Performance Audit Report: COVID-19 — ETA and States Did Not Protect Pandemic-Related UI Funds from Improper Payments Including Fraud or from Payment Delays…

Record facts

Summary

A performance audit report of the U.S. Department of Labor, Office of Inspector General, Report Number 19-22-006-03-315, issued September 30, 2022, on whether the Employment and Training Administration and states ensured pandemic-related Unemployment Insurance benefits were paid only to eligible individuals promptly. It reports that as of April 23, 2022 the three key pandemic UI programs, PUA, PEUC and FPUC, had paid $663.8 billion in benefits. For four tested states between March 28, 2020 and September 30, 2020, the audit estimates $30.4 billion of $71.7 billion in PUA and FPUC benefits was paid improperly (42.4 percent), including $9.9 billion to likely fraudsters (13.8 percent). It also finds 48 of 53 state workforce agencies could not pay regular UI claims timely. The report makes five recommendations to ETA.

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REPORT TO THE EMPLOYMENT 
AND TRAINING ADMINISTRATION       
COVID-19: ETA AND STATES DID NOT 
PROTECT PANDEMIC-RELATED 
UI FUNDS FROM IMPROPER 
PAYMENTS INCLUDING FRAUD OR 
FROM PAYMENT DELAYS 
DATE ISSUED: SEPTEMBER 30, 2022
REPORT NUMBER: 19-22-006-03-315

U.S. Department of Labor 
Office of Inspector General 
Audit 
BRIEFLY… 
 
 
 
 
COVID-19: ETA AND STATES DID NOT 
PROTECT PANDEMIC-RELATED UI FUNDS 
FROM IMPROPER PAYMENTS INCLUDING 
FRAUD OR FROM PAYMENT DELAYS 
September 30, 2022 
WHY OIG CONDUCTED THE AUDIT 
On March 27, 2020, under the Coronavirus Aid, 
Relief, and Economic Security (CARES) Act, 
Congress provided expanded Unemployment 
Insurance (UI) benefits to workers who were 
unable to work as a direct result of the 
COVID-19 pandemic. The expanded benefits 
required the Employment and Training 
Administration (ETA) to oversee states’ 
implementing major changes to the UI system. 
Our pandemic response oversight focus 
includes three high-risk temporary UI programs: 
Pandemic Unemployment Assistance (PUA), 
Pandemic Emergency Unemployment 
Compensation (PEUC), and Federal Pandemic 
Unemployment Compensation (FPUC). The 
3 programs, as of April 23, 2022, had paid 
$663.8 billion in pandemic-related UI benefits. 
WHAT OIG DID 
We conducted this performance audit to answer 
the following question: 
Did ETA and states ensure UI benefits were 
paid only to eligible individuals promptly? 
To do so, we assessed ETA’s oversight, 
surveyed 49 State Workforce Agencies 
(SWA or state), and performed in-depth testing, 
including case file reviews, for 4 states. 
READ THE FULL REPORT  
https://www.oig.dol.gov/public/reports/oa/2022/
19-22-006-03-315.pdf
WHAT OIG FOUND 
We found ETA and states did not ensure 
pandemic-related UI funds were paid only to 
eligible individuals promptly. Of the 4 states we 
tested, from March 28, 2020, through 
September 30, 2020, we estimated $30.4 billion 
of the $71.7 billion in PUA and FPUC benefits 
were paid improperly (42.4 percent). We 
estimated $9.9 billion of that was paid to likely 
fraudsters (13.8 percent). Notably, in the 
4 states, 1 in 5 dollars initially paid in 
PUA benefits went to likely fraudsters.  
Federal guidance required states to prioritize 
expediency, but we also found many Americans 
faced lengthy delays in receiving UI payments. 
States continued to be challenged by the 
increase in claims’ volume while implementing 
the new UI programs. From March 28, 2020, 
through March 14, 2021, the 4 states were able 
to pay 86 percent of PUA claimants timely; 
however, they took more than 30 days to pay 
14 percent of all reported PUA claimants. Also, 
during the year after the CARES Act passed, 
48 of 53 SWAs were unable to timely pay 
regular UI claims, and, based on our analysis of 
ETA’s timeliness reports, at least 6.2 million 
American workers nationwide waited a month 
or more for pandemic-related UI benefits.  
ETA and states made significant efforts; 
however, they did not protect pandemic-related 
UI funds from historic levels of improper 
payments. We attribute this to four causes: 
states did not perform eligibility testing, ETA’s 
oversight was not timely enough, PUA initially 
allowed claimants to self-certify their eligibility, 
and ETA suspended 1 of their primary oversight 
tools for the first 3 months of the CARES Act. 
Furthermore, ETA’s interpretation of its 
regulations hindered the OIG’s timely and 
complete access to state UI claims data to 
assist in detecting and deterring fraud.  
WHAT OIG RECOMMENDED 
We made five recommendations to ETA to 
improve oversight to minimize payment delays 
and improper payments, including fraud. ETA 
agreed or partially agreed with three of the five 
recommendations and provided an acceptable 
alternative for one recommendation. 

U.S. Department of Labor – Office of Inspector General  
TABLE OF CONTENTS  
INSPECTOR GENERAL’S REPORT .................................................................... 1 
-i- 
RESULTS ............................................................................................................. 3 
IN 6 MONTHS, 4 STATES PAID 42.4 PERCENT OF UI BENEFITS 
IMPROPERLY, INCLUDING NEARLY 14 PERCENT PAID TO 
LIKELY FRAUDSTERS .............................................................................. 4 
MORE THAN 6 MILLION AMERICANS WAITED AT LEAST A 
MONTH FOR PANDEMIC-RELATED UI BENEFITS ............................... 21 
OIG’S RECOMMENDATIONS ............................................................................ 26 
SUMMARY OF ETA’S RESPONSE ......................................................... 26 
EXHIBIT 1: FUNDING FOR THREE NEW KEY PANDEMIC-RELATED UI 
PROGRAMS, AS OF 3/14/20 ............................................................................. 28 
EXHIBIT 2: COSTS PAID TO LIKELY FRAUDSTERS OR IDENTITY FRAUD 
CASES ................................................................................................................ 29 
EXHIBIT 3: TIMELINESS REPORTING BY STATE ........................................... 30 
APPENDIX A: SCOPE, METHODOLOGY, & CRITERIA .................................... 32 
APPENDIX B: AGENCY’S RESPONSE TO THE REPORT ............................... 36 
APPENDIX C: ACKNOWLEDGMENTS .............................................................. 56 
 
 
 

U.S. Department of Labor 
Office of Inspector General 
 
 
Washington, DC 20210 
INSPECTOR GENERAL’S REPORT 
PANDEMIC-RELATED UI ELIGIBILITY AND TIMELINESS 
 
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NO. 19-22-006-03-315 
Brent Parton 
Acting Assistant Secretary  
  for Employment and Training 
U.S. Department of Labor 
200 Constitution Ave. NW 
Washington, DC 20210 
 
This report presents the results of the Office of Inspector General’s (OIG) audit of 
the Employment and Training Administration (ETA) and states’ Unemployment 
Insurance (UI) programs under the Coronavirus Aid, Relief, and Economic 
Security (CARES) Act and related extensions. Among other support, the 
CARES Act expanded UI benefits to workers unemployed as a direct result of the 
COVID-19 pandemic, including by creating three key pandemic-related UI 
programs: Pandemic Unemployment Assistance (PUA), Pandemic Emergency 
Unemployment Compensation (PEUC), and Federal Pandemic Unemployment 
Compensation (FPUC).  
 
Shortly after the CARES Act passed, we issued an advisory report1 that identified 
concerns about state preparedness. In our May 2021 CARES Act UI audit,2 we 
found states struggled to pay claimants and to protect funds from improper 
payments, including fraud. States were challenged by the unprecedented 
increase in claims and by implementing the new programs and statutory changes 
to existing UI programs and did not perform required and recommended 
improper payment detection and recovery activities. As of April 23, 2022, ETA 
reported the 3 key pandemic-related UI programs had paid $663.8 billion of the 
total estimated $872.5 billion paid in pandemic-related UI benefits. 
 
                                            
1 CARES Act: Initial Areas of Concern Regarding Implementation of Unemployment Insurance 
Provisions, Report No. 19-20-001-03-315 (April 21, 2020), 
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf 
2 COVID-19: States Struggled to Implement Cares Act Unemployment Insurance Programs, 
Report No. 19-21-004-03-315 (May 28, 2021), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf 

U.S. Department of Labor – Office of Inspector General  
PANDEMIC-RELATED UI ELIGIBILITY AND TIMELINESS 
 
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NO. 19-22-006-03-315 
As part of our continuing pandemic response oversight work, we conducted this 
performance audit to answer the following question: 
 
Did ETA and states ensure UI benefits were paid only to eligible 
individuals promptly? 
 
