Employment & Training Administration - Federal State Unemployment Insurance

High-priority program

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Program level Payment Integrity results

Sponsoring agency: Department of Labor

The UC programs provide temporary, partial wage replacement to eligible workers. Programs included in the monetary loss calculation include the traditional state UI, UCFE, UCX, EB, EUC08 benefits, and PEUC and FPUC CARES Act benefits. The top three root causes for OPs in the UC programs are BYE, Work Search, and Separation Issue IPs. Barriers to prevention include (1) statutory requirements, based on sound policy, to provide due process; (2) states must balance legal requirement to pay benefits quickly with requirement to prevent fraud and improper payments; (3) 53 jurisdictions with different IT systems; and (4) increasingly sophisticated/evolving fraud schemes, including identity fraud.

View on Federal Program Inventory

PROGRAM METRICS

$412,965 M

in FY 2021 outlays, with a

81.1%

payment accuracy rate

PROGRAM METRICS

$85,236 M

in FY 2022 outlays, with a

77.8%

payment accuracy rate

PROGRAM METRICS

$28,149 M

in FY 2023 outlays, with a

83.5%

payment accuracy rate

PROGRAM METRICS

$35,197 M

in FY 2024 outlays, with a

84.1%

payment accuracy rate

PROGRAM METRICS

$37,679 M

in FY 2025 outlays, with a

85.1%

payment accuracy rate

  • Improper payment estimates over time
    View as:

    Chart toggle amounts:
    Proper payments
    Overpayment
    Underpayment
    Technically improper
    Unknown

Payment Integrity results

  • FY 2021 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2020 - 06/2021


    Confidence interval:

    >95%


    Margin of error:

    +/-1.0

Overpayments

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $29,308.71 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $1,829.07 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $27,479.64 M

Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $44,533.49 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $44,533.49 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.0 M

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $3,440.0 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $2,801.47 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $638.53 M

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$3,440.0 M

Unknown Payment Details

For the UI program, payments are considered unknown when the program cannot discern whether a payment is proper or improper as a result of insufficient or lack of documentation, or is still going through the review of a payment at the time that the program must finish their sampling and report its results.

For this data call the Unknown amount is estimated for the BAM sample cases that were not completed as of the AFR and OMB Data Call reporting deadlines. The Unknown amount is a weighted estimate of the population total based on the amount of UI benefits for the incomplete BAM sample payments.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $864.56 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation

Evaluation of corrective actions

ETA has developed numerous strategies to assist the states in reducing their improper payment rates consistent with the requirements of federal and state law. Additional funding has been provided to the states in implementing the different strategies.

Through the American Rescue Plan Act, DOL is providing grants to states to fund fraud prevention efforts, including identity versification, to improve equity, and to fund recommendations to improve state operations identified through the Tiger Team initiative. DOL created the Tiger Team initiative to provide states with multi-disciplined experts to help identify solutions to challenges included in the area of fraud. DOL also has executed blanket purchase agreements with three identity verification providers that states can use to access such services and issued guidance and conditioned grants to states to require the sharing of data with DOL's OIG. DOL has started UI IT modernization pilots to develop modules in key areas for states to use in modernizing their IT operations.

Future payment integrity outlook

Employment & Training Administration - Federal State Unemployment Insurance has established a baseline.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $36,230 M
Current year +1 estimated future improper payments $6,159.1 M
Current year +1 estimated future unknown payments $0 M
Current year +1 estimated future improper payment and unknown payment rate 17.0 %

The program's current year improper payment and unknown payment rate of 18.92 % has been achieved with a balance of payment integrity risk and controls and represents the lowest rate that can be achieved without disproportionally increasing another risk, therefore it is the tolerable rate.

Employment and Training Administration (ETA) requests administrative funding in its budgetary submission to Congress. This funding varies based on the projected economic conditions in the country and/or states.

As in prior year reporting, overpayments reported for July 2020 through June 2021 for the regular Unemployment Insurance (UI) program do not represent a monetary loss to the federal government. The benefits paid under the regular UI program are funded by state-assessed and state-collected taxes and are not federal tax dollars. The UI program is administered by state agencies, which are required by statute to pay benefits when due. Payments were initially made to the right recipients for the right amounts. Subsequent information, which was not available to the agency at the time of the payment, identified an issue resulting in an overpayment. All overpayments recovered by the state agencies are returned to the state UI Trust Funds for the payment of future UI benefits, and are not available for any other federal purpose. Additionally, these monetary losses are outside the agency's control.

