billion in potential fraudulent payments had been identified within the same four high-risk 
areas discussed in this alert memo. This report identifies $29.6 billion in additional funds put to 
better use that were not claimed in our prior reports. See attachment for detailed information, 
including our calculation. 

 
 
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within the UI program. ETA has not taken sufficient action to reach a final 
resolution on the OIG’s recommendations. ETA needs to take immediate action 
and provide the OIG unfettered access to complete and accurate UI data and not 
only for the UI activities related to COVID-19 programs. We reported in our 
June 2021 alert memorandum that we expected the actual amount of potential 
fraud to continue to increase. The continual increases in potential fraud are a 
significant concern that requires ETA’s immediate attention and action.  
 
The OIG emphasizes the importance of ETA implementing prior and current 
recommendations from the OIG, aimed at reducing, mitigating, and preventing 
the payment of potentially fraudulent payments to ineligible claimants. Without 
effective controls and amended federal regulations and guidance, the UI program 
is exposed to substantial risks, including the cost of improper payments to 
ineligible claimants. Establishing effective controls over identified high-risk areas 
will help to prevent similar or even greater amounts of fraud when the next crisis 
(i.e., a pandemic or recession) occurs. 
 
Recommendations 
 
We recommend the Assistant Secretary of Employment and Training: 
 
1. Implement immediate measures to ensure SWAs are required to provide 
ongoing access to the OIG by amending its current guidance to require 
disclosures to the OIG for audits and investigations as necessary, 
mandatory, and without time limitation for the proper oversight of the UI 
program.  
 
2. Expedite OIG-related amendments to 20 C.F.R. § 603.6(a) to make 
ongoing disclosures of UI information to DOL OIG mandatory by expressly 
adding the U.S. Department of Labor, Office of Inspector General 
(including its agents and contractors) to the list of required disclosures that 
are necessary for the proper oversight of the UI program without 
distinction as to purpose (e.g., audits versus investigations).  
 
3. Expedite OIG-related amendments to 20 C.F.R. § 603.5(i) to expressly 
make disclosures of UI information to federal officials for oversight, audits, 
and investigations of federal programs mandatory. 
 
On September 13, 2022, ETA provided us their formal response to the draft alert 
memorandum and recommendations (see Attachment II). The OIG appreciates 
all the effort ETA has made since our February 22, 2021 alert memorandum. 
Nonetheless, despite ETA’s agreement to implement the OIG’s 
recommendations, sufficient action has not been taken or implemented that 
would help mitigate and prevent even more potentially fraudulent payments from 
occurring. Our concerns remain regarding $45.6 billion in potential fraud in the 
four high-risk areas and regarding a more permanent solution to unfettered 

 
 
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access to UI data, especially given the 14-month gap between 
December 31, 2023, and the potential rulemaking date of February 2025. 

ATTACHMENT I 
 
Potential Funds for Better Use47 
 
Table 1: Total Net Funds for Better Use 
 
Description 
Amount 
 
Total Funds for Better Use 
 
$45.7 Billion 
 
Funds for Better Use Claimed  
in Prior OIG Alert Memoranda48  
 
($16.1 Billion)  
 
Net Funds for Better Use 
 
$29.6 Billion 
 
 
The table shows the total net funds for better use for the four high-risk areas 
previously identified. For the period March 2020 to April 2022, the total potential 
fraud we identified in this alert memorandum was $45.7 billion. To prevent double 
counting, we subtracted the $16.1 billion in potential fraudulent payments 
identified in the previous June 16, 2021, alert memorandum. The scope of that 
analysis was March 2020 to October 2020. As a result, we are claiming $29.6 
billion as total net funds for better use in this alert memorandum.  
                                            
47 As defined by the Inspector General Act of 1978, “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. 
48 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 No. 19-21-005-03-315 (June 16, 2021), available at: 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf  
 

ATTACHMENT II

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