To answer this question, we focused on high-risk UI benefit programs including, 
but not limited to: PUA, PEUC, and FPUC. Essentially, PUA provided UI benefits 
to workers who were not traditionally eligible,3 PEUC provided additional weeks 
of UI benefits to workers who had exhausted their regular benefits, and FPUC 
provided a supplement ($600 weekly through July 2020, then, starting in 
December 2020, $300 weekly) to workers eligible for at least $1 of UI benefits 
(see Figure 1).  
 
 
Figure 1: Three Key Pandemic-Related UI Programs 
 
 
Source: CARES Act and related extensions 
 
 
Created by the CARES Act on March 27, 2020, the three programs were later 
extended by the Continued Assistance for Workers Act of 2020 (CAA) and the 
American Rescue Plan Act (ARPA), ending on September 6, 2021.  
 
This audit focused on UI benefit payments made between March 28, 2020, and 
March 14, 2021. As of March 14, 2021, State Workforce Agencies (SWA or state) 
had drawn down $472.2 billion in federal funds to pay UI benefits for PUA, 
PEUC, and FPUC (see Exhibit 1). Of the $472.2 billion funds paid in federal 
UI funds, almost a third (28 percent) was drawn down by 4 states: California, 
Georgia, Kentucky, and Michigan (4 states). We selected these 4 states for 
in-depth analysis based on a risk analysis, including an analysis of funding 
                                            
3 PUA included independent contractors, those with limited work history, and those who otherwise 
did not qualify for regular UI or extended benefits under state or federal law or under PEUC. 

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amounts, law enforcement intelligence, congressional interest, and media 
reports.  
 
We asked the other 49 SWAs4 to complete questionnaires. We also assessed 
ETA’s guidance and oversight such as Unemployment Insurance Program 
Letters (UIPL) and monitoring reports. Last, we analyzed data all SWAs 
submitted in response to Inspector General (IG) subpoenas. We identified 
two universes of claimants, one to assess claimant eligibility and the other to 
assess SWAs’ timeliness in issuing payments to claimants. 
RESULTS 
We found ETA and states did not ensure pandemic-related UI funds were paid 
only to eligible individuals promptly. Of the 4 states we tested, from 
March 28, 2020, through September 30, 2020, we estimated $30.4 billion of the 
$71.7 billion in PUA and FPUC benefits were paid improperly (42.4 percent). We 
estimated $9.9 billion of that was paid to likely fraudsters5 (13.8 percent). 
Notably, in the 4 states, 1 in 5 dollars initially paid in PUA benefits went to likely 
fraudsters. The percentages of improper payments identified during this audit 
applied only to the 4 states and were not projected to the nation.   
 
Federal guidance required states to prioritize expediency, but we also found 
many Americans faced lengthy delays in receiving UI payments. States 
continued to be challenged by the increase in claims’ volume while implementing 
the new UI programs and statutory changes to existing UI programs. From 
March 28, 2020, through March 14, 2021, the 4 states were able to pay 
86 percent of PUA claimants timely; however, they took more than 30 days to 
pay 14 percent of all reported PUA claimants. Also, during the year after the 
CARES Act passed, 48 of 53 SWAs were unable to timely pay regular UI claims, 
and, based on our analysis of ETA’s timeliness reports, at least 6.2 million 
                                            
4 The 50 states, the District of Columbia, the U.S. Virgin Islands, and Puerto Rico have SWAs 
that administer UI programs.  
5 We specifically use the term “likely” when referring to fraudulent claims for which the source of 
the claim has yet to be identified and convicted in a court of law. For our analysis, the OIG’s 
Office of Investigations’ data scientist team identified claims with fraud indicators, and we then 
analyzed the case file or subpoenaed data for supporting evidence, such as multiple claims filed 
from one physical address. 

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American workers nationwide waited a month or more for pandemic-related UI 
benefits.6  
 
ETA and states made significant efforts; however, they did not protect 
pandemic-related UI funds from historic levels of improper payments, including 
fraud. We attribute this to four causes. Specifically, states did not perform 
eligibility testing, ETA’s oversight was not timely enough, PUA initially allowed 
claimants to self-certify their eligibility, and ETA suspended 1 of their primary 
oversight tools for the first 3 months of the CARES Act. Furthermore, ETA’s 
interpretation of its regulations hindered the OIG’s timely and complete access to 
state UI claims data to assist in detecting and deterring large-scale fraud.  
IN 6 MONTHS, 4 STATES PAID 
42.4 PERCENT OF UI BENEFITS 
IMPROPERLY, INCLUDING NEARLY 
14 PERCENT PAID TO LIKELY FRAUDSTERS 
Paying claimants accurately and preventing improper 
payments, including fraud, continued to challenge states 
throughout the effective period for the CARES Act and 
CAA—March 28, 2020, through March 14, 2021. To assess 
eligibility, we statistically sampled and tested 214 cases in 
the 4 states where claimants received either PUA or regular 
UI with an FPUC supplement between March 28, 2020, and 
September 30, 2020. Additionally, we judgmentally selected 
40 cases (10 from each of the 4 states) from 
January 1, 2021, through March 14, 2021, to assess any 
impact of legislative changes after CAA required proof of 
wages for PUA rather than relying solely on self-certification. 
 
From March 28, 2020 through September 30, 2020, we 
found the 4 states paid 118 of 214 cases improperly—$1,435,132 of the total 
$3,381,823 (42.4 percent) paid. During that time, the 4 states submitted data that 
                                            
6 Based on data submitted by states in response to an IG subpoena: from March 28, 2020, 
to September 30, 2020, 4 states submitted claims data for 9,546,807 claimants and 
$71,663,117,052 in benefits for the PUA and FPUC programs. A stratified random sample of 
214 was extracted from the universe and a total of 118 improper payments were identified. Based 
on this sample, it is projected that approximately 5,264,127 improper payments are among the 
total universe, with 95 percent confidence the true value falls between 4,895,638 and 5,632,616. 
Furthermore, it is projected that approximately $30,411,417,895 were improperly paid, with 
95 percent confidence that the true value falls between $28,282,618,642 and $32,540,217,148. 

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showed they paid a total of 9.5 million claimants $71.7 billion in UI benefits for 
PUA and FPUC. By projecting our statistical sample across the 4 states, we 
estimated that, in about 6 months after the CARES Act passed, the 4 states 
improperly paid approximately 5.3 million claimants $30.4 billion, with $9.9 billion 
attributed to 1.1 million likely fraudulent claims.  
 
For comparison, in the 3 years leading up to the pandemic (April 1, 2017, 
to March 31, 2020), ETA’s Benefit Accuracy Measurement (BAM) program7 
estimated the 4 states averaged an improper payment rate of 15.6 percent 
annually, with 2.8 percent attributable to fraud. Nationwide, for the last 18 years, 
ETA has estimated the UI improper payment rate between 9.17 percent and 
13.03 percent (see Figures 2 and 3). 
 
 
Figure 2: Comparison of Improper Payment Rates, Pre-Pandemic Annual 
Averages and 4 States in First 6 Months of CARES Act 
 
 
Source: ETA reports and OIG analysis of case files  
                                            
7 According to ETA, BAM is a quality control statistical survey used to identify errors and support 
corrective action in the state UI system. It usually focuses on the three major UI programs: 
regular UI, Unemployment Compensation for Federal Employees, and Unemployment 
Compensation for Ex-service members. BAM data is used to estimate the total improper 
payments in the UI program, in each state and in the nation as a whole, based on a statistically 
valid examination of a sample of paid and denied claims. 

U.S. Department of Labor – Office of Inspector General  
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Figure 3: Comparison of Fraud Rates, Pre-Pandemic Annual Averages and 
First 6 Months of CARES Act for the 4 States  
 
 
Source: ETA reports and OIG case file analysis  
 
Based on case files and data subpoenaed from states, we identified that 
25 of 214 sampled claimants were likely fraudulent actors.8 These likely 
fraudsters received $465,723 of the total $3,381,823 paid, equating to a fraud 
rate of 13.8 percent.  
 
Furthermore, nine of the sampled claimants appeared to be victims of identity 
fraud. In total, 951 claims filed in 28 different states were attached to likely 
fraudsters or identity fraud cases. States prevented payments to 495 of these 
UI claims; however, 456 claims received $7,092,604 in unemployment benefits 
from 14 different states (see Exhibit 2). 
 
ETA reminded states of their roles and responsibilities in preventing improper 
payments, including those related to fraud:  
 
• In August 2020, ETA issued UIPL No. 28-20, which reiterated 
Section 303(a)(1) of the Social Security Act requirements that, as a 
condition of a state receiving administrative grants for its UI program, state 
law must provide for “methods of administration…As are found by the 
                                            
8 Prior to the release of this audit report, the claimants associated with the fraudulent claims were 
referred to the OIG’s Office of Investigations to assess and determine if the claims warrant 
investigation. If the claims do not warrant investigation, they will be referred to the SWA, in 
accordance with UIPL 04-17. 