As in prior year reporting, estimated overpayments reported for July 2020 through June 2021 for Other Reason (1) include those payments which are required by statute to pay benefits “when due” under the Social Security Act section 300 and Supreme Court Decision Java vs California. Reported IP were initially made to the right recipients, for the right amounts, at the time required by law. Subsequent information, which was not available to the state agencies at the time of the payment, identified an issue resulting in an underpayment or overpayment. However, please note that all overpayments recovered by the state agencies must be returned to the state Unemployment Trust Fund for the payment of future UI benefits, and are not available for payment integrity or any other Federal purpose.

Employment and Training Administration (ETA) requests administrative funding in its budgetary submission to Congress. This funding varies based on the projected economic conditions in the country and/or states.

Additional programmatic information

  • FY 2022 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2021 - 06/2022


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-1.378

Unknown Payment Details

Evaluation of corrective actions

Future payment integrity outlook

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $36,540 M
Current year +1 estimated future improper payments $7,888.99 M
Current year +1 estimated future unknown payments $249.6 M
Current year +1 estimated future improper payment and unknown payment rate 22.27 %

The program's current year improper payment and unknown payment rate of 22.2 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

Additional programmatic information

Per discussion with OMB, the Employment & Training Administration - Unemployment Insurance - Federal Pandemic Emergency Unemployment Compensation (PEUC) is listed as a program for payment integrity reporting purposes. However because PEUC’s eligibility and payment structure are materially similar to the "traditional" Unemployment Insurance program, payment integrity rates are extrapolated and its outlays are included in the "traditional" Unemployment Insurance program's reporting for this report. This same format was used for FY21 reporting.

