Report - Report Dol Oig Covid 19 Recovery Of Millions In Pandemic Related Ui Overpayments Impr 2025 09 25
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- 2025-09-25
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- Report Dol Oig Covid 19 Recovery Of Millions In Pandemic Related Ui Overpayments Impr 2025 09 25
Summary
An audit report of the U.S. Department of Labor Office of Inspector General to the Employment and Training Administration, Report Number 19-25-009-03-315, issued September 25, 2025, on state waivers of pandemic unemployment insurance overpayment recoveries from March 27, 2020, to June 30, 2023. The OIG found that ETA did not detect that Michigan and Massachusetts improperly waived recovery of overpayments, including fraud, with a loss estimated to exceed $240 million. It reports that Michigan waived an estimated 71,656 overpayments that were the claimants' fault, including 17,833 confirmed fraudulent, and Massachusetts waived 250, including 14 likely fraudulent. It says the $10.9 billion that 47 states reported waiving is likely significantly understated. The OIG made five recommendations and states ETA had not yet responded to the draft report.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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REPORT TO THE
EMPLOYMENT AND TRAINING
ADMINISTRATION
COVID-19: RECOVERY OF MILLIONS IN
PANDEMIC-RELATED UNEMPLOYMENT
INSURANCE OVERPAYMENTS
IMPROPERLY WAIVED, INCLUDING
FRAUD
DATE ISSUED: SEPTEMBER 25, 2025
REPORT NUMBER: 19-25-009-03-315
WHAT WE FOUND
We found ETA’s guidance and oversight did not ensure states only
waived the recovery of eligible overpayments for the three key
pandemic-related UI programs from March 27, 2020, to
June 30, 2023. First, ETA did not detect that Michigan and
Massachusetts improperly waived the recovery of overpayments
that did not meet federal requirements, including those resulting
BRIEFLY… from fraud. As a result, the federal government and taxpayers
incurred a financial loss estimated to exceed $240 million; see
Exhibit 1 for details. We based this on the following:
COVID-19: RECOVERY OF MILLIONS
IN PANDEMIC-RELATED UI To waive recovery of a non-fraud overpayment, the CARES Act,
OVERPAYMENTS IMPROPERLY and its amendments required states to determine: (1) the
WAIVED, INCLUDING FRAUD overpayment was not the claimant’s fault and (2) repayment would
be contrary to equity and good conscience. However, Michigan and
WHY WE DID THE AUDIT Massachusetts did not always comply with these requirements.
Michigan waived recovery of an estimated 71,656 overpayments
On March 27, 2020, Congress passed that were the claimants’ fault and 17,833 that were confirmed to be
the Coronavirus Aid, Relief, and fraudulent. Massachusetts waived recovery of 250 overpayments
Economic Security (CARES) Act with that did not meet federal waiver requirements, including 14 that
the intent of providing expanded were likely fraudulent. Data availability issues prevented the
unemployment insurance (UI) benefits projection of Massachusetts’ results. The deficiencies noted
to workers who were unable to work as occurred because ETA’s oversight of waivers primarily consisted of
a direct result of the COVID-19 monitoring reviews that were not sufficient to detect the risk of
pandemic. The act, as amended, improper decisions by states, which involved the creation and
granted state workforce agencies (SWA application of state laws to determine claimants’ waiver eligibility.
or state) authority to waive the recovery
of certain nonfraudulent UI Second, the $10.9 billion in UI overpayment recoveries that
overpayments. As of June 30, 2023, 47 47 SWAs reported to ETA as waived was likely significantly
states reported waiving the recovery of understated. For instance, Massachusetts was unable to report
$10.9 billion (22 percent) of dollar amounts waived for one pandemic-related program due to
$49.6 billion in established system field limitations. Other states reported challenges were due
nonfraudulent UI overpayments. to outdated information technology systems, limited resources, and
increased workloads. Without accurate reporting on recoveries
The Employment and Training waived for pandemic-related UI program overpayments—as
Administration (ETA) was responsible required by ETA—the Department and the public are unaware of
for oversight of CARES Act UI the total amount of this federally funded debt that was forgiven by
programs. Based on concerns that states. ETA also needs this information to make the most informed
states may have unintentionally waived policy decisions about guidance for future emergencies.
the recovery of ineligible overpayments,
including fraud, we performed an audit WHAT WE RECOMMENDED
to answer the following question:
We made five recommendations to ETA including the need for more
Did ETA’s guidance and oversight frequent reviews, working with Michigan on the confirmed fraud
ensure states only waived the cases, remedying at least $240 million in questioned costs, and
recovery of eligible overpayments? working with states to obtain missing waiver information. Although
the Draft Report was provided to ETA in August 2025, ETA has not
To answer this question, we performed yet provided a response. Once available, we will post ETA’s
in-depth testing on two of the states response and our analysis to our website.
that reported the highest dollar amount
of waived overpayment recoveries. We READ THE FULL REPORT
surveyed the other 51 SWAs. For more information, go to:
https://www.oig.dol.gov/public/reports/oa/2025/19-25-009-03-
315.pdf>.
U.S. Department of Labor – Office of Inspector General
TABLE OF CONTENTS
INSPECTOR GENERAL’S REPORT .................................................................... 1
RESULTS ............................................................................................................. 4
Recovery of More Than $240 Million in UI Overpayments, Including
Fraud, Was Improperly Waived ................................................................. 6
States Reported Waiving Recovery of More Than $10.9 Billion in
Pandemic-Related UI Overpayments, but the Actual Amount Is
Unknown and Likely Significantly Higher................................................... 20
CONCLUSION .................................................................................................... 25
OIG’S RECOMMENDATIONS ............................................................................ 26
Analysis of Agency’s Comments .............................................................. 26
EXHIBIT 1: QUESTIONED COSTS .................................................................... 27
EXHIBIT 2: TOTAL OVERPAYMENT RECOVERIES WAIVED AND
NONFRAUDULENT OVERPAYMENTS BY STATE ........................................... 28
EXHIBIT 3: SEVEN WAIVER SCENARIOS ........................................................ 30
EXHIBIT 4: DESCRIPTION OF MASSACHUSETTS ONE-CLICK INELIGIBLE
WAIVER ISSUES ................................................................................................ 31
APPENDIX A: SCOPE AND METHODOLOGY .................................................. 32
-i-
U.S. Department of Labor Office of Inspector General
Washington, DC 20210
INSPECTOR GENERAL’S REPORT
Lori Frazier Bearden
Acting Assistant Secretary
for Employment and Training
U.S. Department of Labor
200 Constitution Avenue NW
Washington, DC 20210
This report presents the results of the U.S. Department of Labor (DOL) Office of
Inspector General’s (OIG) audit of the Employment and Training Administration’s
(ETA) oversight of state workforce agencies (SWA or state) that waived the
recovery of unemployment insurance (UI) benefit overpayments under the
Coronavirus Aid, Relief, and Economic Security (CARES) Act and related
subsequent legislation.
Based on concerns that states may have unintentionally waived the recovery of
ineligible overpayments, including those resulting from fraud, we conducted this
performance audit to answer the following question:
Did ETA’s guidance and oversight ensure states only waived the
recovery of eligible overpayments?
To answer this question, we reviewed UI
overpayments with recoveries waived for the THREE KEY PANDEMIC UI
three key pandemic UI programs: Federal PROGRAMS
Pandemic Unemployment Compensation FPUC provided a weekly supplement
(FPUC), Pandemic Unemployment to UI benefits from 03/27/20 ($600)
Assistance (PUA), and Pandemic Emergency and from 12/28/20 to 09/05/21 ($300).
Unemployment Compensation (PEUC). ~
PUA provided UI benefits to
These programs—authorized by the CARES individuals who were not traditionally
Act 1 on March 27, 2020, expanded by the eligible for UI benefits.
Continued Assistance for Unemployed ~
Workers Act of 2020 (Continued Assistance PEUC provided additional weeks to
Act) 2 and the American Rescue Plan Act of individuals who had exhausted their
regular UI benefits.
1
Section 2102 (PUA), 2104 (FPUC), and 2107 (PEUC)
2
Section 201(1)(d)(4) (A) and (B)
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U.S. Department of Labor – Office of Inspector General
2021—concluded on September 6, 2021.3
We conducted audit procedures at both the
WHAT IS A UI
national and state levels to assess states’
OVERPAYMENT
compliance with federal and state waiver laws. RECOVERY WAIVER?
At the national level, we evaluated ETA’s waiver An overpayment occurs when
guidance and oversight by reviewing individuals receive benefits to
Unemployment Insurance Program Letters which they are not entitled.
(UIPL) and interviewing regional ETA officials. ~
Some UI overpayments occur
We also analyzed waiver data submitted by all due to agency error, and state
SWAs 4 on ETA-required reports. We did this to laws generally treat
identify states that waived overpayment overpayments where the
recoveries in the highest dollar amounts, as well individual is not at fault and is
as to identify trends and irregularities in state not committing fraud differently.