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Secretary of Labor to be reasonably calculated to insure full payment of 
unemployment compensation when due.” Also, UIPL No. 04-01 interprets 
the “when due” requirement to also require states to ensure that payment 
of benefits is not made when payment is not due. DOL has consistently 
interpreted Section 303(a)(1) to require “that state law include provision for 
such methods of administration as are, within reason, calculated (1) to 
detect benefits paid through error by the agency through willful 
misrepresentation or error by the claimant or others, and (2) to deter 
claimants from obtaining benefits through willful misrepresentation.”  
 
• In May 2020, ETA issued UIPL No. 23-20, which specified that the 
CARES Act programs operate in tandem with the fundamental eligibility 
requirements of the federal-state UI program. The UIPL further specified 
that state UI laws must include provisions for administration methods to 
detect and deter improper payments accomplished through SWAs’ Benefit 
Payment Control (BPC) units or other designated staff responsible for 
promoting and maintaining the integrity of the UI program through 
prevention, detection, investigations, establishment, and recovery of 
overpayments.  
STATES PAID CLAIMANTS IMPROPERLY 
For the period March 28, 2020, to September 30, 2020, we identified 
1149 of 214 claimants received improper payments for PUA and regular UI with a 
FPUC supplement, not including fraud. 
 
This includes:  
 
• 47 claimants who were ineligible due to not being or not certifying that 
they were able to or available for work; 
• 23 claimants whose identity could not be verified by the state;  
• 11 claimants who were ineligible due to voluntarily quitting employment, 
being discharged for cause, or stating their employment ended due to the 
pandemic despite their last date of employment occurring significantly 
before the pandemic started;  
• 7 claimants who were ineligible due to claiming benefits after returning to 
work or failing to accurately report earnings;  
• 1 claimant who refused suitable work; and 
                                            
9 Forty-six percent (53 of the 114) of claimants with improper payment issues had multiple types 
of improper payments. In instances where a violation would result in questioned cost as part of 
multiple violations, the greater of the costs was used. 

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• 69 claimants who were ineligible due to violations of PUA-specific 
requirements (details follow). 
 
ETA reported states were particularly challenged while implementing the 
PUA program because it was very different compared to the regular UI program, 
served a unique population, and had new eligibility requirements.10 Included in 
our 214 sampled claimants were 98 PUA claimants. Of these, we found states 
did not comply with PUA specific requirements when paying 
6911 of 98 PUA claimants (70 percent). Specifically, we found: 
 
• 31 claimants who were paid more than the minimum weekly benefit 
amount without supporting documentation, 
• 28 claimants who did not recertify being eligible due to a 
COVID-19-related reason,12 
• 19 claimants who were paid benefits under CAA and ARPA without 
documentation substantiating employment or self-employment as 
required, 
• 4 claimants who received PUA despite eligibility for the regular UI 
program, and 
• 3 claimants who were paid without a valid COVID-19-related reason. 
 
In addition to the 214 sampled claimants, to test the expanded PUA eligibility 
requirements under the CAA, we judgmentally selected 10 claimants from each 
state. We identified that 2213 of 40 sampled PUA claimants received 
$148,110 of $346,805 in federal UI (43 percent) benefits improperly. Specifically, 
we found: 
 
• 18 claimants who were paid benefits under CAA and ARPA without 
documentation substantiating employment or self-employment, 
• 7 claimants whose identity could not be verified by the state, 
                                            
10 ETA provided this statement on May 28, 2021, in response to a CARES Act UI draft report, 
specifically, COVID-19: States Struggled to Implement Cares Act Unemployment Insurance 
Programs, Report No. 19-21-004-03-315 (May 28, 2021), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf. 
11 Seventy percent (48 of the 69) of claimants with PUA-specific improper payment issues had 
multiple types of improper payments. In instances where a violation would result in questioned 
cost as part of multiple violations, the greater of the costs was used. 
12 CARES Act Section 2102(a)(3)(A)(ii)(I) requires PUA claimants to self-certify that they are 
otherwise able and available to work, except that the individual is unemployed, partially 
unemployed, or unable and unavailable to work based upon certain COVID-19-related reasons. 
13 Thirty-two percent (7 of 22) of claimants with PUA-specific improper payment issues had 
multiple types of improper payments. In instances where cost were questioned as part of multiple 
violations, the greater of the costs was used. 

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• 2 claimants who were ineligible due to not being able to work or not being 
available for work, 
• 1 claimant who was paid more than the minimum weekly benefit amount 
without supporting documentation, and 
• 1 claimant who was ineligible due to voluntarily quitting employment or 
being discharged for cause. 
 
ETA officials objected to the use of the time period March 28, 2020, 
to September 30, 2020, to test claimants’ eligibility. ETA officials stated this was 
early in the pandemic when states were implementing the new programs and 
states have since made significant improvements. We acknowledge the likely 
accuracy of these statements; however, during this period, states spent 
approximately 51 percent, $340.1 billion, of UI funds for the new key 
pandemic-related programs. Therefore, increased scrutiny is valid.  
 
Further, the OIG did not have timely and complete access to state UI claims data 
due to ETA’s interpretation of the Code of Federal Regulations (C.F.R.) and 
significant delay in issuing guidance to states that they were required to provide 
access to their UI data to OIG for audits and investigations. On August 3, 2021, 
ETA revised its position and facilitated the OIG’s access for the pandemic period, 
but ETA’s policy revisions came more than a year after the OIG first notified ETA 
of potential large-scale fraud and of the need for access to state UI claims data.  
STATES DID NOT PREVENT LIKELY FRAUDULENT 
PAYMENTS 
In our February 22, 2021, CARES Act Alert Memorandum,14 we reported ETA 
needed to take immediate action to mitigate fraud in pandemic-related UI 
programs. For the 3 years leading up to March 31, 2020, ETA estimated the 
UI fraud rate for the 4 states was 2.8 percent; however, from the cases we 
tested, we estimated the likely fraud rate in the 4 states during the period 
March 28, 2020, to September 30, 2020, was 13.8 percent, a 393 percent 
increase compared to the prior 3 years. 
 
To determine the likely fraudulent claims, we collaborated with the OIG’s Office 
of Investigations’ data scientist team, who reviewed each case for a fraud 
indicator. We then reviewed those case files against IG-subpoenaed data for all 
the SWAs to substantiate the fraud indicator. 
                                            
14 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), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf 

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For example, we identified a claimant who filed a claim from a 3-bedroom house 
that was the shared location for 90 other claims. The same claimant also shared 
a flagged15 email address with 145 other claims. In total, this claimant was 
connected to 235 other claims for unemployment benefits in 3 states—receiving 
benefits on 87 of those claims, all filed in California, for a total amount of 
$1,569,762. California was unable to verify the sampled claimant’s identity and 
stopped payment on September 8, 2020, 164 days after the initial payment. 
 
Overall, of the 214 claimants, we identified 25 who likely committed fraud to 
receive UI benefits. These 25 claimants were connected to 603 claims filed in 
24 different states but were only successful in 13 states. On average, we found 
those 25 likely fraudsters succeeded in receiving UI benefits for claims filed at a 
rate of 60.5 percent. We classified the claimants by the following fraud indicators: 
 
• Flagged physical address—21 claimants filed with a flagged physical 
address. For example, one claimant filed 48 different claims from one 
address and received $406,566 unemployment benefits on 21 of those 
claims. Claimants with a flagged physical address fraud indicator received 
$4,570,604 in UI benefits; 
• Multi-state claimants—14 claimants filed for benefits in multiple states. 
Claimants with multi-state fraud indicators received $1,371,19216 in 
UI benefits; 
• Flagged email address—10 claimants filed with a flagged email address. 
For example, 1 claimant filed 30 different claims from a shared flagged 
email address and received $589,800 on 25 of those claims. Claimants 
with email fraud indicators received $3,726,267 in UI benefits; 
• Flagged phone number—9 claimants filed with a flagged phone number. 
For example, one such claimant filed in three different states using the 
same phone number but with different addresses in a short period of time. 
In total, the claimant received $120,290 on 8 of those claims. Claimants 
with flagged phone number fraud indicators received $1,149,960; and  
• Flagged Bank Account—3 claimants filed with a flagged bank account. 
For example, one claimant with a flagged bank account filed in 3 different 
states with a shared flagged email address for 15 other claims and shared 
physical address for 48 different claims. In total, the claimant filed 
65 different claims and received $322,453 on 21 of those claims. 
Claimants with bank account fraud indicators received $675,917. 
                                            
15 Flagged claimants are those that were indicated by the OIG’s Office of Investigations as 
potentially fraudulent.  
16 Claimants often had multiple fraud indicators; therefore, these include duplicate benefit 
amounts for each fraud flag. 
 

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HISTORIC LEVELS OF IMPROPER PAYMENTS, 
INCLUDING FRAUD, HAD FOUR COMMON CAUSES  
While states were able to initiate pandemic-related UI programs and ETA was 
able to offer guidance and perform monitoring, improper payments including 
fraud reached historic levels. We attribute the historic levels of improper 
payments, including fraud, to four common causes. Specifically,  
 
(1) states did not always perform required procedures necessary to ensure 
claimants were eligible,  
(2) ETA’s guidance and oversight was not timely enough to prevent improper 
payments,  
(3) the PUA program’s initial reliance solely on self-certification left it 
vulnerable to improper payments, and 
(4) ETA suspended the BAM program for the first 3 months of the CARES 
Act. 
 
