New DOL Requirements Help States Fight Unemployment Fraud

New Legislation Helps State Workforce Agencies Prevent Unemployment Fraud and Benefit Overpayments

Signed into law on December 27, 2020, additional COVID relief/stimulus legislation combined with the annual FY2021 spending bill included more than $900 billion in unemployment aid. This included direct payments to individuals and business loans. The legislation extended programs, including:

• Pandemic Unemployment Assistance (PUA)
• Pandemic Emergency Unemployment Compensation (PEUC)
• Federal Pandemic Unemployment Compensation (FPUC) supplementary benefits

This is in addition to the Department of Labor's (DoL) $100 million provided last August to help states combat unemployment fraud.

Additional Reporting Requirements for Individuals and States

The bill's increase in Unemployment Insurance benefits includes additional reporting requirements for both individuals and states. They are intended to combat potentially huge increases in attempted fraud. Several states have reported fraud since the beginning of the pandemic, according to the Wall Street Journal. The reporting requirements include these key elements: 

• New and existing recipients of PUA must substantiate employment or self-employment.
• States must have procedures in place to verify or validate the identity of PUA applicants and for timely payment of benefits.
• The development of these procedures are reimbursed at 100% federal funding.  
• States implement a method to determine:
  • if claimants are refusing to return to work
  • and for employers to notify the state if an individual refuses employment.

On December 30, 2020, the Department of Labor Education and Training Administration Advisory System also issued guidance to State Workforce Agencies in Unemployment Insurance Program Letter No. 9-21. 

It states that “Addressing improper payments and fraud is a top priority for the Department and the entire UI system.  It is critical that states implement UI programs and provisions to ensure that payments are being made to eligible individuals and that states have aggressive strategies and tools in place to prevent, detect, and recover fraudulent payments, with a particular emphasis on imposter fraud by claimants using false identities.” 

The guidance states the DoL will provide $500,000 to each state for implementing the provisions associated with changes to the PUA, FPUC and PEUC.

UI Eligibility Suite of Services Can Help

The Equifax UI Eligibility suite of services help workforce agencies meet these federal requirements. UI Eligibility fosters a more robust, streamlined process for UI claims. Additionally, it helps states protect program integrity.  The suite includes The Work Number Social Service Income and Employment Verification, The Work Number Portfolio Review, Digital Authentication, Account Verification and Incarceration Verification.  States can use the suite to:

• Identify potential fraud risk at the point of application for unemployment benefits
• Validate self-employment claims under the PUA program
• Evaluate continuing payments for claimants and return-to-work status

Visit Equifax to learn more about the UI Eligibility Suite. Request a UI Eligibility Sample Analysis to help with eligibility decisions and understand the risk level of overpayments within your state.