~
waiver activities. At the state level, we focused Under certain circumstances, for
on Michigan and Massachusetts, two of the overpayments without fault or
states with the highest dollar amounts 5 of fraud on the part of the
overpayment recoveries waived for FPUC,6 individual, many states provide
PUA, and PEUC. that the individual may not be
liable for repayment and thus
recovery is waived.
For these two states, we reviewed a sample of
FPUC, PUA, and PEUC claims with overpayment recoveries waived to determine
if SWAs properly applied the waivers. Additionally, we surveyed the remaining 51
SWAs to analyze states’ waiver laws nationwide and capture a comprehensive
view of state practices—47 SWAs 7 responded. Our audit period covered
overpayment recovery waivers approved from March 27, 2020, to June 30, 2023
(the audit period). For more information on scope and methodology, see
Appendix A.
Michigan and Massachusetts reported $5.9 billion, or 54 percent, of the
$10.9 billion that 47 states8 reported to ETA as waived for the audit period.
3
CARES Act activities continued beyond September 6, 2021, for previous weeks.
4
SWAs are the body that administers the UI program within a state, district, or territory. For the
50 states, as well as the U.S. Virgin Islands, the Commonwealth of Puerto Rico, and the
District of Columbia, that administrative body is a SWA. There are, therefore, 53 SWAs.
5
Florida, Ohio, and Texas also were among states with the highest dollar amount of overpayment
recoveries waived. However, we did not perform in-depth testing of these states due to resource
constraints.
6
FPUC’s selection amount included supplements for regular state UI, Unemployment
Compensation for Federal Employees, and Unemployment Compensation for Ex-
Servicemembers. There were other FPUC supplements for additional programs such as
Extended Benefits PUA, PEUC, and others.
7
Kentucky, Rhode Island, Tennessee, and the U.S. Virgin Islands did not respond.
8
Of the 53 SWAs, 6 reported no waiver activity for the three key CARES Act UI programs:
California, Minnesota, New Jersey, New York, Oklahoma, and Puerto Rico.
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U.S. Department of Labor – Office of Inspector General
Figure 1 depicts overpayment recoveries waived in the United States by state.
Refer to Exhibit 2 for details of waived recoveries of overpayments ($10.9 billion)
and nonfraudulent overpayments ($49.6 billion) 9 by state.
Figure 1: Pandemic UI Overpayments Waived by States
Source: OIG analysis of state waiver data published by ETA.
Challenges Presented by the COVID-19 Pandemic
The COVID-19 pandemic presented ETA and states with significant challenges,
exposing critical vulnerabilities within the UI system. According to ETA, decades
of underinvestment in state UI program administration left many states struggling
with outdated technology and insufficient staffing when the pandemic struck.
States had to rely on aging information technology (IT) systems or were amid
modernization efforts, making it difficult to adapt quickly to the surge in UI claims.
As the country responded to the health crisis, states had to shift to fully remote
operations, further straining their limited resources. The sudden and dramatic
increase in claims volume created a dual challenge—delivering timely assistance
to those in need while ensuring the accuracy of payments.
ETA and states made substantial efforts under extreme circumstances. However,
according to ETA, the unprecedented demand for benefits stretched states’ IT
systems beyond capacity, leading to widespread overpayments. Millions of
Americans filed for UI benefits, and in many cases, received payments they may
not have been eligible for through no fault of their own. These challenges
contributed to $49.6 billion in nonfraudulent UI benefit overpayments as of
9
Overpayments net of fraudulent activities.
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U.S. Department of Labor – Office of Inspector General
June 30, 2023.
Authority to Waive the Recovery of Pandemic-Related UI Overpayments
Federal law 10 provided SWAs with the authority to waive recovery of a
nonfraudulent pandemic-related UI overpayment if: (1) the individual was not at
fault and
(2) repayment would be contrary to equity and good conscience. Generally, ETA
authorized two categories of waiver approvals:
• Regular Waiver: 11 Assessed individually on a case-by-case basis.
• Blanket Waiver: Allowed states to waive the recovery of
overpayments for multiple eligible claimants at once.
By February 2022, ETA had approved seven scenarios under blanket waivers.
See Exhibit 3 for a description of blanket waiver scenarios. Additionally, states
could request approval of additional blanket waiver scenarios.
Congress expressed concerns about the use of blanket waivers and ETA’s
potential lack of adequate oversight and controls, possibly allowing the waiving of
recovery of ineligible overpayments.
RESULTS
We found ETA’s guidance and oversight did not ensure states only waived the
recovery of eligible overpayments for the three key pandemic-related UI
programs during the audit period. First, ETA did not detect that Michigan and
Massachusetts improperly waived the recovery of overpayments that did not
meet federal requirements, including those resulting from fraud. As a result, the
federal government and taxpayers incurred a financial loss estimated to exceed
$240 million. We identified this loss as questioned costs12 (see Exhibit 1). We
based this on the following:
10
In March 2020, the CARES Act outlined these circumstances for FPUC and PEUC, and the
Continued Assistance Act expanded those waiver provisions to include PUA in December 2020.
11
ETA uses the terms waiver and blanket waiver. This report refers to waiver as regular waiver.
12
Questioned costs are costs: (A) resulting from an alleged violation of a law, regulation, contract,
grant, or other document or agreement governing the use of Federal funds; (B) that are not
supported by adequate documentation (also known as an unsupported cost); or (C) that appear
unnecessary or unreasonable.
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U.S. Department of Labor – Office of Inspector General
Michigan waived the recovery of an estimated 71,65613 overpayments that were
the claimants’ fault, including an estimated 17,833 14 overpayments that Michigan
confirmed 15 to be fraudulent. In addition, Massachusetts waived the recovery of
250 overpayments that did not comply with federal waiver requirements,
including 14 that were likely fraudulent. Data availability issues prevented the
projection of Massachusetts’ results.16 The deficiencies noted occurred because
ETA’s oversight of waivers primarily consisted of monitoring reviews that were
not sufficient to detect the risk of improper decisions by states, which involved
the creation and application of state laws to determine claimants’ eligibility for
waivers.
Second, the total recoveries that 47 SWAs reported waiving—$10.9 billion (or
22 percent of $49.6 billion in overpayments established during the audit period)—
is likely significantly understated. For instance, Massachusetts was unable to
report dollar amounts waived for the FPUC program due to system field
limitations. Other states reported challenges were caused by outdated IT
systems, limited resources, and increased workloads. Without accurate reporting
on recoveries waived for pandemic-related UI program overpayments—as
required by ETA—the Department and the public are unaware of the total
amount of this federally funded debt that was forgiven by states. ETA also needs
this information to make the most informed policy decisions for future guidance.
13
This estimate is a projection based on data Michigan submitted for 760,228 UI claims that
included regular and blanket waivers of overpayment recoveries under the FPUC, PUA, or PEUC
programs from March 27, 2020, to June 30, 2023. From this data, we created two universes:
29,090 blanket waivers totaling $101.8 million and 731,138 regular waivers totaling $4.1 billion.
From a stratified random sample of 400 claims (195 blanket and 205 regular), we found that 68
waivers were improperly applied—specifically, 50 blanket waivers (25.6 percent of the blanket
sample) and 18 regular waivers (8.8 percent of the regular sample). Based on these results, we
projected that $172.9 million was improperly waived, with a 95 percent confidence interval and a
precision level of ±7 percent.
14
This projection is based on Michigan data for 731,138 unemployment insurance (UI) claims that
received regular overpayment recovery waivers under FPUC, PUA, or PEUC, totaling $4.1 billion
from March 27, 2020, to June 30, 2023. From a stratified random sample of 205 regular waiver
claims, five (2 percent) were confirmed by the state as fraudulent. Based on this sample, we
projected that 17,833 regular waiver claims (2 percent) in the full universe were confirmed
fraudulent. The projected total of confirmed fraudulent waiver dollars was $65.8 million, with a 95
percent confidence interval and a precision level of ±7 percent. No blanket waivers were
confirmed as fraudulent.
15
Confirmed fraud consists of claims where overpayment waivers were validated as fraudulent by
Michigan, establishing that fraudulent overpayments were waived.
16
For details about Massachusetts’ data availability issues, see Appendix A, Sampling.
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U.S. Department of Labor – Office of Inspector General
Recovery of More Than $240 Million in UI
Overpayments, Including Fraud, Was
Improperly Waived
ETA’s guidance and limited oversight did not ensure states only waived the
recovery of eligible overpayments. During the audit period, Michigan and
Massachusetts both waived ineligible claims, including (for Michigan) claims it
determined to be fraudulent and (for Massachusetts) claims approved under
revisions to its state waiver laws which OIG did not find evidence that ETA
reviewed for potential concerns. ETA’s oversight was not sufficient to detect that
Michigan and Massachusetts waived the recovery of ineligible overpayments
estimated to exceed $240 million or to detect fraudulent claims in the waiver
process.