Additionally, ETA’s interpretation of the C.F.R. and significant delay in issuing 
guidance to states hindered the OIG’s timely and complete access to data to 
assist in detecting and deterring large-scale fraud.  
 
More information on each cause follows. 
 
(1) STATES DID NOT ALWAYS PERFORM 
REQUIRED PROCEDURES TO ENSURE 
ELIGIBILITY 
 
ETA officials reported17 states faced the combined challenges of (1) managing 
and processing an unprecedented increase in claims volume at an 
unprecedented pace, (2) making the statutory changes to existing UI programs, 
and (3) implementing the three new key pandemic-related UI programs.  
 
We found the 4 states did not perform required procedures to determine 
eligibility. These requirements were not specific to the pandemic-related UI 
programs and would be performed as part of any regular UI program. 
Specifically, states did not always perform required procedures such as verifying 
claimants’ availability and ability to work, did not sufficiently verify the identity of 
                                            
17 On April 6, 2021, ETA officials stated this in their technical response to the draft of COVID-19: 
States Struggled to Implement Cares Act Unemployment Insurance Programs, 
Report No. 19-21-004-03-315 (May 28, 2021), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf. 

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claimants, and did not prevent paying claimants that had separation or return to 
work issues.  
 
In addition, states did not comply with all eligibility requirements when approving 
PUA claimants. Our prior CARES Act UI report18 detailed that states were able to 
implement the PUA program, on average, in 38 days. However, we found states: 
were not obtaining weekly eligibility re-certifications, paid claimants more than 
the allowable minimum weekly benefit amount without supporting documentation, 
or paid benefits under CAA and ARPA without documentation substantiating 
employment or self-employment as required. 
 
Moreover, states prioritized expediency over safeguards. For example, the 
4 states suspended eligibility and payment controls. Federal guidance issued by 
the Office of Management and Budget (OMB) on April 10, 2020, required 
agencies to prioritize expediency, defined as the rapid issuance of awards to 
meet crucial needs, while also reminding agencies to balance the need for 
expediency with steps to mitigate fraud, waste, abuse, and improper payments.19 
While expediency was required, prioritizing it over essential payment functions—
such as suspending eligibility procedures—was not.  
 
Finally, at the start of the pandemic, not all states were participating in the 
National Association of State Workforce Agencies’ (NASWA) Integrity Data Hub 
(IDH), which provides cross-matching functionality for SWAs to combat UI fraud. 
In March 2020, 19 states had not executed an IDH participation agreement to 
cross-match with the IDH datasets and 50 states were not participating in the 
multi-state cross-match. Of the 4 states, only one state, Michigan, participated in 
the multi-state cross-match and the new identity verification service. Despite 
participation in the IDH, Michigan had higher than typical fraudulent payments 
(see Tables 1 and 2). 
 
ETA officials reported that, since the timeframe of our testing, the IDH has 
experienced increased participation and created an identity verification service. 
As of March 2022, all 53 states executed an IDH Participation Agreement, 
35 states are receiving identity verification results, and 43 states were using the 
multi-state cross-match.  
 
(2) ETA’S GUIDANCE AND OVERSIGHT WAS NOT 
TIMELY ENOUGH  
 
                                            
18 COVID-19: States Struggled to Implement Cares Act Unemployment Insurance Programs, 
Report No. 19-21-004-03-315 
(May 28, 2021), https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf. 
19 OMB Memorandum 20-21, Implementation Guidance for Supplemental Funding Provided in 
Response to the Coronavirus Disease 2019 (April 10, 2020) 

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After the CARES Act passed, ETA worked quickly to obtain signed state 
agreements and ensure pandemic-related UI funds were available. ETA issued 
48 UIPLs, created monitoring tools, issued a self-assessment tool, produced 
training webinars, and reviewed states’ implementation of key pandemic-related 
UI programs. ETA also created a website for state officials that listed guidance, 
policies, and resources to help states respond to the pandemic, including fraud 
alerts from the OIG and other law enforcement agencies.  
 
Despite its efforts, ETA’s guidance and oversight was not timely enough to 
prevent historic improper payments of UI benefits. We previously reported that 
state officials cited ETA’s guidance about initial and continued eligibility was 
untimely and unclear.20 We found ETA’s monitoring reports demonstrated its 
oversight addressed issues after billions had already been paid.  
 
For example, in July 2020, ETA notified California that their PUA monetary 
determination form did not have a procedure in place for re-determining the 
claimant’s weekly benefit if the claimant did not provide proof of earnings or 
provided insufficient proof. California responded that the problem would be 
addressed by the end of August 2020. However, by the end of August, California 
had paid approximately $25.4 billion in PUA benefits, including FPUC. 
 
A similar issue occurred in Michigan. On June 17, 2020, ETA notified Michigan 
that their PUA form did not include the required able and available questions. 
However, by then, Michigan had paid approximately $4.6 billion in PUA benefits, 
including FPUC.  
 
ETA was able to provide states guidance on areas of improper payments as 
early as May 2020. However, ETA and states must be prepared for disasters 
before they occur. In a response to the draft of the OIG’s Semiannual Report to 
Congress, Volume 87,21 ETA highlighted that the time it took to initialize the 
pandemic-related UI programs would typically take up to 4 years. Specifically, 
ETA officials stated:  
 
States’ ability to provide benefit payments within one to two months 
for a new, temporary UI program is a very impressive achievement 
given the extensive, complex requirements and activities that were 
necessary for implementation. For comparison purposes, a swift 
rollout of a new government benefit program—including the policy, 
product and operations—would be 30-48 months. States 
                                            
20 COVID-19: States Struggled to Implement Cares Act Unemployment Insurance Programs, 
Report No. 19-21-004-03-315 (May 28, 2021), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf 
21 Semiannual Report to Congress, Volume 87, October 1, 2021 – March 31, 2021, 
https://www.oig.dol.gov/public/semiannuals/87.pdf 

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concurrently handled the launch of three new programs, which 
included the unprecedented PUA program that covered a 
population previously excluded by the UI program and for which no 
state UI processes were prepared to accommodate. This was all 
accomplished while the states were navigating a ten-fold claims 
volume increase, never before encountered in the program’s 
85-year history. 
 
We are concerned that, given the nature of emergency situations, states would 
be unlikely to have a lengthy rollout period for emergency programs. ETA and 
states must include risk planning that would identify measures to facilitate the 
creation of new programs similar to the ones created in response to the 
COVID-19 pandemic. This risk planning should include steps to ensure eligibility 
procedures and BPC operations continue to function during emergency situations 
to prevent improper payments before they occur.  
 
Compounding the issue, states drew down about $281 billion from April 1, 2020, 
to July 31, 2020, which was more than the states drew down from 
August 1, 2020, through March 31, 2021 (see Figure 4).  
 
 
Figure 4: State-Reported Drawdowns for PUA, FPUC, and PEUC 
 
 
Source: OIG analysis of ETA’s reported information 
 
(3) RELIANCE ON SELF-CERTIFICATION MADE 
PUA HIGHLY SUSCEPTIBLE TO FRAUD 
 
The CARES Act provided up to 39 weeks of PUA coverage to individuals who 
were not traditionally eligible for UI benefits. During the program’s first 9 months, 

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PUA claimants did not have to provide evidence of earnings and states relied 
solely on claimant self-certifications, rendering the program extremely 
susceptible to improper payments, including fraud. We reported our concerns 
regarding this risk in an alert memorandum issued in May 2020, approximately 
2 months after the enactment of the CARES Act.22 We advised ETA that the OIG 
interprets the CARES Act as requiring individuals to submit documentation to 
substantiate employment.23 However, ETA disagreed with our assessment based 
on their interpretation of the CARES Act and underlying regulations.  
 
In October 2020, we further reported24 states had confirmed our concern about 
this risk. Specifically, states reported inherent vulnerability in the PUA 
self-certification process and cited the PUA self-certification requirement as a top 
fraud vulnerability. Subsequent to our work identifying the fraud risks, Congress 
took action to require supporting documentation to improve SWAs’ abilities to 
ensure proper claimant eligibility and to mitigate fraud. 
 
In this audit, we tested 98 PUA cases and found 22 (22 percent) were likely 
fraudulent. In fact, $1 out of $5 initially paid to PUA claims in the 4 states went to 
likely fraudsters. In contrast, we identified only 3 regular UI claims out of 116 as 
likely fraudulent.  
 
