EMPLOYMENT AND TRAINING 

ADMINISTRATION 

ADVISORY REPORT

CARES ACT: INITIAL AREAS OF 

CONCERN REGARDING

IMPLEMENTATION OF 

UNEMPLOYMENT INSURANCE 

PROVISIONS

DATE ISSUED: APRIL 21, 2020

REPORT NUMBER: 19-20-001-03-315 
U.S. Department of Labor – Office of Inspector General 

TABLE OF CONTENTS

INSPECTOR GENERAL’S REPORT....................................................................1

-iRESULTS .............................................................................................................2

State Preparedness ...................................................................................2

Initial Eligibility Determination.....................................................................4

Benefit Amount...........................................................................................7

Return to Work ...........................................................................................8

Improper Payment Detection and Recovery.............................................10

Program Monitoring..................................................................................11

OIG OVERSIGHT OF PANDEMIC RESPONSE.................................................13

CONCLUSION....................................................................................................13
U.S. Department of Labor Office of Inspector General

Washington, D.C. 20210

INSPECTOR GENERAL’S REPORT

CARES ACT: UNEMPLOYMENT INSURANCE ADVISORY REPORT

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John P. Pallasch

Assistant Secretary

 for Employment and Training

U.S. Department of Labor

200 Constitution Ave, NW

Washington, DC 20210

This advisory report presents the Office of Inspector General’s (OIG) initial areas 

of concern the Department of Labor (DOL) and the states should consider given 

the implementation of the unemployment insurance (UI) provisions included in 

the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. UI is a 

joint federal-state program with DOL’s Employment and Training Administration 

(ETA) responsible for providing state oversight. The concerns presented in this 

report represent years of oversight work relating to DOL’s UI program, including 

the use of prior stimulus funds and the Department’s response to past natural 

disasters. 

Since the coronavirus (COVID-19) pandemic first infiltrated the United States in 

early 2020, it has had a major impact on unemployment compensation claims.

DOL reported more than 22 million additional workers have filed initial jobless 

claims since March 14, the largest increase since the Department began tracking 

the data in 1967.

The CARES Act, which became law on March 27, 2020, provides three major 

changes to existing UI coverage, which could total hundreds of billions of dollars

in additional payments. The new Pandemic Unemployment Assistance (PUA) 

program extends unemployment benefits to self-employed, independent 

contractors, those with limited work history, and other individuals not traditionally 

eligible for unemployment benefits who are unable to work as a direct result of 

COVID-19. The CARES Act also provides an additional 13 weeks of

unemployment compensation available to those individuals who have exhausted 

their regular unemployment benefits. Finally, the CARES Act provides a 

supplemental payment of $600 per week for up to four months. 
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The substantial increase in unemployment benefits requires that ETA and state 

agencies establish strong controls to ensure the use of the funding meets the 

intent of the CARES Act and helps to support workers and the economy.

RESULTS

The OIG has published numerous audit reports identifying areas for improvement 

and fraud prevention within DOL’s UI program. Based on these reports, we 

identified initial areas of concern that ETA and the states should consider as they

implement the UI provisions included in the CARES Act. These areas include:

• State Preparedness

• Initial Eligibility Determination

• Benefit Amount

• Return to Work

• Improper Payment Detection and Recovery

• Program Monitoring

 

Our past audit work included recommendations to address deficiencies identified 

in each of these areas. In most cases, ETA initiated corrective actions, including

improvements in its oversight, as well as state operations. However, initiating 

corrective actions does not assure such actions are effective or will continue to 

be effective in addressing program risks and weaknesses. As ETA and the states

implement the relevant CARES Act provisions and in light of the unprecedented 

demands on the unemployment system, more needs to be done to ensure those 

receiving compensation are eligible and receive accurate and timely payment. 

ETA and the states also need to develop effective fraud prevention measures 

and ensure any overpayments are detected and recovered.

STATE PREPAREDNESS

Two issues of state preparedness to successfully implement the expansion of UI 

benefits—staffing and system capabilities—have been long-standing concerns

underlying many issues noted in prior OIG reports. These issues have been 

particularly evident in prior periods of increased stress on the unemployment 

program due to major disasters or periods of significant economic downturn.

UI benefits are generally funded by state employer taxes with administrative 

costs funded by the federal government. Expansions of coverage and benefits, 
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such as by the CARES Act, are generally funded by the federal government. 