  • FY 2023 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2022 - 06/2023


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-1.0

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Automation
    Employment and Training Administration (ETA) continued to support expansion and updates to the State Information Data Exchange System (SIDES). State Information Data Exchange System was developed through the collaborative efforts of state UI agencies, the National Association of State Workforce Agencies (NASWA), ETA, and employers to enable the electronic communication of job separation information and other Unemployment Insurance information between employers and state Unemployment Insurance agencies. The system improves the timeliness and quality of job separation information from employers, thus reducing the number of improper payments to claimants who are determined to be ineligible for Unemployment Insurance due to disqualifying job separations, such as quitting without good cause or discharged for misconduct. National Association of State Workforce Agencies operates State Information Data Exchange System on behalf of the participating states. Employment and Training Administration encourages states to view State Information Data Exchange System as a critical part of their Unemployment Insurance integrity efforts and to connect to all State Information Data Exchange System exchanges. In FY 2023, the following State Information Data Exchange System activities were completed: • Conducted monthly touch base calls with states and State Information Data Exchange System integrated partners. • Employment and Training Administration issued Training and Employment Notice (TEN) No. 18-22, to announce the 2023 State Information Data Exchange System, “Don’t Miss the Train to Integrity” State Information Data Exchange System Seminar Informational Webinars. The National Association of State Workforce Agencies State Information Data Exchange System Team hosted the bi-weekly webinar series to promote attendance at the State Information Data Exchange System Seminar. • Employment and Training Administration issued Training Employment Notice Number 06-22, to announce the 2022 State Information Data Exchange System administrative website webinar series, “Moving the Integrity Needle Using State Information Data Exchange System Data”. The National Association of State Workforce Agencies State Information Data Exchange System team hosted the bi-weekly webinar series, which provided an overview of the State Information Data Exchange System administrative website as well as a detailed look at the reports available. • Employment and Training Administration issued Training Employment Notice Number 12-22, to provide information regarding the 2023 Unemployment Insurance State Information Data Exchange System Seminar. The National Association of State Workforce Agencies State Information Data Exchange System team hosted the 2023 State Information Data Exchange System Seminar, April 18-20, 2023, in Indianapolis, IN, which was the largest in-person State Information Data Exchange System Seminar to date. The Unemployment Insurance State Information Data Exchange System Seminar highlighted promising state practices focusing on improving Unemployment Insurance integrity and State Information Data Exchange System exchange implementation. Workshops included exploring State Information Data Exchange System architecture and security; fraudulent Unemployment Insurance trends; Benefit Timeliness Quality (BTQ); Unemployment Insurance appeals; hot topics in Unemployment Insurance information technology (IT); project planning; employer outreach; and roundtable discussions. A hands-on lab was available to learn strategies for maintaining State Information Data Exchange System connectivity between the state/integrated partner system and the State Information Data Exchange System broker. • Coordinated a rewrite of the State Information Data Exchange System Monetary and Potential Charges exchange to align with changes made to the Separation Information exchange. The rewrite successfully cut over to the updated standard format on September 21, 2023, and included 10 states and 60 integrated partners. • Conducted a system security assessment using the Federal Information Security Management Act (FISMA) standards. • Kicked off a business-to-business project to provide states a template of a webpage to attract employer registration and use of State Information Data Exchange System and to create an updated toolkit for states to determine implementable promising practices. Pilot states are reviewing materials and providing feedback. • Initiated the rewrite of the Earnings Verification information exchange project to review and update the standard format to align with changes made in Separation Information and Monetary and Potential Charges and will include the addition of the fraud indicator. • The Department provided funding to support the development of a State Information Data Exchange System Power of Attorney exchange. This will be the first exchange where the integrated partner will be initiating the flow of data to the state. • Employment and Training Administration continued to formalize State Information Data Exchange System best practices within recommendations through Tiger Team engagements with states. Employment and Training Administration, in partnership with the Social Security Administration (SSA) and National Association of State Workforce Agencies, established a secure data exchange between the Interstate Connections Network (ICON) and Social Security Administration’s Prisoner Update Processing System (PUPS) to provide states with the ability to cross-match Unemployment Insurance claims data with incarceration records to assist states in making accurate Unemployment Insurance eligibility determinations (see Unemployment Insurance Program Letter (UIPL) No. 01-22. National Association of State Workforce Agencies operates Interstate Connections Network on behalf of the participating states. In FY 2023, Employment and Training Administration completed the following