(4) BAM SUSPENDED FOR THE FIRST 3 MONTHS 
AFTER THE CARES ACT PASSED 
 
One of ETA’s primary oversight tools is the BAM program, a statistical survey 
designed to determine the accuracy of paid and denied UI claims. It does this by 
reconstructing the UI claims process for samples of weekly payments and denied 
                                            
22 Alert Memorandum: The Pandemic Unemployment Assistance Program Needs Proactive 
Measures to Detect and Prevent Improper Payments and Fraud, 
Report No. 19-20-002-03-315 (May 26, 2020),  
https://www.oig.dol.gov/public/reports/oa/2020/19-20-002-03-315.pdf 
23 The CARES Act (§ 2102(h)) states that federal regulations 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 weekly benefit amount 
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. 
24 COVID-19: States Cite Vulnerabilities in Detecting Fraud While Complying with the CARES Act 
UI Program Self-Certification Requirement, Report No. 19-21-001-03-315 (October 21, 2020), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-001-03-315.pdf 

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claims using data verified by trained investigators. BAM is used to identify the 
root causes of improper payments; it is a diagnostic tool for the use of federal 
and state staff in identifying errors and causes as well as for correcting and 
tracking solutions to these problems.  
 
However, ETA allowed states to temporarily suspend the BAM program from 
April 1, 2020, through June 30, 2020, due to the significant and sudden increase 
in workload brought on by COVID-19 pandemic. ETA and states cannot, 
therefore, estimate the amount spent improperly for the first 3 months of the 
pandemic-related UI programs.  
 
Consistent with an OIG recommendation, ETA is beginning to estimate the 
improper payment rate for pandemic-related UI programs. To do so, ETA 
applied the regular UI improper payment rate to the FPUC and PEUC 
programs. ETA stated it will develop a separate methodology and report the 
PUA improper payment rate in 2022.  
 
For July 1, 2020, through June 30, 2021, ETA estimated the national improper 
payment rate as 18.71 percent. Based on our audit and investigative work, as 
stated in our pandemic response oversight plan and in Congressional 
testimony,25 the improper payment rate for pandemic-related UI programs is 
likely higher. Based on our testing, we estimated an improper payment and fraud 
rate for each of the 4 states and compared it to ETA’s estimated BAM rate 
(see Tables 1 and 2). 
 
 
Table 1: OIG Estimated Improper Payment and Fraud Rates 
(March 28, 2020–September 30, 2020) 
 
State 
Estimate 
Source 
Programs 
Improper 
Payment 
Rate % 
Fraud 
Rate % 
California 
OIG Audit 
PUA and FPUC 
36.6 
19.2 
Georgia 
38.4 
7.8 
Kentucky 
20.1 
2.2 
Michigan 
67.9 
3.9 
Source: OIG analysis of case files 
 
                                            
25 “Pandemic Response and Accountability: Reducing Fraud and Expanding Access to COVID-19 
Relief through Effective Oversight,” March 17, 2022, Hearing of the U.S. Senate Committee on 
Homeland Security and Governmental Affairs, Statement of Larry D. Turner, Inspector General, 
Office of Inspector General, U.S. Department of Labor, Report No. 19-22-003-03-315, 
https://www.oig.dol.gov/public/testimony/20220317.pdf 

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Table 2: ETA BAM Estimated Improper Payment and Fraud Rates 
(April 1, 2020–March 31, 2021) 
 
State 
Estimate 
Source 
Programs 
Improper 
Payment 
Rate % 
Fraud 
Rate % 
California 
BAM 
Program 
FPUC and 
PEUC 
8.9 
3.1 
Georgia 
12.9 
5.9 
Kentucky 
6.0 
4.1 
Michigan 
16.0 
0.9 
Source: ETA BAM reports  
 
Michigan’s improper payment rate was largely driven by the state not initially 
implementing able and available certifications for the PUA program. ETA 
identified the issue, and Michigan corrected it by June 15, 2020. OMB Circular 
A-123, Appendix C, Requirements for Effective Estimation and Remediation of 
Improper Payments, states: “when an agency's review is unable to discern 
whether a payment was proper as a result of insufficient or lack of 
documentation, this payment must also be considered an improper payment.” 
 
ETA’s BAM estimated improper payment rates for the 4 states was lower than 
the OIG estimate likely due to two primary factors. First, the OIG audit estimate 
focuses on the initial 6 months of the CARES Act programs, including the 
3 months ETA suspended the BAM program. During this time, states had not 
completely initialized their programs with all required elements and did not 
perform all eligibility testing.  
 
Second, ETA’s BAM program estimate does not include PUA claimants. ETA has 
not yet reported improper payment data for the PUA program, which, as 
previously noted, was highly susceptible to improper payments, including fraud. 
In the 4 states, we found PUA claimants received 44 percent of benefits 
improperly while regular UI claimants with an FPUC supplement received 
31 percent of benefits improperly. 
ETA’S INTERPRETATION OF REGULATIONS 
LIMITED DOL OIG FROM ASSISTING IN DETECTING 
AND DETERRING LARGE-SCALE FRAUD 
The OIG conducts independent oversight of the UI program to, in part, detect and 
deter large-scale fraud. The power and use of data and predictive analytics 
enables the OIG to continuously monitor DOL programs and operations to detect 

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and investigate fraud. Continuous monitoring serves as a deterrent to fraud, 
allows the OIG to promptly discover areas of weakness, and assists DOL 
management to timely correct problems. However, ETA’s interpretation of its 
regulations and significant delay on issuing guidance to the states hindered the 
OIG’s timely and complete access to state UI claims data to assist in detecting 
and deterring UI fraud. 
 
Early in the pandemic, OIG requested that DOL instruct the states of the 
requirement to disclose UI information to the OIG for program audits and 
investigations. The OIG expressed the urgent need for DOL to issue this 
guidance to the states immediately due to increasing allegations of UI fraud. In 
response, DOL disagreed with the OIG and relied on a legal interpretation of its 
own UI disclosure regulations, asserting it could not require states to provide 
UI data to the OIG for audits. As a result, the OIG was forced to take the 
unprecedented step of issuing IG subpoenas to every SWA in order to obtain this 
critical claims data. ETA’s inaction in providing early guidance to the states 
caused delay and confusion among the states. ETA could have issued guidance 
earlier; however, by the time it did so, fraudsters had already taken billions in 
federal funding.  
 
For example, from March 2020 to October 2020, the OIG identified26 almost 
$17 billion including approximately $915 million identified under more than one 
category resulting in over $16 billion in potentially fraudulent unemployment 
insurance (UI) pandemic benefits. The over $16 billion in potentially fraudulent 
UI benefits were paid in four high-risk areas, to individuals with Social Security 
numbers: 1) filed in multiple states, 2) of deceased persons, 3) of federal 
inmates, and 4) used to file for UI claims with suspicious email accounts. We 
shared our methodology and the underlying data with DOL and the states, and 
we recommended they establish effective controls to mitigate fraud and other 
improper payments to ineligible claimants. The data provided to DOL and the 
states included more than 3 million suspicious claimants. 
 
Notably, DOL has revisited its position. On August 3, 2021, ETA issued UIPL 
No. 04-17, Change 1, which required states to provide UI data for investigations 
and audits. However, this was a temporary measure that sunsetted on payments 
                                            
26 Alert Memorandum: The Employment and Training Administration Needs to Ensure State 
Workforce Agencies Implement Effective Unemployment Insurance Program Fraud Controls for 
High Risk Areas, Report No. 19-21-002-03-315 (February 22, 2021), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-002-03-315.pdf; and 
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), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-005-03-315.pdf 

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made for the week ending September 6, 2021.27 Further, ETA reported28 that, by 
July 31, 2021, states had drawn down $614.8 billion in pandemic-related UI 
funds, or approximately 92.6 percent of the benefits paid, meaning that only after 
the majority of benefits had been paid did ETA issue guidance consistent with the 
OIG’s authority to access claim and wage information for oversight of the 
UI programs. 
AS A RESULT, 4 STATES PAID $30.4 BILLION 
IMPROPERLY, INCLUDING $9.9 BILLION PAID TO 
LIKELY PANDEMIC FRAUDSTERS 
Highlighting the importance of proper planning and oversight, the 4 states paid 
more improperly than the total amount typically paid for the entire UI program. 
From March 28, 2020, to September 30, 2020, we projected the 4 states 
improperly paid $30.4 billion. In the prior 3 years leading up to March 31, 2020, 
50 states, the District of Columbia, and Puerto Rico paid an average of 
$27.2 billion in UI benefits annually, with an estimated $3.1 billion in improper 
payments. If the selected states had been able to maintain their prior year’s 
improper payment rates, then states would have paid $19.3 billion less in 
improper payments (see Figure 5). 
 
 
Figure 5: Improper Payments Comparison 
 
 
Source: OIG case file analysis and ETA reported data 
                                            
27 ETA has required grant recipients to share state UI data with the OIG as a condition of 
accepting the fraud prevention grants offered under the American Rescue Plan (ARP) Act, which 
will continue to facilitate OIG’s access through December 31, 2023.  
28 As reported on ETA’s website, “Families First Coronavirus Response Act and Coronavirus Aid, 
Relief, and Economic Security (CARES) Act Funding to States through July 31, 2021, 
https://oui.doleta.gov/unemploy/docs/cares_act_funding_state.html. 