Michigan and Massachusetts Did Not Comply with
Federal Requirements When Waiving the Recovery
of UI Overpayments
According to the CARES Act, Continued Assistance Act, and UIPL 20-21, a state
could only waive the repayment17 of an FPUC, PUA, or PEUC overpayment if it
determined that: (1) the payment of such compensation was without fault on the
part of the individual and (2) such repayment would be contrary to equity and
good conscience. Despite these requirements, we found both Michigan and
Massachusetts improperly waived the recovery of overpayments as follows:
• Michigan approved regular waivers and blanket waivers for which
overpayments were the claimants’ fault,
• Michigan waived the recovery of fraudulent overpayments,
• Massachusetts approved waivers that did not comply with federal
requirements including issues that were the claimants’ fault, and
• Massachusetts approved waivers for claims with a high probability
of fraud.
17
The CARES Act used the terminology “waive repayment,” while UIPL 20-21 used the term
“recovery”.
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U.S. Department of Labor – Office of Inspector General
Michigan
Michigan Waived the Recovery of Overpayments that Did Not Comply with
Federal Requirements
From March 27, 2020, to June 30, 2023, Michigan waived the recovery of UI
overpayments that totaled approximately $4.2 billion (760,228 claims). We
stratified the universe and selected 400 sample claims, (205 regular and
195 blanket 18 waivers) totaling $1.8 million.
Michigan law,19 the Social Security Act,20 and applicable sections of the
CARES Act required that UI claimants must be able and available for work to be
considered eligible for benefits. Claimants were required to recertify their
eligibility biweekly and had to answer “yes” to being able and available for work.
Of the 400 claims we tested, there were 68 claims 21 from individuals that
answered “yes” and received benefits but were subsequently found ineligible by
Michigan because they did not meet the able and available for work
requirement.22 Accordingly, Michigan issued determination letters to the
claimants informing them of their ineligibility for unemployment benefits and
weeks of overpayments. However, Michigan waived recovery of the
overpayments, despite the overpayment letters containing statements indicating
the claimants were at fault. For example, one letter stated:
Your class schedule conflicts with the normal hours of your usual
occupation. You are not willing to drop or rearrange your classes in order to
accept suitable full-time work.
Prior to granting the waivers, Michigan had to establish that: (1) the
overpayments were no fault of the claimants and (2) recoveries would be
“against equity and good conscience,” in accordance with the CARES Act and
UIPL 20-21. However, we found no evidence that Michigan made these
determinations.
Therefore, the 68 claimants should not have been granted waivers that
extinguished their obligation to repay federally funded debt.
18
We tested 195 blanket waivers included in two batches; that totaled 29,090 claims. Michigan
approved the first batch on July 17, 2022 (13,570) and the second batch on October 25, 2022
(15,520).
19
Michigan Employment Security Act 421.28
20
Section 303(a)(12)(16)
21
Of the 68 claims, we identified 33 in FPUC, 16 in PUA, and 19 in PEUC.
22
There were 98 additional claimants whose overpayments were waived under several executive
orders.
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U.S. Department of Labor – Office of Inspector General
In total, Michigan improperly waived approximately $126,000 related to the
68 sampled claims, which amounted to a projected total of nearly $173 million
related to able and available issues (see Table 1).
Table 1: Michigan’s Ineligible Waivers, Able and Available Issues
Amount Waived Total Total
Waiver Type
from Sample Projected Amount Claims
Regular $42,491 $160,639,407 18
Blanket $83,954 $ 12,288,136 50
Totals $126,445 $172,927,543 68
Source: Generated by the OIG using data from Michigan
Michigan officials maintained that the 68 claimants were not subject to the
requirement for being able and available for work. While Michigan law23 specifies
requirements associated with being able and available for work, Michigan issued
Executive Order 2020-24 (followed by a series of 12 rescissions and extensions)
that suspended compliance with this law from March 16, 2020, through
September 4, 2020. However, the overpayment issues related to the 68 claims
occurred after September 4, 2020.
Michigan Waived the Recovery of Fraudulent Overpayments
In its guidance,24 ETA specified that under no circumstances may a state waive
recovery activities for a fraudulent overpayment. The OIG expressed concerns
about states unintentionally waiving the recovery of fraudulent overpayments in
its Semiannual Report to Congress for the period October 1, 2022, to
March 31, 2023.25 This audit’s data analysis and case reviews confirmed those
concerns were valid.
Specifically, we tested 400 sampled claims and identified those that were
potentially fraudulent using a fraud indicator analysis previously used and
23
Michigan Employment Security Act 421.28(1)(c)
24
UIPL 21-20, Change 1
25
Semiannual Report to Congress, Vol. 89 (October 2022–March 2023),
https://www.oig.dol.gov/public/semiannuals/89_rev.pdf
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U.S. Department of Labor – Office of Inspector General
reported by the OIG.26 This analysis flags claims with fraud indicators such as
claimants applying for benefits in multiple states, claimants using suspicious or
temporary emails, and claims involving the Social Security numbers (SSN) of
deceased persons. However, some of these indicators may also appear in claims
involving identity theft victims where fraudsters use the personal information of
innocent persons to file UI claims.
We analyzed the sampled claims against an OIG database containing UI claims
data for all 53 SWAs. This allowed us to identify suspicious patterns in the claims
data—such as the same SSN, email, or bank account being used across multiple
claims in different states—which pointed to organized fraud. For example, if a
single SSN was used to file claims in multiple states with shared bank account
information, it was likely the work of fraudsters directing funds to one account
they controlled.
From our analysis, we identified 14 claims that totaled $87,277, with a high
probability of fraudulent activities, which we refer to as likely fraudulent.
Examples included:
• one claim ($4,500) was filed with an SSN used to file 11 claims in different
states, with a physical address shared by 4 additional claims. In total, this
SSN was linked to claims filed in 11 states,27 as shown in Figure 2.
26
Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High-Risk
Areas Increased to $45.6 Billion, Report No. 19-22-005-03-315 (September 21, 2022),
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf
27
The claimant filed claims in Michigan, Alabama, Arizona, California, Colorado, Illinois,
Massachusetts, North Carolina, Nevada, Pennsylvania, and West Virginia; however, only
Alabama and Michigan paid UI benefits on the claims.
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U.S. Department of Labor – Office of Inspector General
Figure 2 – One SSN Used to File Multiple Claims in 11 States
Source: OIG data analysis of SWA claims data
• another claim ($1,280) was filed with an SSN used to file 2 claims in
different states, with emails, bank account information, physical address,
and phone numbers linking it to 21 additional claims. In total, this SSN
was linked to claims filed in three states.28
We referred the 14 likely fraudulent claims to Michigan for confirmation. Michigan
state officials verified 5 of the 14 claims were confirmed to be fraudulent.
Specifically, Michigan reported:
• three claims had pending investigations resulting in overpayments being
waived prior to completion of the investigations that confirmed fraud,
• one claim was determined to be fraudulent by Michigan based on an out
of state SSN, Alabama address, no reported wages, and incorrect Social
Security Administration information, and
• one claim had an identity verification and a fraud investigation added by
Michigan’s system. The claimant was determined to be ineligible based on
identity theft. Michigan waived recovery of the overpayment a year later.
28
The claimant file claims in Arizona, Pennsylvania, and Michigan; however, only Michigan paid
UI benefits on the claims.
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U.S. Department of Labor – Office of Inspector General
These instances of confirmed fraud demonstrated Michigan’s system did not
consistently prevent waiving the recovery of fraudulent overpayments. Based on
our statistical sample, we projected Michigan waived recoveries totaling over
$65 million for 17,833 claims related to confirmed fraudulent overpayments.
Despite guidance prohibiting waivers for the recovery of fraudulent
overpayments, waivers were issued for UI claims that resulted from fraud.
Without adequate controls at the state and federal level, SWAs and ETA faced
increased risk of waiving recovery of fraudulent overpayments.
Massachusetts
Massachusetts Waived the Recovery of Overpayments that Did Not Comply
with Federal Requirements
During the audit period, Massachusetts waived the recovery of UI overpayments
that totaled approximately $1.1 billion (232,687 claims). From the universe of
$1.1 billion, we randomly sampled 441 claims (196 regular waivers,29 195 blanket
waivers,30 and 50 one-click waivers,31 totaling $3.6 million).32
We tested 121 PUA regular waiver samples—totaling approximately $1.8 million
in overpayments—to which Massachusetts applied state law to waive recoveries.
States were permitted to waive recovery of overpayments under federal or state
authority if two federal criteria were met—no fault of the claimant and against
equity and good conscience. While the 121 overpayments met the no fault
criteria, we found no evidence these claims met the second requirement: against
equity and good conscience.