actions: • Continued to coordinate and streamline communications between states, SSA, and NASWA to facilitate states’ connection to the PUPS incarceration data exchange. • Updated and finalized the Interstate Connections Network Information Exchange Agreement to extend the agreement for an additional five years through July 2028. • Continued to promote the importance of incarceration cross-matches and encouraged state UI agencies to connect to incarceration data exchanges, including the ICON exchange that uses Social Security Administration’s Prisoner Update Processing System data, as well as other datasets available for prisoner cross-matching. • Recommended use of federal, state, and local incarceration cross-matches as fraud prevention and detection activities in UIPL No. 11-23. • Continued to formalize PUPS recommendations through Tiger Team engagements for those states not currently in receipt of federal incarceration information. The Department is also using American Rescue Plan Act funds to make available to states (for at least the next two years subject to available funding) both in-person and digital, government-operated, Identification verification services (i.e., National ID Verification Offering). The Department’s National Identification Verification Offering provides a remote, mobile ready digital Identification verification solution through Login.gov, in partnership with General Service Administration. In- person Identification verification will be made available to all states at over 19,000 retail post office locations across the country in partnership with United States Postal Service. This initiative was announced in Unemployment Insurance Program Letter Number 11-23 in July 2023.
    FY2023 Q4
    Completed
    Behavioral/Psych Influence
    The Department-funded Unemployment Insurance Integrity Center provides behavioral science information and expertise, evidence-based insights, and support for state Unemployment Insurance agencies seeking to achieve better outcomes on challenging program problems. The Unemployment Insurance Integrity Center Behavioral Insights team continued to develop and publish new resources in the Behavioral Insights Toolkit, including a Work Search Planner and plain language resources, to supplement Behavioral Insights Curriculum lessons and grow the offerings of the Behavioral Insights Toolkit and Knowledge Exchange Library more broadly. In FY 2023, the following additional Behavioral Insights accomplishments were completed: • Updated existing Behavioral Insights Glossary terms and added new terms. • Supported state research and implementation of Behavioral Insights projects and publications. • Presented on leveraging Behavioral Insights in Unemployment Insurance programs at NASWA conferences and meetings. • Completed and published the Behavioral Insights Certificate program, which is a certificate training program for Unemployment Insurance staff who want to learn more about Behavioral Insights and/or are interested in learning how to design and use Behavioral Insights interventions to increase adherence to Unemployment Insurance program rules, policies, laws, and guidelines. • Continued to work on the claimant education video production projects for states and, which include behavioral nudging, and developed cost estimates on foreign language versions of the videos. The Department’s Tiger Team initiative with states also continued to provide recommendations to states regarding the use of plain language and Behavioral Insights to improve Unemployment Insurance systems, processes, and integrity.
    FY2023 Q4
    Completed
    Training
    Employment and Training Administration provided Unemployment Insurance-related training to states administering the Unemployment Insurance programs through webinars, meetings, and targeted technical assistance. The trainings covered a number of Unemployment Insurance-related topics including, critical guidance, Unemployment Insurance performance measures, Employment and Training Administration Unemployment Insurance reporting requirements, and targeted trainings based on specific Unemployment Insurance programs areas. The Department’s Tiger Team initiative with states also identified and shared best practices/toolkits for reducing backlogs, increasing equity, and for improving timeliness of Unemployment Insurance benefit payments. Some of the highlighted resources in FY 2023 included: • Tiger Team Promising Practices, which provides promising recommendations discovered through Tiger Team engagements in the areas of equitable access, fraud prevention and detection, and ensuring timely payment of benefits. • Robotic Process Automation (RPA) Toolkit, which provides information on Robotic Process Automation as a technology and is a comprehensive location for information to support states with use of the technology, including known states’ use of the tool, promising practices and lessons learned. • Equitable Access Toolkit, which provides an overview of promising practices to address and remove common barriers that make it difficult for people to access Unemployment Insurance benefits. Employment and Training Administration also encourages states to attend relevant Unemployment Insurance-related training conferences and symposiums and announces training resources and events through Training Employment Notice Numbers. In FY 2023, Employment and Training Administration issued the following Training Employment Notice Numbers to announce these events and resources: • Training Employment Notice Number. 06-22, to announce the 2022 State Information Data Exchange System administrative website webinar series, “Moving the Integrity Needle Using State Information Data Exchange System Data”. • Training Employment Notice Number. 11-22, to remind states of the continuing availability of the self-paced, online Federal-State Unemployment Compensation Legislative Seminar. • Training Employment Notice Number. 