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We cannot project the results for the 4 states to the nation since the states were 
judgmentally selected. However, evidence indicates these issues were prevalent 
nationwide. Specifically, the 4 states were not alone in suspending eligibility and 
payment controls. In our survey, 77 percent of responding SWAs indicated they 
used BPC staff to process payments and 54 percent of responding states 
indicated they temporarily suspended payment integrity functions to pay 
claimants faster.  
 
ETA’s nationwide BAM program identified overpayment causes among most 
states common to those we identified in the 4 states, such as: 
 
• Benefit Year Earnings (BYE) Issues where claimants filed for UI benefits 
after returning to work or failed to accurately report earnings,  
• Separation Issues where paid claimants were ineligible for UI benefits due 
to quitting employment or being discharged for cause, and  
• Able and Available (A/A) Issues where paid claimants were ineligible for 
UI benefits due to not being able to or available for work (see Table 3).  
 
 
Table 3: Improper Payments (IP) and Causes for the 4 States 
(April 1, 2020–March 31, 2021) 
 
State 
IP 
Rate 
Rank 
BYE 
Issues  Rank Separation 
Issues  
Rank 
A/A  
Issues 
Rank 
KY 
6.0% 
3rd 
2.1% 
7th 
2.0% 
13th 
0.5% 
21st 
CA 
8.9% 
8th 
1.5% 
4th 
1.4% 
8th 
2.2% 
41st 
GA 
12.9% 
18th 
3.8% 
21st 
6.3% 
32nd 
0.7% 
27th 
MI 
16.0% 
29th 
8.6% 
45th 
5.2% 
27th 
0.5% 
22nd 
Source: OIG analysis of ETA’s reported information  
 
Curbing large-scale, organized UI fraud is not only a function of protecting public 
funds, it also protects the safety of Americans. Criminal enterprises have 
discovered that UI fraud is a low-risk, high-reward crime. They have invested 
fraudulent UI proceeds to further other criminal activity, such as purchasing guns 
and drugs. Individuals who we find are central to this conduct have been indicted 
on charges including racketeering conspiracy. The allegations included in these 

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indictments often relate to numerous violent, drug-trafficking, and economic 
crimes committed in furtherance of a criminal enterprise. 
MORE THAN 6 MILLION AMERICANS 
WAITED AT LEAST A MONTH FOR 
PANDEMIC-RELATED UI BENEFITS 
In our May 28, 2021, CARES Act UI Audit Report, we highlighted that states 
were challenged in ensuring claimants were paid promptly. Payment promptness 
continued to be a challenge for states for the entire CARES Act and CAA 
effective periods, and, in fact, worsened. To test timeliness, we assessed 
9.4 million claimants in the 4 states who received either regular UI or PUA 
benefits for weeks between March 28, 2020, and March 14, 2021. We used this 
data in conjunction with publicly-available data reported by ETA to assess 
payment timeliness for all 53 SWAs. 
 
OMB issued federal guidance on April 10, 2020, requiring agencies to prioritize 
expediency, which OMB defined as the rapid issuance of awards to meet crucial 
needs.29 In addition, ETA’s first payment promptness standard for the regular 
UI program requires 87 percent of claimants to receive their first payment within 
14 to 21 days.30 Further, as previously noted, many states reassigned BPC staff 
or suspended controls to process claims, contributing to improper payments. 
However, we found 48 of 53 SWAs were untimely in paying regular UI claimants; 
only 5 states were able to pay at least 87 percent of claimants within the required 
time period.  
 
Also, states sometimes took weeks to implement the new programs and 
claimants could not file for benefits until the new programs were active. As the 
pandemic-related UI programs were temporary, ETA did not apply its first 
payment promptness standard to them. However, since this is the standard DOL 
uses for the timeliness of regular UI payments, we used it for both our regular UI 
and PUA timeliness analysis, along with other timeliness indicators, to provide 
context as to the performance of states.  
 
Most states paid at least half of regular UI claimants timely. However, based on 
our analysis of ETA’s timeliness reports, the time required to implement the new 
                                            
29 OMB Memorandum 20-21, Implementation Guidance for Supplemental Funding Provided in 
Response to the Coronavirus Disease 2019 (April 10, 2020). 
30 ETA requires states to pay 87 percent of claimants in 14 or 21 days after the first compensable 
week depending if there is waiting week. Most states require that an individual, who is otherwise 
eligible for UI benefits, must first serve a waiting period (generally 1 week) prior to receiving 
benefits in a particular benefit year.  

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UI programs and the volume of claims resulted in millions of claimants waiting a 
month or more for their first payment, including at least 6.2 million Americans 
eligible for regular UI nationwide. 
STATES HAD VARYING SUCCESS PAYING 
CLAIMANTS TIMELY, AND IT WORSENED 
For the regular UI program, eligibility and weekly payment amounts vary by state. 
However, the regular UI program generally provides 26 weeks of unemployment 
compensation for individuals who are unemployed through no fault of their own 
and were working for a certain length of time earning a certain amount of money 
before becoming unemployed. We included regular UI claimants in our analysis 
of pandemic-related UI benefits’ timeliness as they also received FPUC, the 
weekly federal supplement. 
 
From our analysis of ETA’s reporting, only 5 of the 53 SWAs were able to pay 
regular UI claimants in compliance with ETA’s first payment promptness standard 
(see Table 4, and see Exhibit 3 for details on timeliness for all 53 SWAs). 
 
 
Table 4: Five States Met Timeliness Standard for Regular UI 
(April 1, 2020–March 31, 2021) 
 
State 
Total 
Claimants 
Claimants Paid 
Timely 
Percentage Paid 
Timely 
Minnesota 
42,418 
38,081 
90% 
Wyoming 
32,283 
28,591 
89% 
Louisiana 
418,031 
369,465 
88% 
North Dakota 
71,912 
63,550 
88% 
Rhode Island 
139,518 
122,900 
88% 
Source: OIG analysis of ETA-reported information  
 
All but 5 of the 53 SWAs were able to pay more than 50 percent of regular UI 
claimants within the ETA’s payment promptness standard (see Table 5). 
 
 
 

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Table 5: Five States Did Not Pay Half of Claimants Timely for Regular UI 
(April 1, 2020–March 31, 2021) 
 
State 
Total 
Claimants 
Claimants Paid 
Timely 
Percentage Paid 
Timely 
Ohio 
826,516 
356,790 
43% 
Florida 
1,772,328 
684,051 
39% 
Puerto Rico 
278,772 
94,886 
34% 
Hawaii 
192,294 
58,102 
30% 
Virgin Islands 
7,804 
730 
9% 
Source: OIG analysis of ETA-reported information  
 
For our analysis of PUA timeliness, we found only 1 of the 4 states was able to 
pay PUA claimants consistent with ETA’s first payment promptness standard. 
However, the other 3 of 4 states were able to pay the majority of claimants timely 
(see Table 6).  
 
 
Table 6: The 4 States Paid Most PUA Claimants Timely 
(March 27, 2020–March 14, 2021) 
 
State 
Total Claimants 
Claimants Paid 
Timely 
Percentage 
Paid Timely 
California 
2,485,306 
2,187,324 
88% 
Michigan 
659,249 
555,379 
84% 
Georgia 
333,268 
276,637 
83% 
Kentucky 
123,771 
92,290 
75% 
Source: OIG analysis of information collected during the audit 
 
While states had varying success with timeliness for the first payment during our 
audit scope, the timeliness nationwide over time worsened after the first quarter 
of implementation of pandemic-related UI programs. Ninety-four percent of 
SWAs (50 of 53) paid claimants faster during April through June 2020 than 

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during July through September 2020. In the first quarter after implementation, 
67 percent of claimants were paid timely; however, only 51 percent were paid 
timely in the next quarter. While the number rose during the following quarter, 
2020 ended with fewer claimants receiving their first UI payment on time than in 
April 2020. This trend continued through March 31, 2021 (see Figure 6).  
 
 
Figure 6: States’ Regular UI Payment Timeliness Worsened Over Time, 
(April 1, 2020–March 31, 2021) 
 
 
Source: OIG analysis of ETA-reported information  
STATES WERE CHALLENGED BY THE VOLUME OF 
CLAIMS AND IMPLEMENTING NEW PROGRAMS 
States were challenged by the volume of claims and the implementation of new 
UI programs. The COVID-19 pandemic was historic in its impact on the 
UI system. In 2019, DOL reported 11 million initial claims and 89 million 
continued claims for regular UI. In contrast, from March 28, 2020, 
to March 14, 2021, DOL reported more than 101 million workers filed an initial 
claim for PUA or regular UI. In addition, during this same time period, DOL 

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reported 1.1 billion PUA, regular UI, or PEUC continued claims and 
approximately 647 million FPUC claims.31  
 
In addition to the sheer volume, states had to develop new systems to implement 
the UI new programs, resulting in backlogs in processing claims for weeks and, 
in some cases, months. 
 