Each state administers a separate UI program, but all states follow the same

general guidelines established by federal law. Each state sets its own additional 

requirements for eligibility, benefit amounts, and length of time benefits can be 

paid. Each state also manages the staffing and system resources needed to 

administer the program. These resources are critical to all aspects of the UI

program and affect each area of concern discussed in this report. 

Staffing 

Funding provided under the CARES Act necessitates that states have sufficient 

staffing and system resources to manage the extraordinary increases in the 

number of claims and payments. The CARES Act specifically provides states 

with temporary, limited flexibility to hire temporary staff, re-hire former staff, or 

take other steps to process unemployment claims quickly. 

Our work related to past funding for emergency staffing under the 2009 Recovery 

Act showed that states took over a year to spend the majority of funds available 

for hiring; and at least 40 percent of the available funds were unspent after 15

months.1 State officials said they did not have sufficient staff because they were 

already working at low staffing levels prior to receiving the Recovery Act funding

and hiring efforts were delayed due to state-imposed hiring freezes that required 

exemptions to bypass. ETA’s intent was for states to hire quickly as its guidance 

stated that the majority of available funds should be spent within the first year.

ETA did not provide sufficient monitoring and oversight to ensure this occurred.

Systems

States have been slow to modernize unemployment systems, which has resulted 

in processing delays and inaccurate unemployment compensation payments.

States that do not have modernized unemployment systems may need 

alternative controls to compensate for the limitations imposed by outdated

systems, including hiring additional staff. 

The Recovery Act provided $7 billion states could use to modernize legacy 

systems for processing UI claims. However, an audit in 2010 found that $2 billion 

was used to pay benefits (an allowable option under the legislation) and another 

$1.3 billion would likely not have been spent before their period of availability 

 1 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment 

Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011; 

Report No. 18-11-005-03-315)
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expired.2 States cited increased costs for benefit payments and the political 

difficulty of making the required changes to state laws as the primary reasons 

they would not apply for the funding. Additionally, the audit disclosed that states 

with $39 million in available administrative grant funds to modernize their 

systems did not have plans in place to spend those funds.

ETA took action to address our prior audit recommendations on staffing and 

system modernization. However, the OIG remains concerned that staffing 

challenges, coupled with the state of legacy systems, will continue to impede the 

management and oversight of UI benefits. Heightened oversight and assistance 

from ETA and compensating controls by the states are required to ensure the 

concerns from past audits, as discussed in this advisory report, are adequately 

addressed.

INITIAL ELIGIBILITY DETERMINATION

A key challenge faced by states is ensuring unemployment compensation 

benefits are paid to only those individuals eligible under program 

requirements. Accurate initial determinations of eligibility are critical to 

ensuring that benefits are granted only to those intended by the programs. For 

claimants covered by the regular UI program, this means obtaining necessary 

separation information from the employer. For claimants not traditionally 

covered by UI, states will need to ensure self-certifications are not abused and 

methods to detect fraud and recover improper payments are established.

Regular Unemployment Benefits

Past OIG audits have shown the need for better strategies to increase 

employer participation in efforts to determine initial eligibility. States need 

employers to confirm the employee worked for them for a sufficient length of 

time and lost their job through no fault of their own. The most efficient method 

for employers to exchange separation information is the State Information 

Data Exchange System (SIDES). SIDES is a standardized computer to 

computer system designed to enable more rapid and accurate communication 

between states and employers compared to mailed requests. A 2017 audit 

found that almost all states used the SIDES, an effective automated tool to 

obtain timely and accurate information from employers on the reasons 

individuals separated from employment.3 This information is key to 

 2 DOL OIG, “Recovery Act: More Than $1.3 Billion in Unemployment Insurance Modernization 

Incentive Payments Are Unlikely To Be Claimed By States,” (September 30, 2010; Report No. 18-

10-012-03-315)

3 DOL OIG, ““Better Strategies Needed to Increase Employer Participation in the State 

Information Data Exchange System,” (March 31, 2017; Report No. 04-17-003-03-315)
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determining initial eligibility, compensation amounts, validity of selfcertifications, and the enforcement of voluntary quit provisions that in nearly all 

instances render the claimant ineligible. 

We found that improper payment rates for each of the five State Workforce 

Agencies (SWA) we reviewed declined after implementing SIDES. In those 

instances where SIDES was used, it resulted in better initial eligibility 

determinations and a reduction in improper payments. However, we found that 

there was missed opportunity to maximize the utilization of the system.

Specifically, better strategies were needed to address the following:

• Only 19.8 percent of employers covered by the five SWAs we reviewed 

signed up to use SIDES.