To determine whether the claimants met the criteria for against equity and good
conscience, Massachusetts required the submission of waiver applications that
included hardship sections. Massachusetts state law defined against equity and
good conscience as:
…recovery of an overpayment will be considered inequitable if an
29
Of the 196 regular waivers, 75 were subsequently determined to be one-clicks, for a total of
121 regular waivers and 125 one-clicks.
30
We tested 195 waivers included in one batch of 21,888 claims, approved by Massachusetts on
April 19, 2022.
31
The Massachusetts Department of Unemployment Assistance created a simplified one-click
waiver to make it easier for the claimant to apply for debt forgiveness for 2020 and/or 2021for
no-fault overpayments received during the pandemic.
32
We were unable to project the results of our testing for Massachusetts due to data availability
issues. For details about Massachusetts’ data availability issues see Appendix A, Sampling.
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U.S. Department of Labor – Office of Inspector General
overpaid claimant, by reason of the overpayment, relinquished a valuable
right or changed his or her position for the worse. In reaching such a
decision, the overpaid claimant's financial circumstances are irrelevant.
The relevancy of a claimant’s financial circumstances did not negate the state’s
requirement for information to support hardship, and we found no evidence that
Massachusetts assessed whether the required conditions were met. Although
applications included hardship statements, Massachusetts did not verify the
statements made or determine whether claimants relinquished a valuable right or
changed positions for the worse. In doing so, Massachusetts did not ensure
waivers met the required federal and state standards for “against equity and
good conscience.
Furthermore, Massachusetts’ waiver regulations 33 state that in any proceedings
under these regulations, the overpaid claimant shall have the burden of proving
entitlement to a waiver. Instead, Massachusetts officials said claimants’ financial
hardship waivers did not include a set calculation utilized in determining
claimants’ request for a waiver due to financial hardship; essentially, they used
an honor system in making the determinations.
We questioned the entire $1.8 million in overpayments associated with the
121 claims tested. Massachusetts did not provide documentation to support
claimants’ hardship assertions and relied solely on unverified statements in
claimants’ waiver applications. This increased the risk that ineligible
overpayments were waived, compromising the integrity of the overpayment
recovery waiver process.
According to GAO’s Standards for Internal Control in the Federal Government,
documentation is a necessary component of an effective internal control system.
It supports the design, implementation, and operational effectiveness of internal
controls34 . Without adequate documentation, Massachusetts could not
demonstrate its waiver decisions met federal requirements.
Massachusetts Waived Overpayment Recoveries without Completing the
Requirement for Claimant Notification
We tested 195 blanket waivers totaling approximately $1.3 million. We found
Massachusetts waived recovery of overpayments totaling $27,216 for
4 claimants who had not been notified of their overpayments as required by
33
430 CMR 6.05 Waiver of Recovery Overpayments
34
OV4.08, Documentation Requirements
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ETA’s UIPL 20-21.35 Notifying the claimants would have triggered applications for
waivers. However, Massachusetts waived the claimants’ overpayments in
blanket waivers, which negatively impacted the potential recovery of federal
funds. This confirms Congress’ program integrity concerns regarding blanket
waivers. We questioned the $27,216 in overpayments.
Massachusetts Expedited One-Click Waiver Process
As noted, Massachusetts introduced a one-click option in 2022 as a simplified
waiver request process for UI overpayments. This initiative aimed to provide
relief to claimants with outstanding nonfraudulent overpayments. Under the
simplified waiver process, claimants did not have to submit a traditional waiver
application. Massachusetts informed claimants of the regulation changes36 and
the new process as follows:
The Department of Unemployment Assistance (DUA) has created a
simplified one-click waiver to make it easier for you to apply for debt
forgiveness. It is important to note that YOU must ask for this
debt forgiveness by applying for a waiver of your 2020 and/or
2021 non-fault overpayment received during the pandemic.
Applying for a waiver is quick and easy!
1. Log onto your PUA Online Account at https://ui-cares-
act.mass.gov/PUA/_/
2. Click the “More” tab
3. Select on “Apply for an Overpayment Waiver”
4. Click “Submit”
That’s it! You’re done.
Massachusetts One-Click Issues
We tested 12537 one-click waivers totaling approximately $427,579 in
overpayments. We asked Massachusetts officials for documentation to support
their one-click waiver decisions—including determinations of no fault and against
equity and good conscience. Massachusetts officials informed us there was no
documentation to support any of the one-click decisions. Additionally, letters
35
UIPL 20-21 outlines federal law requirements for identifying and establishing overpayments,
which include promptly contacting the individual to whom the potential overpayment was made
and providing the individual a reasonable amount of time to be heard before making an official
determination that the payment is improper.
36
Change to 430 CMR 6.00 and 430 CMR 6.16 Special Relief for Pandemic Overpayments
37
Contains 75 waivers initially regular and subsequently determined to be one-clicks
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notifying the claimants of their overpayments indicated the claimants were
potentially at fault (see Table 2).
Table 2: Massachusetts, Potential At-Fault Issues with One-Click Waivers
Number Issue Type Total Waived Total Claims
1 PUA Eligibility $143,318 28
2 Voluntarily Quit $101,800 20
3 Employed $50,150 12
4 Able and Available $43,200 31
5 Gross Earning $33,345 25
6 Without Good Cause $27,900 2
7 Late Appeal $16,341 2
8 Employment Discharge $9,125 4
9 Suitable Work $2,400 1
All Totals $427,579 125
Source: Generated by the OIG using data from Massachusetts
Because Massachusetts officials could not support that they made the two
determinations required by the CARES Act, we questioned waivers for the entire
$427,579 in overpayment recoveries associated with the 125 claims tested. See
Exhibit 4 for a description of each issue type.
Furthermore, our survey results showed Massachusetts was not the only state
that used one-click waivers. Of the 47 SWAs that responded to the survey, New
Hampshire indicated it used a one-click waiver process.
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Massachusetts Waived the Recovery of Overpayments that Had a High
Probability of Fraud
We also tested Massachusetts’ waiver universe and identified potentially
fraudulent claims using a fraud indicator analysis that had been previously used
and reported38 by the OIG in September 2022.
We analyzed the potentially fraudulent claims against an OIG database to
identify patterns consistent with organized fraud, enabling examination of
associated UI claims across the 53 SWAs to detect fraudulent activities. Our
analysis identified 14 likely fraudulent claims39 with overpayments totaling
$191,928. For example, we identified four claims with multistate fraud flags:
• One PUA claim ($6,804) involved an SSN used for 2 claims in different
states with different names and with a phone number shared by
23 additional claims. In total, this claim was linked to claims filed in three
states;40
• One PUA claim ($6,804) involved an SSN used for 4 claims in different
states, with a physical address shared by 4 additional claims. In total, this
claim was linked to claims filed in four states;41
• One PUA claim ($8,004) involved an SSN used for 2 claims in different
states, with a physical address and email address shared by 4 additional
claims. In total, this claim was linked to claims filed in two states;42 and
• One PEUC claim ($9,300) involved an SSN used for 2 claims in different
states using the same name, with the only variation being the email
address. The username remained identical, but the domain changed.
Changing the email address domain is consistent with common fraud
38
In September 2022, the OIG reported a cumulative $45.6 billion paid in four high-risk areas that
represented increased risks of UI fraud. Multistate claimants—$29 billion—was the largest.
Alert Memorandum: Potentially Fraudulent Unemployment Insurance Payments in High-Risk
Areas Increased to $45.6 Billion, Report No. 19-22-005-03-315 (September 21, 2022),
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf
39
Including 1 FPUC waiver, 12 PUA waivers, and 1 PEUC waiver
40
The claimant filed claims in Massachusetts, Michigan, and Pennsylvania; however, only
Massachusetts and Michigan paid UI benefits on the claims.
41
The claimant filed claims in Arizona, California, Massachusetts, and Nevada; however, only
Arizona, California, and Massachusetts paid UI benefits on the claims.
42
The claimant filed claims in Massachusetts and New York; however, only Massachusetts paid
UI benefits on the claims.
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tactics used to evade detection. In total, this claim was linked to claims
filed in two states.43
The remaining 10 claims totaling $161,016 were flagged due to SSNs used to file
claims in multiple states, along with suspicious email patterns—such as reuse of
the same email across multiple UI applications, use of temporary email
addresses, or addresses consistent with common fraud techniques.
We asked Massachusetts state officials about efforts to ensure claims were
nonfraudulent prior to waiving recovery of the established overpayments.
Massachusetts officials informed us they had not identified any of the 14 claims
as fraudulent. The claimants had been previously approved for benefits and
received payments for multiple weeks before Massachusetts determined the
claims were ineligible—and therefore overpayments. When establishing an
overpayment, ETA required states to determine who is at fault, including whether
the overpayment was caused by claimant fraud.