ETA officials stated the new pandemic-related UI programs were stood up in 
record time for any new program and under a period when the UI program was 
facing unprecedented demand and claims volume. This occurred as states were 
forced to transition all staff to full remote work due to the pandemic and rapidly 
hire and train staff.  
AS A RESULT, MILLIONS OF AMERICANS FACED 
LENGTHY DELAYS 
Delays in UI payments have real, long-lasting effects on Americans. We 
previously reported32 those effects include the inability to pay bills, increased 
credit card debt, high-interest rate borrowing, depleted savings, and food 
scarcity.  
 
In 2019, the Bureau of Labor and Statistics reported 6.3 million Americans were 
among the “working poor,” defined as those who worked at least 27 weeks but 
whose income fell below the official poverty level. Those same workers were also 
most likely to be service industry employees, the most susceptible occupation 
group to become unemployed due to the pandemic. Further, a 2020 National 
Endowment for Financial Education study indicated 52 percent of Americans are 
living paycheck to paycheck.  
 
Despite these very real needs, we assess that, from April 1, 2020, 
through March 31, 2021, at least 6.2 million of 29 million Americans nationwide 
eligible for regular UI waited a month or more to receive their first UI payments. 
Additionally, the 4 states took at least 30 days to pay 
492,109 of 3,601,594 (14 percent) PUA claimants. 
 
Further, our analysis does not account for discouraged applicants, applicants that 
attempted to apply for UI but did not get a response or felt the process was too 
                                            
31 DOL did not track initial claims for PEUC since claimants were not required to file a separate 
application. 
32 COVID-19: States Struggled to Implement Cares Act Unemployment Insurance Programs, 
Report No. 19-21-004-03-315 (May 28, 2021), 
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf 

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difficult to continue. ETA reports did not capture information on these individuals, 
and our analysis could not logically identify how many potential applicants were 
discouraged applicants. However, the Economic Policy Institute national survey33 
indicated the number could be in the millions.  
OIG’S RECOMMENDATIONS 
We recommend the Acting Assistant Secretary for Employment and Training: 
 
1. Use data collected from monitoring and BAM reports to identify the areas 
of highest improper payments including fraud and create a plan to prevent 
similar issues in future temporary UI benefit programs.  
 
2. Require states to have written policies and procedures, which apply 
lessons learned during the COVID-19 pandemic, to continue eligibility 
testing and BPC procedures during emergencies or other times of 
increased claims volume. These policies and procedures should include 
strategies to pay claimants timely. 
 
3. Work with NASWA to update the IDH Participant Agreement to require 
state to submit the results of their UI fraud investigations. 
 
4. Work with NASWA to ensure the IDH cross-matches are effective at 
preventing the types of fraud that were detected during the pandemic and 
regularly update using the results of state fraud investigations.  
 
5. Work with the OIG and states to recover the greatest practicable amount 
of the $7,092,604 paid to claimants connected to likely fraudulent claims. 
SUMMARY OF ETA’S RESPONSE 
While ETA agreed or partially agreed to three of five recommendations, it 
expressed three primary concerns regarding the report. First, ETA stated the 
amount of case files reviewed was not statistically valid for reporting a national 
improper payment rate. We cautioned readers of this report that the improper 
payment rate presented is the result of our specific testing of the 4 states and is 
                                            
33 Economic Policy Institute, “Unemployment Filing Failures: New Survey Confirms that Millions of 
Jobless Were Unable to File an Unemployment Claim,” Working Economics blog post 
(April 28, 2020), last accessed March 28, 2022, available at: 
https://www.epi.org/blog/unemployment-filing-failures-new-survey-confirms-that-millions-of-
jobless-were-unable-to-file-an-unemployment-insurance-claim/ 

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not intended to be projected to the nation. Also, ETA expressed concern that the 
OIG’s methodological approach would misrepresent the PUA improper payment 
rate. The OIG’s purpose was to determine if UI benefits were paid only to eligible 
individuals promptly rather than identifying an improper payment rate, which 
remains an ETA responsibility. The OIG maintains its characterization of these 
issues are accurately presented in our report. 
 
Second, ETA stated the report repeats findings from prior OIG reports and alert 
memoranda but does not acknowledge the steps taken to address these 
concerns, specifically ETA’s efforts to combat fraud in the UI program since 
February 2021. This is the first audit report to include case file testing, which 
provides an in-depth analysis of issues at the state-level. 
 
Third, ETA stated the report failed to appropriately consider the challenges facing 
states and ETA during the pandemic. The OIG unequivocally acknowledges, in 
this report and others, that staff at ETA and states struggled during the 
COVID-19 pandemic as SWAs worked to ensure timely and accurate UI benefit 
payments of more than $870 billion to workers unemployed through no fault of 
their own. The OIG’s recommendations in this report are partly intended to help 
alleviate such issues should the nation face another disaster.  
 
We considered other technical comments provided by ETA and made clarifying 
adjustments as appropriate. For example, ETA technically disagreed with our 
Recommendation 3 and provided an alternative approach. The alternative 
approach involves ETA revising its reports to capture the tools or interventions 
used by a state to detect potential fraud issues (including the IDH) and include 
the aggregated data for outcomes (e.g., determination, overpayment amounts) of 
the issues detected by these tools or interventions. In our view, this alternative 
approach satisfies the intent of our recommendation.  
 
We appreciate the cooperation and courtesies ETA extended us during this audit. 
OIG personnel who made major contributions to this report are listed in 
Appendix C. 
 
 
Carolyn R. Hantz 
Assistant Inspector General for Audit 
 

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EXHIBIT 1: FUNDING FOR THREE NEW KEY PANDEMIC-
RELATED UI PROGRAMS, AS OF 3/14/20  
Pandemic-Related 
UI Program 
Funds Drawn Down 
Total 
Funds Drawn Down in the  
4 States 
FPUC 
$331,742,201,334 
$92,987,427,406 
PUA 
95,666,665,202 
29,988,852,388 
PEUC 
44,755,749,596 
10,953,664,456 
TOTALS 
$472,164,616,132 
$133,929,944,250 
 Source: ETA-reported data 
 
 

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EXHIBIT 2: COSTS PAID TO LIKELY FRAUDSTERS OR 
IDENTITY FRAUD CASES  
In total, 951 claims filed in 28 different states were attached to likely fraudsters or 
identity fraud cases. States prevented payments to 495 of these UI claims; 
however, 456 claims received $7,092,604 in unemployment benefits from 
14 different states. 
 
State 
Amount Paid to Likely Fraudsters  
of Victims of Identity Fraud 
Arizona 
$70,296 
California 
6,527,934 
Florida 
45,741 
Georgia 
11,287 
Illinois 
143,840 
Kentucky 
10,432 
Louisiana 
78,163 
Massachusetts 
3,552 
Maryland 
5,393 
Michigan 
112,183 
New Jersey 
1,846 
Tennessee 
3,500 
Texas 
58,920 
Wisconsin 
19,517 
Total 
$7,092,604 
Source: OIG analysis of case files 
 
 
 

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EXHIBIT 3: TIMELINESS REPORTING BY STATE 
REGULAR UI - TIMELINESS BY STATE 
State 
Initial Claims 
Workload 
Cases Paid 
Timely 
Percentage 
Paid Timely 
Did State Meet ETA's 
Timeliness 
Standard? 
Alabama 
362,723 
279,441 
83% 
No 
Alaska 
75,906 
45,587 
60% 
No 
Arizona 
395,813 
288,731 
73% 
No 
Arkansas 
181,863 
141,054 
78% 
No 
California 
4,613,109 
2,707,352 
59% 
No 
Colorado* 
571,923 
459,586 
80% 
No 
Connecticut* 
420,905 
327,384 
78% 
No 
Delaware* 
65,718 
50,025 
76% 
No 
District of 
Columbia 
91,628 
47,550 
52% 
No 
Florida 
1,772,328 
684,051 
39% 
No 
Georgia* 
1,007,163 
742,173 
74% 
No 
Hawaii 
192,294 
58,102 
30% 
No 
Idaho 
85,871 
48,924 
57% 
No 
Illinois 
1,269,763 
959,082 
76% 
No 
Indiana 
551,976 
331,827 
60% 
No 
Iowa* 
287,677 
226,174 
79% 
No 
Kansas 
374,968 
278,224 
74% 
No 
Kentucky 
351,969 
250,315 
71% 
No 
Louisiana 
418,031 
369,465 
88% 
Yes 
Maine 
122,466 
68,067 
56% 
No 
Maryland* 
330,205 
189,859 
57% 
No 
Massachusetts 
1,028,245 
660,543 
64% 
No 
Michigan* 
1,214,282 
801,894 
66% 
No 
Minnesota 
42,418 
38,081 
90% 
Yes 
Mississippi 
249,314 
126,145 
51% 
No 
Missouri 
355,333 
281,503 
79% 
No 
Montana 
14,040 
10,867 
77% 
No 
Nebraska 
87,100 
57,355 
66% 
No 
Nevada* 
483,554 
294,747 
61% 
No 