• Employers that did sign up to use SIDES did not respond to 41 percent 

of the 4.2 million SWA requests for employee separation information.

• State marketing did not increase employer participation in SIDES.

• SIDES infrastructure presented technical challenges.

We recommended ETA work with SWAs to increase the number of employers 

using SIDES and resolve technical challenges with the system. We found that 

SIDES was most effective when used by employers who had a higher number of 

unemployment claims. Significantly more employers will fit this profile due to 

COVID-19. ETA generally agreed with our recommendations and issued 

additional guidance to SWAs encouraging the use of SIDES. Further, ETA

required the use of SIDES for UI modernization funding, held conferences and 

Webinars, and created a new marketing and outreach tool kit. However, we 

remain concerned that some states may not have effectively increased employer 

use of SIDES. This could require greater reliance on compensating controls, as 

well as greater attention to detection of improper payments.

Pandemic Unemployment Assistance

The new PUA program extends benefits to those who are classified as selfemployed, independent contractors, those with limited work history, and other 

individuals not traditionally eligible for unemployment benefits who are unable to 

work as a direct result of COVID-19. PUA is similar to the Disaster 

Unemployment Assistance (DUA) program, which the OIG has audited.

A DUA audit conducted in response to a major weather-related disaster 

underscores some of challenges the PUA program will face.

4 After the disaster,

 4 DOL OIG, ““Audit of Florida Disaster Unemployment Assistance Grant Number 1359 - DR,” 

(March 26, 2004; Report No. 04-04-004-03-315)
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claimants had to show they were not eligible for benefits under the State’s 

regular unemployment program and lost their jobs due to the disaster.

Our audit in one state found improper payments to over 71 percent of the 420 

sampled claims, many for more than one reason. Payments were made to 

claimants who:

• were not unemployed due to the disaster, or

• did not have adequate documentation of their continuing eligibility or 

were paid due to other administrative errors.

Based on a statistical projection from our sample, we estimated the total amount 

of improper payments was at least $1.7 million. ETA did not provide adequate 

monitoring to ensure state officials implemented DUA policies that were 

consistent with program requirements. We recommended ETA require the state 

to establish administrative policies and procedures that comply with federal filing 

and eligibility guidelines. As previously noted, the risk of fraud and improper 

payments is even higher under PUA because claimants can self-certify their UI 

qualifications. ETA needs to establish methods to detect fraud and recover 

improper payments. 

Fraudulent Claim Prevention and Detection

The OIG is concerned ETA and the states have not developed sufficient systems 

to prevent fraud during initial eligibility determinations and detect fraud if those 

systems fail. An Investigative Advisory Report issued by the OIG’s Office of

Investigations in 2015 identified systemic weaknesses that make the UI program 

more susceptible to fraudulent activity.5 The information presented is even more 

relevant due to the expanded benefits provided under the CARES Act and the 

increased volume of claims. The systemic weaknesses identified include the 

following:

• State systems that allow individuals to file unemployment insurance 

claims in multiple states during the same timeframe using the same 

personal information.

• State systems that auto-populate the application with the claimant's 

employment history, making it easier for the claimant to complete the 

application process, but also making it easier for someone to make 

 5 DOL OIG, “Weaknesses Contributing to Fraud in the Unemployment Insurance Program,” 

(July 24, 2015; Investigative Advisory Report)
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fraudulent claims.

• State systems that allow individuals to file claims online using

anonymous IP addresses, internet hotspots and stolen internet 

connections, making it difficult to validate the identity of the claimant.

• Non-state issued pre-paid debit cards available through retail outlets, 

provide anonymity to those who are submitting fraudulent claims and 

make it difficult to trace the activity and use of the funds.

• Inconsistent or unstructured communication between state tax and 

employment departments, making it difficult to validate claims using 

corporate unemployment insurance tax filings.

ETA and the states need to consider these systemic weaknesses as they

develop methods to prevent and detect fraud in the UI program.

BENEFIT AMOUNT

The OIG is concerned ETA and states do not have sufficient systems, alternative 

controls, and oversight in place to ensure appropriate payment durations and 

amounts. The CARES Act will significantly increase the number of 

unemployment compensation claims because provisions include payment to 

those not traditionally eligible for unemployment benefits. Furthermore, 

provisions to provide an additional 13 weeks of unemployment compensation 

and an additional $600 per week will significantly increase the duration and 

amount of unemployment compensation payments. 

The 2009 Recovery Act included a weekly benefit augmentation similar to the 

CARES Act, but instead of $600 it was the significantly lesser amount of $25. 