12-22, to provide information regarding the 2023 Unemployment Insurance State Information Data Exchange System Seminar. • Training Employment Notice Number 18-22, to announce the 2023 State Information Data Exchange System “Don’t Miss the Train to Integrity” State Information Data Exchange System Seminar Informational Webinars. • Training Employment Notice Number 24-22, to announce the release of new Tiger Team Promising Practices content. • Training Employment Notice Number 25-22, to announce the release of release of the Robotic Process Automation Toolkit. • Training Employment Notice Number 26-22, to announce the release of the Equitable Access Toolkit. • Training Employment Notice Number 01-23, to provide information regarding the 2023 Unemployment Insurance Integrity Symposium. • Training Employment Notice Number 02-23, to announce the “Leveraging Federal Funds to Support More Robust Integrity Data Hub Utilization” webinar. • Training Employment Notice Number 05-23, to announce Benefit Accuracy Measurement (BAM) Investigator Virtual Training sessions and Data Validation Training sessions. • Issued Training Employment Notice Number 06-23, to announce the “Fundamentals of Equitable Access in Unemployment Insurance” online training lesson. Employment and Training Administration funds and oversees the National Association of State Workforce Agencies Unemployment Insurance Integrity Center, which provides training to state Unemployment Insurance agencies through the Unemployment Insurance National Integrity Academy (Academy). The Academy is dedicated to providing rigorous and relevant training programs and materials to states and provides no-cost interrelated certificates that offer Unemployment Insurance program integrity training for state staff via online, eLearning lessons/modules and through virtual and in person instructor-led training that leads to credentials. Employment and Training Administration works in collaboration with National Association of State Workforce Agencies to develop important Unemployment Insurance program trainings. In FY 2023, Employment and Training Administration and National Association of State Workforce Agencies developed the following trainings for states: • “Fundamentals of Equitable Access in Unemployment Insurance”, which is a self-paced training lesson to address challenges and possible solutions to help ensure equitable access to the Unemployment Insurance program. • A virtual instructor led training course for state BAM investigators, which provides instruction in the fundamentals of Benefit Accuracy Measurement investigations, including fact finding, coding and writing the case summary. • A virtual instructor led training course for state staff, which provides instruction in the fundamentals of Data Validation for Benefits and Tax, including how to diagnose errors and build proper extract files. The Academy also completed and published multiple lessons to the National Association of State Workforce Agencies Learning Management System, which included eLearning lessons in Data Analysis, the Integrity Data Hub, and the Behavioral Insights curricula. The Academy received 1,417 new learner enrollments for FY 2023, bringing total all-time enrollments to 16,297 learners. In FY 2023, the Academy conducted the Basic Unemployment Insurance Fraud Investigations course 19 times to a total of 319 learners. More than 225 hours of eLearning instruction are available in seven certificate tracks, and 208 individual lessons and courses are offered via eLearning, virtual classrooms, and instructor led training. Additionally, the Unemployment Insurance Integrity Center’s Integrity Data Hub team actively works with states to implement the datasets available through the Integrity Data Hub for the prevention and detection of improper payments and fraud in the Unemployment Insurance program. The Integrity Data Hub team conducts bi-weekly Integrity Data Hub update calls with states and provides direct technical assistance and peer-to-peer engagements. The Integrity Data Hub team also continued conducting onsite Integrity Data Hub implementation support services, which are designed as short, in-person engagements with states to provide training and aid states with the understanding and utilization of the Integrity Data Hub system and results data. Employment and Training Administration and the Unemployment Insurance Integrity Center also presented and provided Unemployment Insurance-related trainings at virtual and in-person conferences throughout FY 2023.
    FY2023 Q4
    Completed
    Change Process
    Employment and Training Administration provided guidance and resources to states to alert states regarding new Unemployment Insurance program requirements; provide updates to existing Unemployment Insurance requirements, processes, or policies; and/or provide information on important program trainings, Unemployment Insurance integrity resources, and operational recommendations. In FY 2023, Employment and Training Administration also continued to provide significant funding to states to improve Unemployment Insurance program integrity. The funding is being used by states for a number of program integrity strategies and solutions, including updating processes, procedures, and tools to combat fraud, strengthen identity verification, reduce improper payments, recover overpayments, assess and address fraud risks, protect victims of identity fraud, modernize state Unemployment Insurance systems, and evaluate data to ensure effectiveness and equity in fraud prevention and detection efforts. In total, the Department has made available up to $765 million in grant opportunities to support states with fraud prevention and detection and overpayment recovery efforts, which includes up to $525 million in Coronavirus Aid, Relief, and Economic Security (CARES) Act grant funding and up to $240 million in American Rescue Plan Act (American Rescue Plan Act) grant funding. Furthermore, up to $200 million in additional American Rescue Plan Act grant funding was made available to states to improve the resiliency of state IT systems and their ability to respond to changing fraud threats (see Unemployment Insurance Program Letter Number 11-23). In addition to announcing the $100 million in integrity grant funding and $200 million in IT modernization funding announced under Unemployment Insurance Program Letter Number 11-23, in FY 2023, Employment and Training Administration also continued to review grant applications, provide technical assistance to states’ applying for the equity grant funds, and award equity grant funds made available under Unemployment Insurance Program Letter Number 23-21. The Department is also using American Rescue Plan Act funds to make available to states (for at least the next two years subject to available funding) both in-person and digital, government-operated, identity verification services (i.e., National identity Verification Offering). The Department’s National Identity Verification Offering provides a remote, mobile ready digital identity verification solution through Login.gov, in partnership with GSA. In-person identity verification will be made available to all states at over 19,000 retail post office locations across the country in partnership with United States Postal Service. This initiative was announced in Unemployment Insurance Program Letter Number 11-23 in July 2023. Furthermore, the Department’s Tiger Team initiative continued to work with states to identify needs and issues focused on near-term improvements in customer experiences and improved operational processes, while also making recommendations and proposing solutions to address fraud and support more equitable access for legitimate claimants. In FY 2023, the Department’s Tiger Teams completed the following activities: • Delivered finalized Tiger Team recommendations for 34 participating states. • Continued to finalize and deliver recommendations based on Tiger Team consultative assessments, providing more than 320 cumulative recommendations to date. • Expanded stakeholder support mechanisms in the Tiger Team initiative to provide ongoing operational support to states. • Processed states’ grant applications to fund Tiger Team recommendations.? • Conducted quarterly check-in meetings with all states that engaged with Tiger Teams to track and ensure progress on implementing recommendations as well as performance against metrics. • Assisted the Office of Unemployment Insurance (OUI) and the Office of Unemployment Insurance Modernization with target modernization project initiatives that intersect with Tiger Team technical assessment areas. • Supported the Department with the recruitment and onboarding of states to the Department’s National identity Verification Offering. • Identified and shared best practices/toolkits for reducing backlogs, increasing equity, and for improving timeliness of Unemployment Insurance benefit payments through the Unemployment Insurance Community of Practice (CoP) and through webinars. • Added new American Rescue Plan Act Tiger Team content on Workforce GPS and aligned content with the Office of Unemployment Insurance Modernization reference site. • Finalized and announced the availability of “Fundamentals of Equitable Access in Unemployment Insurance” training. Lastly, the Unemployment Insurance Integrity Center provided states with consultative and technical assistance services and provided operational recommendations and best practices to support states' adoption of strategies and process improvements that reduce the improper payment rate and promote prevention, detection, and recovery of Unemployment Insurance improper and fraudulent payments
    FY2023 Q4
    Completed
    Cross Enterprise Sharing
    Employment and Training Administration and the Department of Labor's Office of Inspector General (DOL- OIG) continued to meet regularly to discuss emerging Unemployment Insurance fraud issues and antifraud measures that target high risk areas. The open dialog between Employment and Training Administration and Department of Labor’s Office of Inspector General also provides opportunities to streamline communication with states and coordinate fraud prevention and overpayment recovery efforts. In FY 2023 Employment and Training Administration’s collaboration with Department of Labor’s Office of Inspector General included the following: • Met with Department of Labor’s Office of Inspector General to discuss civil prosecutions and explore possibilities of using a self-disclosure program for Unemployment Insurance fraud. As a result, Employment and Training Administration: o Began development of a Standard Operating Procedure (SOP) for federal law enforcement regarding processing recovered Unemployment Insurance funds paid out on fraudulent claims through civil prosecution under the False Claims Act. o Included information about and promotion of a fraud self-disclosure program as a recommended overpayment recovery activity in UIPL No. 11-23. • On January 31, 2023, the Unemployment Insurance Integrity Center completed development, testing, and release to production of the Department of Labor’s Office of Inspector General Integrity Data Hub Interface. The Department of Labor’s Office of Inspector General Integrity Data Hub Interface allows approved OIG Investigators to easily request and receive a report of Integrity Data Hub results sent to states, which identifies Unemployment Insurance claims reasonably believed to be potential fraud. • On March 13, 2023, Employment and Training Administration hosted a national call with states and Department of Labor’s Office of Inspector General to share techniques Department of Labor’s Office of Inspector General uses to prepare Unemployment Insurance data for analysis to identify trends indicating potential fraud and to provide states with information on money mule operations. • Shared Department of Labor’s Office of Inspector General curated news articles each month with Employment and Training Administration Regional Offices to ensure Regional Offices and states remain aware of the ongoing Unemployment Insurance fraud arrests, actions, and prosecution efforts of federal, state, and local law enforcement. Employment and Training Administration also shared the updated #StopRansomware Guide with Employment and Training Administration Regional Offices and states, which was developed through the