Of the 14 SSNs, 5 were on a list of claimants who filed potentially fraudulent
claims ETA had transmitted to Massachusetts in response to the OIG’s reports
on high-risk areas, issued September 2022. ETA also provided instructions and
requirements for investigations and due process regarding the list of claimants.
According to Massachusetts officials, they did not conduct any subsequent
investigations because they had already denied the claims and established the
overpayments prior to receiving the list in March 2023. Neither denying payment
of the claims nor establishing overpayments and waiving recoveries negated the
email from ETA requiring Massachusetts to investigate the SSNs.
Massachusetts’ UI systems44 did not detect the 14 claims were potentially
fraudulent, which leads us to question the systems’ effectiveness to identify
potentially fraudulent claims. Massachusetts had one of the highest maximum
weekly benefit amounts during the pandemic—$823 per week—with some
claimants receiving an additional $600 in pandemic-related payments for a total
of over $1,400 per week. These high-dollar amounts made Massachusetts an
attractive and high-value target for fraudsters. Most of the 14 claims were PUA,
the pandemic-related UI program with the highest risk of fraud.
We identified 10 of 14 claims as ineligible for waivers based on non-fraud
reasons previously discussed and included them in our questioned costs.45
43
The claimant filed claims in California and Massachusetts; however, only Massachusetts paid
UI benefits on the claims.
44
Of the 14 claims, Massachusetts processed 12 claims using its current FAST system and
2 claims using Unemployment Insurance Online.
45
The cost associated with the remaining 4 likely fraudulent claims—$29,016—was not
questioned because Massachusetts could not confirm the claims were fraudulent.
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However, Massachusetts’ failure to determine if the claims were fraudulent prior
to waiving recoveries of the overpayments increased the likelihood that
fraudsters were enriched by ineligible waivers and could avoid criminal
prosecution.46
ETA’s Guidance and Oversight of States’
Processes for Waiving the Recovery of UI
Overpayments Was Insufficient
Federal law granted states the authority to waive the recovery of UI benefit
overpayments financed with federal funds in accordance with their own state
waiver laws if two federal criteria were met. As such, federal funds were at
increased risk of undue financial loss due to decisions being made at state
levels, without adequate consideration or concern for the negative financial
impact on the federal government. Accordingly, ETA needed to develop,
implement, and enforce more stringent guidance and controls to safeguard
federal funds from the risk of fraud, waste, and abuse.
In October 2020, ETA outlined its oversight of state waiver activities for its
regional offices in Employment and Training Order 1-21.47 This order and
attachments provided detailed information and instructions for the types of
oversight required for FPUC, PUA, and PEUC, including program reviews with
waiver questions to identify states’ waiver issues. However, the frequency and
requirements of the reviews were insufficient to detect the waiver issues we
identified.
During the audit period, ETA conducted 5 monitoring reviews for Michigan.
Review results were documented in reports dated February 202148 and July
2021 with no waiver issues identified. The waiver issues we found—FPUC, PUA,
PEUC—occurred after September 2021 and should have been detected by ETA
during the next 2 monitoring reviews that had results published in reports dated
February 2022 and December 2023. However, the reports contained no findings
or waiver-related areas of concern.
Also, during the audit period, Massachusetts received a monitoring review that
resulted in a report dated February 2022. While the report contained CARES Act
findings spanning our audit scope, it did not indicate examination of
46
As it stands, the statute of limitations for many pandemic-related UI fraud cases has begun to
expire, as the statutes most often used to prosecute UI fraud have five-year limitations.
47
National and Regional Office Responsibilities in Managing, Monitoring, and Overseeing State
Grants for the Unemployment Insurance (UI) Programs Created by the Coronavirus Aid, Relief,
and Economic Security (CARES) Act of 2020, issued on October 2, 2020
48
Two monitoring review reports were dated February 2021 (February 10 and February 24).
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Massachusetts’ waiver process. Although ETA examined Massachusetts’
CARES Act activity, it did not have sufficient controls in place to ensure the
propriety of decisions—that culminated in waiving the recovery of $1.1 billion in
UI overpayments.
Furthermore, although ETA stated it intended to review any proposed or created
state statutes or regulations regarding the waiver of CARES Act program
overpayment recoveries, Massachusetts enacted emergency regulations in
April 2022. We found no evidence that ETA had reviewed emergency
regulations. The new regulations allowed the state to take actions that resulted in
the state’s approval of ineligible waivers using the one-click process.
According to ETA, it provided states with multiple forms of guidance and support,
including three webinars between May 2021 and July 2022 on UIPL
No. 20-21 and CARES Act reporting requirements. Additionally, ETA provided
funding through UIPL No. 28-20, Change 4, to help states address administrative
and reporting challenges. However, despite these efforts, of the 47 survey
respondents, 15 SWAs (32 percent) responded they received no CARES Act
technical assistance from their respective ETA regional offices.
Millions in Federal Funds Lost Due to Improperly
Waived UI Overpayment Recoveries
As a result of ETA’s insufficient oversight of Michigan’s and Massachusetts’
waiver activities, the federal government and taxpayers incurred a financial loss
estimated to exceed $240 million in financial loss (see Table 3).
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Table 3: Amounts of Recoveries Waived for Ineligible Overpayments,
Michigan (MI) and Massachusetts (MA)
State and Issue Total Amount
MI: Able and Available Issue $172,927,543
MI: Confirmed Fraud $65,781,593
Michigan: Total (Projected) $238,709,136
MA: Did Not Meet Federal Requirement (Against Equity
$1,803,425
and Good Conscience)
MA: Did Not Meet Claimant Notification Requirement $33,744
MA: At-Fault One-Click Waivers $427,579
Massachusetts: Total $2,264,748
TOTAL BOTH STATES $240,973,884
Source: Generated by the OIG using data from Michigan and Massachusetts
Had we been able to project the amount of UI overpayment recoveries
improperly waived by Massachusetts, the financial loss estimated to exceed
$240 million would have likely been significantly higher. Furthermore,
$191,928 of Massachusetts’ ineligible overpayments were likely fraudulent.
ETA’s Guidance Limits Reconsideration of Waivers
Under Finality Laws
In December 2023, ETA’s UIPL 05-24 allowed states to apply their finality laws to
CARES Act claims, restricting their ability to revisit waiver decisions. For
example, Michigan’s law permits reconsideration only within 1 year for nonfraud
cases. Similarly, Massachusetts allows reconsideration within 1 year for errors or
new claimant information. As a result, it is likely that the non-fraud waiver issues
we identified in Michigan and Massachusetts will not be revisited due to these
states’ finality laws.
By permitting states to forego revisiting waiver decisions after applicable
established timeframes, ETA is preventing the correction of errors or the
recovery of federal funds even when issues with eligibility, claim accuracy, or
administrative error are later identified. Consequently, the application of finality
laws in waiver decisions contributes to unrecoverable debt owed to the federal
government, reinforcing the need for robust initial oversight and controls to detect
improper payments in state UI programs.
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States Reported Waiving Recovery of More
Than $10.9 Billion in Pandemic-Related UI
Overpayments, but the Actual Amount Is
Unknown and Likely Significantly Higher
Under state CARES Act agreements and ETA guidance, SWAs were required to
report overpayment activities, including the total dollar amount of overpayment
recoveries waived, with an emphasis on accuracy, uniformity, and comparability
in reported information. According to state reporting on ETA’s website, 47 SWAs
reported waiving the recovery of $10.9 billion in FPUC, PUA, and PEUC
overpayments; however, this information was incomplete.
States mainly attributed the waiver reporting challenges to outdated IT systems.
States also cited inadequate guidance and technical support from ETA to assist
with the submission of accurate and complete reports. Without accurate and
complete data, policymakers, program administrators, and the public could not
make informed decisions or hold states accountable for administrating their UI
programs. Incomplete reporting also hampered ETA’s efforts to measure the
effectiveness of pandemic-related UI programs.
ETA Required States to Report Overpayment and
Waiver Information
To receive CARES Act funds, SWAs signed agreements requiring compliance
with all ETA guidance and operating instructions. These agreements obligated
SWAs to provide any information and reports that ETA deemed necessary. ETA
issued the following related UIPLs:
• (April 2020) UIPL 16-20,49 requiring states to submit PUA monthly
ETA 902P reports through which states could provide information on PUA
overpayment activity and administration;
49
Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 – Pandemic
Unemployment Assistance (PUA) Program Operating, Financial, and Reporting Instructions
(April 5, 2020), https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2020/UIPL_16-20.pdf
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• (April 2020 and June 2020) UIPL 17-20 and UIPL 15-20, Change 2,50
specifically requiring states to document FPUC and PEUC overpayment
detection, prevention, recovery, and waiver activities using quarterly ETA
227 reports;
• (January 2021) UIPL 16-20, Change 4,51 updating the ETA 902P report to
include: additional overpayment data items for tracking and assessing
state overpayment recovery efforts; informing policymakers about PUA;
determining the effectiveness of identity theft prevention efforts; and
assessing additional program integrity needs; and
• (September 2021) UIPL 16-20, Change 6,52 adding the requirement for
states to report overpayment recovery waivers for the PUA program.