ETA estimated the total cost of the $25 additional payments would exceed $8 

billion. Our audit identified system limitations and control weaknesses that 

affected states ability to properly pay the additional $25 per week to eligible 

unemployed recipients.6 We determined that some states paid the $25 

additional compensation to ineligible claimants, and that overpayments by the 

10 states we reviewed ranged from $160,000 to about $2.5 million. Moreover, 

some states did not attempt to identify and recover overpayments or compile

and report overpayment information to ETA as required. For these states, 

 6 DOL OIG, “Recovery Act: States Have Aggressively Implemented the $25 Weekly 

Supplemental Unemployment Benefit but Some Challenges Remain,” (September 30, 2009; 

Report No. 18-09-004-03-315)
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overpayments were considered lost and ETA did not have the information 

needed to provide adequate oversight and control. 

ETA concurred with our conclusions in this report and addressed concerns in 

the states audited. ETA also issued guidance to all states to reaffirm the 

requirements for managing and controlling the $25 per week additional 

compensation. However, our audit did not cover all states and we are 

concerned that state system limitations and control weaknesses still exist. 

Addressing these weaknesses where needed is especially critical due to the 

much higher $600 per week provided by the CARES Act. 

Additionally, a series of audits we conducted in response to past disasters 

identified systemic control weakness that ETA should consider as it oversees

CARES Act provisions.

7 Our audits found that two states affected by 

Hurricanes Katrina and Rita made rapid unemployment compensation 

payments without ensuring claimants were eligible. For example, both states 

failed to verify social security numbers or crossmatch payment information to 

prevent duplicate payments. One state disregarded the requirement to 

determine the correct benefit amount based on prior wages and granted all 

beneficiaries the maximum amount without regard to prior earnings. Based on 

our review, we determined that the two states potentially overpaid about $100 

million in unemployment compensation.

We recommended ETA develop a nationally coordinated contingency plan to

provide alternatives for individual states to process claims when disasters or 

other reasons disrupt normal processing. This included developing alternative

controls for instances when states suspend established eligibility and benefit 

payment controls. ETA agreed with our recommendations and worked with 

states to develop a nationally coordinated contingency plan. However, ETA 

has not implemented the contingency plan during an emergency on the scale 

of COVID-19.

RETURN TO WORK

To ensure unemployment compensation payments stop at the appropriate time it 

is critical that states identify when claimants have returned to work. A key control 

for doing so is effective use of the National Directory of New Hires (NDNH). 

States will need to perform crossmatches of the NDNH against state claims 

databases, including PUA claimants, to ensure the continued eligibility of all 

 7 DOL OIG, “Lack of Contingency Plans Contributed To More Than $100 Million in Potential 

Overpayments of Hurricane-Related Unemployment Benefits,” (June 12, 2008; Report No. 06-08-

001-03-315)
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benefit recipients. This is especially important given large numbers of claimants 

are expected to return to work once COVID-19 subsides and some may continue 

to collect benefits after successful reemployment.

In Fiscal Year 2017, DOL estimated the UI program improperly paid more than 

$1 billion to claimants who were ineligible for benefits because they had returned 

to work. ETA classifies these types of overpayments as “benefit year earnings 

(BYE) overpayments.” Since 2011, ETA has mandated that states use the NDNH 

to detect and prevent BYE improper payments. States also use the State 

Directory of New Hires (SDNH) to identify BYE overpayments.

OIG audit work has found that states generally used these new hire detection 

tools to reduce BYE overpayments, but ETA could do more to assist states 

efforts.8 Despite an 8 percent reduction in overpayments, states underutilized 

new hire directories. Further, states did not make timely overpayment 

determinations of new hire investigations and did not report complete and 

accurate results of new hire investigations, as required. These areas of concern 

will make the effective management of CARES Act funding difficult if ETA does 

not ensure states take action to enhance state controls over identifying return to 

work. 

Our recommendations included that ETA:

• Develop and implement new procedures to identify states that are 

underutilizing NDNH and the SDNH tools and target those states for 

additional technical assistance.

• Revise and redistribute recommended operating procedures for state 

and national new hire cross-matching that includes the use of 

Enhanced NDNH procedures.

• Develop and implement improved oversight procedures to ensure the 

results of NDNH and SDNH investigations reported on the ETA 227 

Overpayment Detection and Recovery Activities quarterly report are 

complete and accurate. 