Joint Ransomware Task Force, as a resource to help organizations reduce the risk of ransomware incidents through best practices to detect, prevent, respond and recover, including step-by-step approaches to address potential attacks. In FY 2023, Employment and Training Administration participated on banking workgroup calls to discuss ongoing fraud prevention and detection issues and overpayment recovery efforts. The calls help keep banking organizations, federal government agencies, and law enforcement agencies aware of the emerging fraud schemes targeting different sectors, while also streamlining communications to aid in the recovery and return of fraudulently obtained and overpaid funds and benefits. In working with states, the Unemployment Insurance Integrity Center develops and disseminates tools and products to highlight best practices and provides operational recommendations to improve Unemployment Insurance program performance and reduce improper payments. The Unemployment Insurance Integrity Center’s Knowledge Exchange Library (Library) is an online, searchable, knowledge-sharing platform that includes a repository of all Unemployment Insurance Integrity Center resources including, model state operational processes, promising state practices, and recommendations to strengthen Unemployment Insurance program integrity. In FY 2023, the Unemployment Insurance Integrity Center continued to add Unemployment Insurance integrity-related resource documents to the Library, bringing total available Unemployment Insurance integrity-related resources to over 2,800. The Library’s COVID-19 special collection, dedicated to the pandemic and the Unemployment Insurance system emergency response, includes over 400 resources.
    FY2023 Q4
    Completed
    Audit
    ETA National and Regional Office staff are collectively responsible for federal oversight of state administration of UI programs. Employment and Training Orders (ETOs) provide direction to ETA staff on processes for a wide array of oversight reviews and performance accountability activities. ETA requires states to submit a State Quality Service Plan (SQSP) each year. The SQSP is the principal vehicle used by state UI programs to plan, record, and manage improvement efforts as they strive for excellence in service. It represents an approach to the UI performance management and planning process that allows for an exchange of information between Federal and state partners to enhance the UI program’s ability to reflect their joint commitment to performance excellence and client-centered services. The SQSP is part of the process by which states receive Federal UI administrative grants. As part of the SQSP process, each state must address UI program performance deficiencies by submitting corrective action plans (CAPs) for UI performance measures falling below the Acceptable Level of Performance (ALP). States provide quarterly updates on their CAPs. In addition, states must complete an Integrity Action Plan (IAP), outlining the state’s UI program integrity and antifraud strategies. The IAP requires states to discuss their actions and planned activities to prevent and detect fraud, reduce improper payments, and improve overpayment recoveries. As part of the IAP, states also report UI fraud risk mitigation strategies and address any additional UI integrity and fraud risk topics, including fraud and integrity-related National Priorities identified in the annual SQSP Additional Planning Guidance. In FY 2022, ETA began requiring states to provide a six-month update to the IAP. In FY 2023, ETA reports the following additional actions regarding the SQSP and IAP: • Reviewed states’ FY 2023 SQSPs, IAPs, and corresponding updates. • Included “Ensuring UI program integrity by assessing and evaluating fraud risks, implementing and maintaining sufficient controls to effectively mitigate the likelihood and impact of fraud, and reducing improper payments” as a National Priority for the FY 2024 SQSP. • Updated the IAP requirements for FY 2024, adding a topic for states to discuss plans and actions to mitigate negative consequences for UI ID fraud victims, including ensuring simplified processes to remove the victim’s liability for overpayments resulting from ID fraud. • Issued UIPL No. 09-23, the Additional Planning Guidance for the FY 2024 SQSP, which in addition to providing SQSP guidance, highlighted actions the Department is taking to update fraud risk management activities and required states to report actions to develop their own state-specific antifraud strategy as part of the IAP. • Included in the IAP template for FY 2024, the Government Accountability Office’s (GAO) key elements of an antifraud strategy, to aid states in the development of their own state-specific antifraud strategy. • Began exploring options to conduct in-depth analysis on states’ SQSPs and IAPs to better inform the Department’s antifraud strategy, make data-driven decisions regarding fraud and improper payment risk mitigation strategies, and streamline review of future SQSP and IAP submissions and updates. • Continued to reinforce state SQSP and IAP reporting requirements within recommendations through Tiger Team engagements.
    FY2023 Q4
    Completed
    Predictive Analytics