$10.9 Billion in Waived Overpayment Recoveries Is
Likely Significantly Understated
Although 47 SWAs reported waiving recovery of $10.9 billion in overpayments for
FPUC, PUA, and PEUC, this amount is highly likely incorrect because some
SWAs reported waiver information that was likely inaccurate.53 For example,
Massachusetts reported zero waived FPUC amounts to ETA for 5 quarters.54
The state could not report FPUC dollar amounts waived due to system field
limitations. It also reported zero waived PEUC amounts for quarters ending
June 2020 and September 2020. According to Massachusetts personnel, the
state did not begin to process waivers until the quarter ending December 2020.
50
Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020—Pandemic Emergency
Unemployment Compensation (PEUC) Program Operating, Financial, and Reporting Instructions
(April 10, 2020),
https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2020/UIPL_17-20.pdf; and
Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020—New Data Collection
Instrument and Revised Reporting Instructions for Federal Pandemic Unemployment
Compensation (FPUC) (June 15, 2020),
https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2020/UIPL_15-20_Change_2.pdf
51
Continued Assistance to Unemployed Workers Act of 2020—Pandemic Unemployment
Assistance (PUA) Program: Updated Operating Instructions and Reporting Changes
(January 8, 2021), https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2021/UIPL_16-
20_Change_4.pdf
52
Pandemic Unemployment Assistance (PUA) Program: Updated Operating Instructions and
Reporting Changes (September 3, 2021),
https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2021/UIPL_16-20_Change-6.pdf
53
Some states reported zero waived amounts for FPUC, PUA, and PEUC when they should not
have. Additionally, some states were unable to report accurately due to IT system limitations.
54
Quarters ending June 2020 through March 2021 and June 2023.
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In addition, we identified discrepancies between SWAs’ survey responses and
required recovery waiver reporting. For example, New York, one of the states we
surveyed, informed us that it waived the recovery of overpayments. However,
New York reported zero waived amounts for the three pandemic UI programs
reviewed, which they attributed to ongoing IT system modernization efforts. In
total, 14 SWAs acknowledged waiving recovery of overpayments; however, their
required reporting showed zero waived amounts for specific pandemic-related
programs. For the audit period, we found the following discrepancies for the 14
respondent states:
• California, New Jersey, New Hampshire, New York, Oregon,
Puerto Rico, and West Virginia acknowledged waiving recoveries
for pandemic-related UI program overpayments but reported zero
waived amounts for FPUC.
• Alabama, California, Connecticut, Delaware, Kansas, New Jersey,
New York, Puerto Rico, Vermont, and Washington acknowledged
waiving recoveries for pandemic-related UI program overpayments
but reported zero waived amounts for PUA.
• Alabama, California, Mississippi, New Jersey, New York, Oregon,
and Puerto Rico acknowledged waiving recoveries for pandemic-
related UI program overpayments but reported zero waived
amounts for PEUC.
Furthermore, eight of the respondent states 55 indicated they did not fully report
the total dollar amount waived for overpayment recoveries. Of these, 5 states –
California, New Jersey, New York, Vermont, and Washington – reported zero
waived amounts for one or more of the pandemic-related UI programs reviewed.
Notably, information on the SWAs’ websites showed all eight states had
programs waiving recovery of pandemic-related UI overpayments.
Insufficient IT Systems and Technical Support Led
to Incomplete Reporting
States cited various factors leading to incomplete and inaccurate reporting of
overpayment recoveries waived. Of 47 survey respondents, 23 reported facing
challenges in reporting total waived dollar amounts for CARES Act UI
overpayments on ETA 227 (FPUC and PEUC) and ETA 902P (PUA) reports. Of
these 23, 12 attributed their challenges to IT issues, including outdated UI
55
The eight surveyed states were: California, Indiana, Maine, New Jersey, New Mexico, New
York, Vermont, and Washington.
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systems, limited technical and business resources, and difficulties in updating
overpayment processes to meet federal reporting requirements. According to
ETA, its monitoring alone was not sufficient to correct these situations.
States reported that core system limitations and legacy mainframes hindered
accurate data separation and reporting. Multiple states reported incorrect data,
necessitating manual corrections. Programming complexities, such as the need
to program each overpayment type and waiver decision, further complicated the
process. Specific examples of IT challenges included:
• Arizona: Challenges with separating data for ETA 227 reports due to the
state’s antiquated UI system;
• Georgia: Limited resources to update overpayment system processes and
develop federal reporting requirements timely, including CARES Act
programs and extended benefit changes;
• New Jersey: Legacy mainframe system limitations prevented separate
reporting;
• Pennsylvania: Mainframe limitations caused difficulties in reporting waived
nonfraudulent FPUC and PEUC overpayments;
• Texas: Programming challenges due to the volume needed for ETA 227
reports across multiple programs (FPUC and PEUC); and
• Vermont: Outdated systems and challenges with staffing and program
development.
Non-IT-related challenges added further complications that included vendor
issues, competing priorities, high workloads, legal constraints such as statutes of
limitations, and law modifications. States also faced challenges differentiating
between program rules and aligning with reporting guidance. Despite ETA
issuing UIPLs, hosting webinars, and providing funding opportunities, a lack of
oversight led to inconsistencies in reporting waived recoveries.
Furthermore, ETA did not sufficiently address system limitations, hindering
states’ ability to report large dollar amounts waived. For example, Michigan
initially did not report the amount of waived overpayment recoveries due to a
system limitation that prevented entry of large dollar amounts, which triggered
fatal errors in the ETA 227 reporting system. This issue was fixed by ETA, in
September 2023, 2 years after the first transmission was prevented.
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Incomplete Reporting Created a Barrier to
Assessing Recoveries of Waived Overpayments
The states’ failure to report complete overpayment amounts with recoveries
waived prevents UI program stakeholders from fully understanding the
performance of pandemic-related programs. In addition, it impairs the ability of
policymakers and program administrators to make informed decisions and hold
states accountable for administering their UI programs and managing taxpayer
dollars. Furthermore, these reporting deficiencies contributed to DOL receiving its
fourth consecutive qualified opinion on its consolidated financial statements.56
ETA’s policies emphasize the need for accuracy, uniformity, and comparability in
UI data to monitor program effectiveness. However, states’ current reporting
does not provide sufficient data to accurately assess the full scope of
pandemic-related UI overpayment recoveries waived, negatively affecting the
ability to gauge their impact on the recovery of UI overpayments. Incomplete and
inaccurate reporting also hinders ETA’s ability to: (1) ensure the integrity of
overpayment recovery processes and (2) better prepare for similar future
emergencies.
Lack of Detail in Waiver Data
Adding to these challenges, ETA did not require states to report blanket waivers
separate from their reporting of regular overpayment waivers, complicating any
assessment of effectiveness of each waiver type.
According to GAO’s Standards for Internal Controls in the Federal Government,
management should use quality information to achieve the entity’s objectives.
Under the standards, management should change information requirements as
needed to meet modified objectives and address modified risks.57
On February 18, 2022, Congressional stakeholders asked the Secretary of Labor
to provide an overall estimate for the number and dollar value of claims that fell
into each of the five new waiver categories (scenarios) and a state-by-state
breakdown for each of the 53 UI systems. ETA responded,
56
Near the end of each calendar year for the preceding fiscal year, the OIG issues an
Independent Auditors' Report on DOL's Consolidated Financial Statements. The reports
(available by clicking on the respective year) for fiscal years 2021, 2022, 2023, and 2024 each
issued a qualified opinion. Before the 2021 report, DOL had not received a qualified opinion in 25
years.
57
Principle 13
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ETA has not estimated the number and dollar value of claims that fall into
the approved blanket waiver scenarios as states are only required to
report the total amount of overpayments for which recovery is waived.
This reporting limitation complicated our ability to assess states’ waiver activities.
Specifically, we were unable to determine and report the extent to which SWAs
used regular waivers and blanket waivers, the amounts waived under each type,
or overall effectiveness of waiver types nationwide. For this audit, we obtained
CARES Act program data directly from Michigan and Massachusetts UI systems,
which allowed us to identify overpayment recoveries waived by waiver type. This
allowed us to assess and demonstrate risks presented by regular and blanket
waivers—and to detect the existence of other waiver types.
Questions from Congress and media highlight the need for more transparent and
detailed data on overpayment recovery waivers. Of survey respondents, 20 of
47 SWAs (43 percent) indicated being able to distinguish amounts waived based
on waiver type. Understanding these distinctions is essential for assessing the
utilization and effectiveness of waivers and ensuring transparency in UI program
reporting—for improved program integrity.