ETA implemented these recommendations. However, ETA now needs to focus 

the expenditure of CARES Act funding on eligible recipients only, enabling the 

funding to impact a greater population of those in need.

 8 DOL OIG, “Improved Oversight of States' Use of New Hire Tools Would Help Reduce Improper 

Payments,” (September 27, 2018; Report No. 04-18-003-03-315).
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Furthermore, the CARES Act presents additional challenges for the 

unemployment program. For example, the provisions for small business loans, 

under the Paycheck Protection Program, enable some employers to reopen and 

offer employees their jobs back. As conditions improve, states face the challenge

of identifying situations where employees refuse to return to work because the 

additional $600 per week under the Emergency Increase in Unemployment 

Compensation Benefits may result in sufficiently comparable payment to 

employment. Situations may also arise where small businesses use the loans to 

provide back pay to employees that received unemployment compensation for 

the same period. ETA needs to work with the states to develop processes to

discontinue benefits when appropriate or detect and recover any overpayments. 

IMPROPER PAYMENT DETECTION AND 

RECOVERY

In this report, we have discussed the need for states to have in place preventive 

controls to ensure eligible people are receiving the correct amount of benefits for 

the correct period of eligibility in order to prevent the occurrence of improper 

payments. However, states need to establish controls to detect any improper 

payments made in case preventive controls fail. Furthermore, states need to 

establish processes to ensure they recover any detected overpayments.

The OIG continues to report the Department’s ability to measure, report, and 

reduce improper payments in its UI program as a significant concern.9 The UI 

program, designed to provide benefits to individuals out of work, has one of the 

highest improper payment rates of all government programs. The UI program 

paid benefits totaling $26.91 billion during the period July 1, 2018, to June 30, 

2019. Of this, estimated improper payments totaled $2.86 billion, making the 

estimated improper payment rate 10.61 percent. 

Our prior audit work revealed that the Department has not done enough to 

formally assess the various strategies and determine what issues persist, due in 

part to a lack of reliable state reported data. A leading cause of improper UI 

payments was states’ inability to determine a claimant’s benefit eligibility based 

 9 DOL OIG, “Semi-Annual Report to Congress,” (Volume 82; April 1 – September 30, 2019).
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on adequate base-year wages, or allowable reasons for separation10,11

Furthermore, identity thieves and organized criminal groups have found ways to 

exploit program weaknesses. Thus, improper payments stemming from 

fraudulent activity continue to pose a significant threat to the integrity of the UI 

program. 

The Department needs to continue its ongoing work with states to implement 

strategies designed to reduce the UI improper payment rate, which would include 

sharing best practices identified among states. Under the CARES Act, DOL’s 

improper payment rate may increase if strong controls are not established. To 

ensure CARES Act funding can reach those eligible recipients in need of the 

assistance, it is paramount that states develop controls to detect and recover any 

improper payments.

PROGRAM MONITORING

ETA must ensure program monitoring over the use of the stimulus funding is 

sufficiently designed and executed and benefit outlays are accurately tracked 

and reported, at the state and federal level. Without this critical oversight and 

transparency, ETA cannot ensure its management of the billions of dollars in 

supplemental program funding has achieved the desired outcome and sufficiently 

met the requirements of the CARES Act.

ETA is responsible for issuing operating instructions or other guidance to states 

as necessary. ETA can also waive requirements of the Paperwork Reduction Act 

to gather quickly the necessary information from states and more rapidly 

distribute funding appropriated under the CARES Act. While a great sense of 

urgency exists during COVID-19, past audit work has found that in the rush to 

disseminate stimulus funding, ETA was remiss in providing necessary, additional 

 10 DOL OIG, “ETA Needs Stronger Controls to Ensure That Only Eligible Claimants Receive 

Unemployment Compensation for Federal Employees,” (March 28, 2016; Report No. 

04-16-001-03-315).

11 DOL OIG, “Reporting Over the U.S. Department of Labor's FY 2018 Compliance with the 

Improper Payments Elimination and Recovery Act,” (Issued June 3, 2019; Report No. 

22-19-007-13-001).
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guidance to direct spending more effectively and to track and report more 

meaningful results.12,13

Specifically, prior audit work found that DOL moved quickly after the Recovery 

Act’s passage to allocate funds to states; and develop and issue general 

guidance on allowable spending categories and reporting formats. While DOL 

provided timely guidance to states, DOL did not consistently apply lessons 

learned to ensure the most efficient use of the stimulus funding. One audit found 

that DOL could have directed states to use reemployment services grants to 

correct claimant service-related weaknesses identified by several 

organizations.14

Moreover, ETA guidance did not ensure the level of transparency and 

accountability the Recovery Act required. ETA guidance lacked results-oriented 

goals, objectives, and measurable outcomes. As a result, ETA could not provide 

a breakout of how the 54 states and territories spent the reemployment services 

funding. 