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REGULAR UI - TIMELINESS BY STATE 
State 
Initial Claims 
Workload 
Cases Paid 
Timely 
Percentage 
Paid Timely 
Did State Meet ETA's 
Timeliness 
Standard? 
New Hampshire 
124,591 
75,916 
61% 
No 
New Jersey* 
725,240 
532,711 
73% 
No 
New Mexico 
99,693 
63,110 
63% 
No 
New York 
2,235,140 
1,214,593 
54% 
No 
North Carolina 
721,891 
436,889 
61% 
No 
North Dakota 
71,912 
63,550 
88% 
Yes 
Ohio 
826,516 
356,790 
43% 
No 
Oklahoma 
299,210 
233,494 
78% 
No 
Oregon 
440,778 
233,110 
53% 
No 
Pennsylvania 
1,240,729 
738,662 
60% 
No 
Puerto Rico 
278,772 
94,886 
34% 
No 
Rhode Island 
139,518 
122,900 
88% 
Yes 
South Carolina 
361,665 
267,186 
74% 
No 
South Dakota 
39,445 
29,868 
76% 
No 
Tennessee 
523,490 
367,647 
70% 
No 
Texas 
1,983,897 
1,433,989 
72% 
No 
Utah 
137,010 
106,080 
77% 
No 
Vermont* 
78,600 
57,594 
73% 
No 
Virgin Islands 
7,804 
730 
9% 
No 
Virginia 
593,101 
500,080 
84% 
No 
Washington 
536,428 
356,521 
66% 
No 
West Virginia 
140,099 
100,518 
72% 
No 
Wisconsin 
370,170 
240,244 
65% 
No 
Wyoming* 
32,283 
28,591 
89% 
Yes 
Source: OIG analysis of information publicly reported by ETA for April 1, 2020, to March 31, 2021 
*State did not traditionally utilize a waiting week—used the 21-day standard 
 
 
 

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APPENDIX A: SCOPE, METHODOLOGY, & CRITERIA 
SCOPE 
This audit covered DOL’s and states’ UI benefit programs including, but not 
limited to, regular UI, PUA, PEUC, and FPUC. Our testing covered the period 
March 28, 2020, to March 14, 2021.  
METHODOLOGY 
This performance audit was conducted remotely and included an in-depth 
analysis of four states: California, Georgia, Michigan, and Kentucky (4 states). 
Survey questionnaires were sent to an additional 49 SWAs. We completed this 
audit in accordance with Generally Accepted Government Auditing Standards 
(GAGAS).  
 
To answer our audit objective, we reviewed the CARES Act, CAA, ETA 
guidance, OMB guidance, the Social Security Act, and other criteria as required. 
We performed internal control procedures and interviews with the Office of 
Unemployment Insurance (OUI) national office and at the relevant OUI regional 
offices. For the 4 states, we analyzed internal controls, reviewed policies and 
procedures, conducted walkthroughs, and interviewed key agency personnel. 
Additionally, we statistically selected claimants to test case files for eligibility 
including fraud. In conjunction, with data selected for in-depth analysis we 
analyzed public data to assess the timeliness of payments for all 53 SWAs. 
Based on our initial testing, we created survey questionnaires and sent to 
non-selected states. The audit team administered 49 survey questionnaires to 
SWAs not included in in-depth analysis and received 44 responses. 
 
We reviewed and analyzed public summary data available from the states on 
UI claims and funding. 
 
SAMPLING PLAN 
 
Statistical Sampling Plan 
 
To perform our audit, we judgmentally selected 4 states for more intense 
analysis. To determine which states would be selected for more in-depth 
analysis, we performed a risk assessment using several risk factors. Specifically, 
we assessed program funding amounts, law enforcement intelligence, 

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congressional interest, and media reports. Based on this analysis, we selected 
California, Georgia, Kentucky, and California.  
 
This audit focused on UI benefit payments made between March 28, 2020, 
and March 14, 2021. As of March 14, 2021, SWAs had drawn down 
$472.2 billion in federal funds to pay UI benefits for PUA, PEUC, and FPUC 
(see Exhibit 1). Of that $472.2 billion, almost a third (28 percent) was drawn 
down by the 4 states selected. 
 
Based on data submitted by states in response to an IG subpoena, we identified 
the population of claimants who received an initial PUA program payment or 
regular UI program payment with an FPUC supplemental payment from 
March 28, 2020, to September 30, 2020. In total, from March 28, 2020, 
to September 30, 2020, the 4 states submitted claims data for 
9,546,807 claimants and $71,663,117,052 in benefits for the PUA and 
FPUC programs.  
  
We used the stratified random sampling method to select a sample from the 
universe of PUA and regular UI claimants. The total sample size for the 4 states 
was 214 with 98 PUA claimants and 118 regular UI claimants with a 
FPUC supplement. Based on our sample size, the confidence level was 
95 percent with a 7 percent precision rate.  
 
Non-Statistical Sampling Plan 
 
For each of the 4 states selected for in-depth analysis, we obtained a universe of 
PUA claimants, from March 28, 2020, to March 14, 2021. From these universes, 
we judgmentally selected 10 claimants from each to test under the revised 
eligibility requirements of the CAA. 
 
RELIABILITY ASSESSMENT 
 
We assessed the reliability of computerized data provided by states. We 
evaluated the appropriateness of the data provided by assessing the data, 
controls over the data, and when possible, corroborated it to public data. 
Specifically, the audit team performed analytical tests of the data and inquired 
with data analysts for any data discrepancies. We assessed controls 
implemented by states over pandemic-related UI programs and information 
technology. The audit team also corroborated PUA claims against public reports. 
Finally, as part of testing, the audit team traced the data provided by the states to 
claimant case files. 
 
 
 

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INTERNAL CONTROLS 
 
A performance audit includes an understanding of internal controls considered 
significant to the audit objective and testing compliance with significant laws, 
regulations, and other requirements. In planning and performing our audit, we 
considered whether internal controls significant to the audit objective were 
properly designed and placed in operation. This included reviewing policies and 
procedures. We confirmed our understanding of these controls and procedures 
through interviews and the review and analysis of documentation. We evaluated 
internal controls used for reasonable assurance. Our consideration of internal 
controls for administering key pandemic-related UI programs would not 
necessarily disclose all matters that might be reportable conditions.  
CRITERIA 
• Coronavirus Aid, Relief, and Economic Security Act, Public Law 116-136 
(March 27, 2020) 
• Consolidated Appropriations Act, 2021, specifically Division N, Title II, 
Subtitle A, the Continued Assistance for Unemployed Workers Act of 2020 
(December 27, 2020) 
• American Rescue Plan Act of 2021 (Pub. L. 117-2), specifically Title IX, 
Subtitle A, Crisis Support for Unemployed Workers (March 11, 2021) 
• Section 303 of the Social Security Act (42 U.S.C. 503) (August 14, 1935) 
• Office of Management and Budget Memorandum 20-21, Implementation 
Guidance for Supplemental Funding Provided in Response to the 
Coronavirus Disease 2019 (April 10, 2020) 
• Unemployment Insurance Program Letter 23-20, Program Integrity for the 
Unemployment Insurance (UI) Program and the UI Programs Authorized 
by the CARES Act of 2020 - Federal Pandemic Unemployment 
Compensation (FPUC), Pandemic Unemployment Assistance (PUA), and 
Pandemic Emergency Unemployment Compensation (PEUC) Programs 
(May 11, 2020) 
• Unemployment Insurance Program Letter 28-20, Addressing Fraud in the 
Unemployment Insurance (UI) System and Providing States with Funding 
to Assist with Efforts to Prevent and Detect Fraud and Identity Theft and 
Recover Fraud Overpayments in the Pandemic Unemployment Assistance 
(PUA) and Pandemic Emergency Unemployment Compensation (PEUC) 
Programs (August 31, 2020) 
• Unemployment Insurance Program Letter 04-01, Payment of 
Compensation and Timeliness of Determinations during a Continued 
Claims Series (October 27, 2000) 
• Unemployment Insurance Program Letter 04-17, Disclosure of 
Confidential Unemployment Compensation (UC) Information to the 

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Department of Labor’s Office of Inspector General (OIG) 
(December 16, 2016) 
• Unemployment Insurance Program Letter 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 (August 3, 2021) 
 

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APPENDIX B: AGENCY’S RESPONSE TO THE REPORT 
 
 
 

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U.S. Department of Labor – Office of Inspector General  
APPENDIX C: ACKNOWLEDGMENTS 
 
 
 
 
 
 
 
 
 
Key Contributors to this report were: 
Dennis Asante, Information Technology Specialist 
Nick Cumby, Lead-Audit Manager 
Dwight Gates, Audit Director 
Jonathan Heinz, Attorney Advisor 
Carla Orvis Hunt, Writer-Editor 
Velma Ivey, Auditor 
LaKeisha Jones, Statistician 
Sharon Newby, Auditor  
Le Nguyen, Attorney Advisor 
Phu Nguyen, Supervisory Information Technology Specialist 
Christy Powell, Auditor 
Michael Roberts, Auditor 
Mark Sanderson, Audit Manager 
Travis Williams, Auditor 
Chaze Williams-Bey, Auditor 
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REPORT FRAUD, WASTE, OR ABUSE  
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

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