CONCLUSION
Pandemic-related federal funds were at increased risk of undue financial loss
due to decisions made by SWAs to waive the recovery of UI overpayments under
federal and state laws. Our audit found 2 states—representing 54 percent of total
dollars waived during the audit period—improperly waived recovery of
pandemic-related UI overpayments estimated to exceed $240 million, including
an estimated more than $65 million in confirmed fraud. That is out of a likely
significantly underreported $10.9 billion in waiver activities by SWAs nationwide.
Because of inadequate federal oversight, billions of dollars in federal funds are at
increased risk of having been inappropriately waived and going unrecovered.
Addressing weaknesses in federal oversight of states’ UI waiver activities is
critical to adequately protecting federal funds from the risk of fraud, waste, and
abuse during future emergencies.
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OIG’S RECOMMENDATIONS
We recommend the Administrator for the Office of Unemployment Insurance:
1. Work with states to strengthen waiver approval processes to prevent the
improper waiving of UI overpayment recoveries when federal dollars are at
stake.
2. Work with the Office of the Chief Financial Officer (OCFO) to develop and
implement a specific process designed to detect when states have
improperly waived UI overpayment recoveries, providing time for states to
course correct and minimize the risk of financial loss.
3. Work with Michigan to ensure proper post-investigative actions are taken for
the five confirmed fraud cases identified in this report.
4. Remedy the $240,973,884 in questioned costs.
5. Work with state workforce agencies to ensure they retroactively submit
accurate and complete information related to overpayment recovery waiver
amounts for FPUC, PUA, and PEUC, for all pandemic-related reporting
periods.
Analysis of Agency’s Comments
The OIG issued a draft of this report to ETA officials for comment in August 2025.
ETA has not yet provided a response. As such, we are issuing the final report
without ETA’s response. Upon receipt of a response from ETA, we will post it,
along with our analysis of management’s comments, on our website.
We appreciate the cooperation and courtesies ETA extended to us during this
audit.
Laura B. Nicolosi
Assistant Inspector General for Audit
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U.S. Department of Labor – Office of Inspector General
EXHIBIT 1: QUESTIONED COSTS
Table 4: Questioned Costs for Michigan and Massachusetts
Description Amount
Michigan $238,709,136
Massachusetts $2,264,748
Total Questioned Costs $240,973,884
Source: Generated by the OIG using data from Michigan and Massachusetts
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U.S. Department of Labor – Office of Inspector General
EXHIBIT 2: TOTAL OVERPAYMENT RECOVERIES WAIVED AND
NONFRAUDULENT OVERPAYMENTS BY STATE
Table 5: Total Overpayment Recoveries Waived and Nonfraudulent
Overpayments by State, March 27, 2020, to June 30, 202358
Total Overpayment Total Nonfraudulent
State
Recoveries Waived59 Overpayments
National Total 10,898,158,066 49,565,815,310
Alabama 194,044 272,065,629
Alaska 5,583,284 74,542,266
Arizona 275,300,494 312,724,372
Arkansas 941,689 63,723,471
California - 14,093,157
Colorado 324,847,797 2,317,705,378
Connecticut 6,401,990 18,265,169
Delaware 303,565 14,458,264
District of Columbia 360,122 89,604,180
Florida 760,817,520 3,866,830,593
Georgia 14,041,549 101,943,396
Hawaii 3,499,807 23,816,779
Idaho 9,320,835 27,111,637
Illinois 90,414,027 2,724,258,847
Indiana 112,473,997 1,142,871,451
Iowa 25,266,451 107,596,562
Kansas 44,673 23,302,584
Kentucky 9,034,096 29,560,850
Louisiana 29,587,190 210,001,714
Maine 802,716 83,686,639
Maryland 267,621,606 3,995,762,834
Massachusetts 1,225,743,668 2,992,242,502
Michigan 4,680,065,138 10,658,759,053
58
A hyphen (-) is applied in cells where states reported “0” for required overpayment reporting.
59
Overpayment and recovery amounts are based upon publicly available state reporting on the
ETA 227 (FPUC), ETA 902P (PUA), and ETA 227 (PEUC) report. Information found at:
https://oui.doleta.gov/unemploy/DataDownloads.asp.
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U.S. Department of Labor – Office of Inspector General
Total Overpayment Total Nonfraudulent
State
Recoveries Waived59 Overpayments
Minnesota - 55,508,372
Mississippi 3,434,813 351,064,169
Missouri 82,751,677 495,331,722
Montana 778,751 76,224,552
Nebraska 1,347,878 56,519,932
Nevada 18,213,182 1,703,984,238
New Hampshire 8,675,203 164,635,784
New Jersey - 107,166,709
New Mexico 41,118,446 512,158,622
New York - 216,281,079
North Carolina 31,533,025 797,738,076
North Dakota 657,052 78,047,583
Ohio 416,413,264 5,405,208,419
Oklahoma - 58,380,373
Oregon 7,235,153 117,447,843
Pennsylvania 13,882,193 2,999,339,881
Puerto Rico - 169,340,768
Rhode Island 8,025,557 46,256,851
South Carolina 1,223,189 159,790,319
South Dakota 3,419,707 21,412,579
Tennessee 2,325,281 78,010,270
Texas 2,123,233,040 3,662,928,355
Utah 519,264 50,703,203
Vermont 1,987,753 8,825,594
Virginia 237,036,121 919,701,863
Virgin Islands 3,852 3,966,082
Washington 28,505,851 1,806,752,334
West Virginia 390,238 81,460,608
Wisconsin 19,905,591 177,799,644
Wyoming 2,875,727 18,902,159
Source: OIG analysis of public overpayment and recovery data, retrieved March 27, 2024.
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U.S. Department of Labor – Office of Inspector General
EXHIBIT 3: SEVEN WAIVER SCENARIOS
In UIPL 20-21 (May 2021) and UIPL 20-21, Change 1 (February 2022),60 ETA
provided states with guidance on applying blanket waivers to certain types of
overpayments. The following seven types of overpayments qualify for these
waivers, provided they occurred through no fault of the individual receiving
benefits and repayment would be contrary to equity and good conscience:
1. An individual was eligible for payment for a given week, but, through no
fault of the individual, was paid incorrectly under either PUA or PEUC at a
higher weekly benefit amount;
2. An individual, through no fault of their own, was paid a minimum weekly
benefit amount under PUA based on the incorrect ETA guidance;
3. An individual responded “no” to being able and available for work, and the
state issued payment for PUA or PEUC without adjudicating the eligibility
issue;
4. An individual was eligible for payment, and the state issued payment at a
higher rate than the weekly benefit amount under PUA or PEUC;
5. An individual responded “no” to being unemployed, partially unemployed,
or unable or unavailable to work due to approved COVID-19-related
reasons, and the state paid PUA. When asked to self-certify, the individual
did not respond or confirmed no approved COVID-19-related reasons
applied. The state issued payment, resulting in overpayment for the week;
6. An individual submitted required proof of earnings used to calculate the
PUA weekly benefit amount, and the state incorrectly processed the
calculation, resulting in a higher weekly benefit amount under PUA; or
7. An individual submitted proof of self-employment earnings to establish
eligibility for the Mixed Earners Unemployment Compensation Program,
and the state incorrectly processed the information, resulting in
overpayment.
60
In January 2025, ETA provided new guidance ending applications for approval of additional
blanket waiver scenarios, available at:
https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2021/UIPL%2020-
21%20Change%202/UIPL%20No.%2020-21%20Change%202.pdf
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U.S. Department of Labor – Office of Inspector General
EXHIBIT 4: DESCRIPTION OF MASSACHUSETTS ONE-CLICK
INELIGIBLE WAIVER ISSUES
• PUA Eligibility Requirements – A claimant did not meet PUA eligibility
requirements.
• Voluntarily quit – A claimant left their job under circumstances
determined to be voluntary and without good cause.
• Employed – A claimant was not deemed unemployed because they did
not meet the criteria for either ''partial unemployment'' or ''total
unemployment.”
• Able and available – A claimant did not meet able and available for work
requirements.
• Gross earnings – A claimant failed to accurately report gross earnings for
the week. The claimant was not entitled to UI benefits for any week in
which more than the allowable amount was earned.
• Without good cause/did not comply with registration and filing
requirement – A claimant did not meet the registration and filing
requirements.
• Late appeals – A claimant who did not file an appeal within 30 calendar
days from the issue date of the determination letter.
• Employment Discharge – A claimant was discharged for deliberate
misconduct in willful disregard of the employer’s interest.
• Suitable work – A claimant refused an offer of suitable work without good
cause and therefore was not entitled to receive benefits.
Source: Generated by the OIG using Massachusetts Determination Letters
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U.S. Department of Labor – Office of Inspector General
APPENDIX A: SCOPE AND METHODOLOGY
Scope
Our audit focused on the impact of waivers on the recovery of UI overpayments,
including fraud, and covered the period March 27, 2020, to June 30, 2023.