The lessons learned from implementing our audit recommendations could help 

ETA in the effective and efficient management of CARES Act funding. Those 

recommendations included:

• Establishing priorities, outcome measures, and effective data collection 

systems for future UI program funding to address program 

weaknesses and better measure the services states provide to 

claimants.

• Developing monitoring and financial reporting requirements to enable 

DOL to report how effectively states spent federal funds on

employment and reemployment services.

 12 DOL OIG, “ETA Needs Stronger Controls to Ensure That Only Eligible Claimants Receive 

Unemployment Compensation for Federal Employees,” (March 28, 2016; Report No. 

04-16-001-03-315).

13 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment 

Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011; 

Report No. 18-11-005-03-315)

14 DOL OIG, “Recovery Act: DOL Could Have Better Monitored the Use of Re-employment 

Services Funds to Adhere to Standards for Transparency and Accountability,” (March 31, 2011; 

Report No. 18-11-005-03-315)
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• Determining from independent analysis what state experiences were 

and identifying best practices; areas for improvement; and short and 

long- term achievements, so DOL could then use this information to set 

goals and measures for outcomes and achievements for future 

funding.

OIG OVERSIGHT OF PANDEMIC RESPONSE

Federal agencies are tasked with a difficult charge–rapid implementation of 

programs in a manner that meets the intent of the CARES Act. Actions to fulfill 

the mandates of the CARES Act across government require an exceptional level 

of transparency to ensure the effective and efficient use of the estimated $2.3 

trillion funding, which includes keeping workers paid and employed; enhancing 

health care systems; and stabilizing the economy. Strong implementation plans 

and oversight controls are critical to ensure the use of funds as intended and 

ultimately achieving desired outcomes. 

Given the challenges to ETA and the states noted in this report, the actions each

will need to take to address those challenges, and the magnitude of risk, the OIG 

will conduct extensive oversight to monitor and assess how well these challenges 

are being addressed. The OIG has issued a four-phased oversight plan for this 

purpose.

15 Our efforts will include oversight of initial program implementation or 

change rollout; evaluation of intermediate implementation results; assessment of 

final program results; and a summary of overall lessons learned from all major 

impacted programs. 

The OIG will continue to monitor and assess DOL’s actions relating to COVID-19,

as well as any new legislation enacted by Congress. Our Oversight Plan will 

evolve in response to new legislation, as well as to address areas of risk 

identified during the completion of our oversight efforts. 

CONCLUSION

The rapid deployment of CARES Act funding is critical to help mitigate the impact 

of the COVID-19 pandemic and help workers in need. However, anticipating and 

addressing the increased risk that comes with the expanded funding is vital to

meeting the intent of the Act. OIG’s prior recommendations in this area can help

ETA with its risk assessment and response to COVID-19. As our prior audit work 

 15 DOL OIG, “Pandemic Response Oversight Plan,” (Issued April 15, 2020)
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has shown, rapid fund deployment can result in shortcomings in the effective and 

efficient implementation of stimulus programs and possible misuse of funds. To 

meet the requirements of the CARES Act, states must have sufficient staffing 

and system resources to manage the extraordinary increases in the number of 

claims and payments. The expanded coverage offered under the temporary PUA 

program will pose significant challenges to states as they implement processes 

to determine initial and continued program eligibility. ETA must ensure states 

establish strong controls for determining eligibility and consider past systemic 

weaknesses when developing fraud prevention measures. ETA must also ensure 

states establish procedures to detect and recover any improper payments made 

and redirect the funding to those eligible for the assistance.

Our past audit work has included recommendations made to assist ETA in 

addressing deficiencies identified in these areas. In many cases, ETA

implemented corrective actions, to include improving the extent of monitoring and 

oversight; and state-level operations and controls. However, as ETA implements 

the relevant CARES Act provisions, more needs to be done to ensure those 

receiving compensation are eligible and receive prompt payment; and to ensure 

overpayments are recovered and redirected to those in need. It is critical that 

ETA considers these areas of concern when implementing the stimulus program 

activities required for managing this unprecedented level of UI claims and

increase in UI funding.

Elliot P. Lewis

Assistant Inspector General for Audit
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