The objective of the audit was to determine if ETA’s guidance and oversight
ensured states only waived the recovery of eligible overpayments. Specifically,
this audit focused on: whether waived overpayments met eligibility requirements;
and the extent to which improper waivers impacted the recovery of UI
overpayments and the pursuit of fraud in the three key pandemic-related UI
programs: FPUC, PUA, and PEUC.
Methodology
We conducted this performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and
perform the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit objective.
We believe that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objective.
This performance audit included our review of ETA’s guidance (UIPLs) for UI
overpayment recoveries waived by states for the three new key pandemic UI
programs from March 27, 2020, to June 30, 2023. We judgmentally selected two
focus states—Michigan and Massachusetts—based on a risk assessment
discussed below. We interviewed ETA regional personnel responsible for
oversight of Michigan and Massachusetts and state officials.
We evaluated claims with the recovery of overpayments waived for Michigan and
9F 10
Massachusetts to determine whether the claimants were eligible to have the
recoveries of their overpayments waived. Additionally, we surveyed the
remaining 51 SWAs, identified those with waiver laws, and analyzed the
applicable states’ laws. We coordinated with OIG data scientists to compare the
two focus states’ data with data from the OIG Office of Investigations’ data
warehouse to identify the extent to which waived overpayment recoveries
contained potentially fraudulent claims in three high-risk areas, specifically,
individuals who filed claims using: the same SSN in multiple states, SSNs of
deceased persons, and suspicious email accounts.
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U.S. Department of Labor – Office of Inspector General
Data Reliability
We assessed the reliability of data provided by Michigan and Massachusetts
through a series of analytical tests and evaluations of IT controls. We
collaborated with OIG data scientists to validate the sufficiency, relevance,
validity, reliability, completeness, and accuracy of the data, using tools such as
Statistical Analysis Software for testing missing values and outliers. We
examined state-level controls over pandemic-related UI programs and IT
systems. Additionally, we corroborated state data with external sources, such as
public reports, and traced data back to claimant case files to verify accuracy and
validity. Based on these procedures, the data was assessed as sufficiently
reliable for the audit objective.
Internal Controls
We obtained an understanding of internal controls for ETA, Michigan, and
Massachusetts, including IT systems, that were considered significant to the
audit objective and in planning and designing procedures to perform the audit.
We did not provide assurance on their internal controls. Therefore, we did not
express an opinion on ETA’s or the two states’ internal controls.
Sampling
To perform our audit, we initially judgmentally selected five states for in-depth
analysis. To determine which states to select, we performed a risk assessment
that identified the states that waived the highest dollar amount of overpayment
recoveries. Specifically, we stratified the states by the total dollar amounts
waived, from lowest to highest, for the FPUC,61 PUA, and PEUC programs
combined. We then selected the five states with the highest dollar amounts.
Based on this assessment, we initially selected Michigan, Massachusetts,
Florida, Ohio, and Texas. We then added an additional two states, Arizona and
Pennsylvania, based on risk factors such as the percent of overpayment
recoveries waived and the use of blanket waivers to forgive a substantial amount
of overpayments. We focused our first round of in-depth testing on Michigan and
Massachusetts, the two states with the highest dollar amount waived. Due to
resource constraints, we did not perform further in-depth testing.
For Michigan’s and Massachusetts’ claims testing, we designed a sampling
plan under the assumption of high risk. For Michigan, we used stratified
sampling for the FPUC, PUA, PEUC programs and obtained samples from
61
FPUC data was limited to the supplements for regular state UI, Unemployment Compensation
for Federal Employees, and Unemployment Compensation for Ex-Servicemembers. There were
other FPUC supplements for additional programs such as Extended Benefits, PUA, PEUC, and
others. However, data for these categories were not apparent.
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U.S. Department of Labor – Office of Inspector General
regular and blanket waiver universes (760,228) with a 95 percent confidence
level and 7 percent relative precision. We stratified the universe and selected
400 sample claims, (205 regular and 195 blanket waivers).
For Massachusetts, we used stratified sampling for the regular universe
(123,348) and for the one-click universe (58,071) we randomly selected a
judgmental sample62 size of 50 with a 95 percent confidence level and 5 percent
relative precision. In addition, we used a simple random sampling for
Massachusetts blanket universe (21,888) with a 95 percent confidence level and
7 percent relative precision. We did not project the amount of Massachusetts’
improper waiver activity due to data availability issues.
Specifically, after selecting a sample of 441 claims (195 blanket waivers,
196 regular waivers, and 50 one-click waivers) from Massachusetts and
completing our testing, we discovered the regular waiver sample included
one-click waivers. In consultation with the OIG statistician, we decided (due to
time constraints and limited resources) to use the testing that had been
performed. This decision resulted in the 195 blanket waivers, 121 regular
waivers, and 125 one-click waivers with the inability to project our results.
Criteria
• American Rescue Plan Act, Title IX, Part 1 – Extension of CARES Act
Unemployment Provisions (March 11, 2021)
• Coronavirus Aid, Relief, and Economic Security (CARES) Act, Public Law
116-136 (March 27, 2020)
• Consolidated Appropriations Act, 2021, including Division N, Title II,
Subtitle A, the Continued Assistance for Unemployed Workers Act of 2020
(December 27, 2020)
• Employment and Training Order 1-20
• Employment and Training Order 1-20, Change 1
• GAO-14-704G, Standards for Internal Control in the Federal Government
(September 2014)
• Michigan Employment Security Act (December 24, 1936)
• Massachusetts Unemployment Insurance Law, Chapter 151A (1941)
• Massachusetts 430 CMR 6.00 Waiver Regulations (April 5, 2019)
• Massachusetts Emergency Regulation Change to 430 CMR 6.0 Expanded
Definitions and 430 CMR 6.16 Special Relief for Pandemic Overpayments
(July 15, 2022)
62
Judgmental sampling is a non-probability sampling technique in which the sample members
are chosen based on the auditor’s knowledge and judgment.
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U.S. Department of Labor – Office of Inspector General
• UIPL No. 15-20, Change 2, CARES Act of 2020, New Data Collection
18
Instrument and Revised Reporting Instructions for Federal Pandemic
16
Unemployment Compensation (FPUC) (June 15, 2020)
• UIPL No. 16-20, Change 6, To Provide states with additional operating
instructions in processing PUA claims and updated instructions for
reporting PUA program activities (Attachment IV) (September 3, 2021)
• UIPL No. 17-20, CARES Act of 2020, Pandemic Emergency 17
Unemployment Compensation (PEUC) Program Operating, Financial, and
Reporting Instructions (April 10, 2020)
• UIPL 20-21, States Instructions for Assessing Fraud Penalties and
Processing Overpayment Waivers under the CARES Act, as Amended
(May 5, 2021)
• UIPL 20-21, Change 1, Additional State Instructions for Processing
Waivers of Recovery of Overpayments under the CARES Act, as
Amended (February 7, 2022)
Prior Relevant Coverage
During the last 4 years, the OIG has issued 6 reports of significant relevance to
the subject of this report. Those reports include the following:
1. CARES Act: Initial Areas of Concern Regarding Implementation of
Unemployment Insurance Provisions,
Report No. 19-20-001-03-315 (April 21, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-001-03-315.pdf
2. COVID-19: More Can Be Done to Mitigate Risk to Unemployment
Compensation under the CARES Act,
Report No. 19-20-008-03-315 (August 7, 2020), available at:
https://www.oig.dol.gov/public/reports/oa/2020/19-20-008-03-315.pdf
3. COVID-19: States Struggled to Implement Cares Act Unemployment
Insurance Programs, Report No. 19-21-004-03-315 (May 28, 2021),
available at:
https://www.oig.dol.gov/public/reports/oa/2021/19-21-004-03-315.pdf
4. Alert Memorandum: The Employment and Training Administration Needs
to Ensure State Workforce Agencies Report Activities Related to CARES
Act Unemployment Insurance Programs,
Report No. 19-22-004-03-315 (August 2, 2022), available at:
https://www.oig.dol.gov/public/reports/oa/2022/19-22-004-03-315.pdf
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U.S. Department of Labor – Office of Inspector General
5. Alert Memorandum: Potentially Fraudulent Unemployment Insurance
Payments in High-Risk Areas Increased to $45.6 Billion,
Report No. 19-22-005-03-315 (September 21, 2022), available at: and
https://www.oig.dol.gov/public/reports/oa/2022/19-22-005-03-315.pdf
6. ETA and State Workforce Agencies Need to Do More to Recover
Pandemic UI Program Improper Payments
Report No. 19-25-003-03-315 (April 1, 2025), available at:
https://www.oig.dol.gov/public/reports/oa/2025/19-25-003-03-315.pdf
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REPORT FRAUD, WASTE, OR ABUSE
TO THE DEPARTMENT OF LABOR
Online
https://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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