    The Department continued to strongly encourages states to adopt an array of strategies to detect and fight fraud, provide equitable access for claimants facing challenges using online ID verification, expand the ID verification footprint by adding more ID verification options, and to have robust strategies in place to verify the identity of individuals applying for UI benefits. The Department is using ARPA funds to make available to states (for at least the next two years subject to available funding) both in-person and digital, government-operated, ID verification services (i.e., National ID Verification Offering). The Department’s National ID Verification Offering provides a remote, mobile ready digital ID verification solution through Login.gov, in partnership with GSA. In-person ID verification will be made available to all states at over 19,000 retail post office locations across the country in partnership with USPS. FY 2023, ETA reports the following actions: • Issued UIPL No. 11-23, which made available additional funding to support UI program integrity efforts, including strengthening ID verification in UC programs, and officially announced the Department’s National ID Verification Offering. o The guidance also defined a risk-based approach to ID verification for UC programs and introduced evidence-based ID verification. • Expanded outreach regarding the National ID Verification Offering by conducting demonstrations of the Login.gov and USPS services, holding discussions with states, and initiating follow-up conversations with interested state UI agencies. o Total outreach included 45 states, with 39 states expressing interest in at least one, if not both, of the ID verification services. • Deployed both Login.gov and USPS ID verification services in Arkansas and Hawaii. o Escalated Hawaii implementation to coincide with their Disaster Unemployment Assistance (DUA) response to the Maui wildfires. • Deployed the USPS ID verification service in Oklahoma and Oregon. • Continued to formalize ID Verification recommendations through Tiger Team engagements. ETA continued to support and provide funding for enhancements to the UI Integrity Center’s IDH, which is a secure, robust, centralized, multi-state data system that allows participating states to cross-match, compare, and analyze UC claims data against a variety of datasets for enhanced prevention and detection of improper payments and fraud in UC programs. The IDH currently has the following functionality: • Suspicious Actor Repository (SAR) – allows states to match UI claims against other states’ known suspicious claims data. This tool allows each state to benefit from the investigative work of all states as claims data associated with known or probable UI fraud is submitted and stored in the SAR for cross- matching purposes. • Suspicious E-Mail Domains and Patterns – allows participating states to cross-match their claims against a database of suspicious e-mail domains and detects suspicious email patterns, that have been associated with fraudulent activity, and flags claims with these domains and/or patterns for further investigation by the submitting state. • Foreign IP Addresses – allows participating states to receive flags on UI claims filed from Internet Protocol (IP) addresses outside of the U.S. • Data Analysis – provides the unique ability to analyze national claims data and conduct cross-state analysis within a secure system. • Multi-State Cross-Match (MCSM) – provides the ability to identify UI claims data used across multiple states and allows a lookback capability to identify after-the-fact matches based on new claims or fraud activity data submitted to the IDH. • Fraud Alerting – provides a secure messaging platform for states, ETA, and the DOL-OIG to share information through the IDH on emergent fraud schemes. • Identity Verification (IDV) – provides states with a centralized, front-end ID verification tool by returning ID scoring information, including flagging of false and synthetic identities; this solution includes a cross-match to the SSA’s Death Master File. • Bank Account Verification (BAV) – provides states with access to near real-time information to proactively identify and authenticate bank account information provided by the UI claimant by validating the account’s status and ensuring the individual identified as the claimant is the account owner and/or authorized user prior to initiating the UI benefit payment. The UI Integrity Center and ETA report the following actions in FY 2023: • Actively worked with states to implement the datasets available through the IDH for the prevention and detection of improper payments and fraud in the UI program. • Continued supporting states’ connection to the IDH and assisted states with reviewing, processing, and analyzing IDH results. As of September 30, 2023: o All 53 states have executed an IDH participation agreement. o 51 states are using SAR. o 50 states are using MSCM. o 45 states are using the IDV solution. o 40 states are using the BAV service. o All states, ETA, and the DOL-OIG have access to Fraud Alerting in the IDH. • Completed enhancements to the IDH Prioritization and the IDH Sorting, Filtering, and Outcomes (SFO) functionality, adding an “After the Fact Match” filter option as well as the capability to display priority rule violation detail on the results tab. o “After the Fact Match” increases IDH users’ ability to review IDH results on current UI claims, thereby increasing investigative efficiencies. It also provides users with the ability to identify matches that occurred after the lookups have been performed, such as those resulting from hijacked claims and multi-state schemes. o Priority rule violation detail allows IDH users to view which rule(s) specifically were violated. o Added an IDH prioritization rule to identify and flag high-risk age categories. • Developed and implemented an enhanced Fraud Alerting capability (Fraud Alert 2.0), capturing data elements identified in fraud alerts in a more structured format which allows new lookup requests to be cross-matched against “historical” fraud alerts. • On January 31, 2023, the UI Integrity Center completed development, testing, and release to production of the DOL-OIG IDH Interface. The DOL-OIG IDH Interface allows approved OIG Investigators to easily request and receive a report of IDH results sent to states, which identifies UI claims reasonably believed to be potential fraud. • Developed and reviewed new data visualizations related to duplicate records and IDH priority assignments. • Conducted bi-weekly IDH update calls with states and provided direct technical assistance and peer-to-peer engagements. • Continued conducting onsite IDH implementation support services. The visits are designed as a short, in- person engagement between UI Integrity Center staff and the state to aid the state with the understanding and utilization of the IDH system and results data. • On August 1, 2023, hosted the “Leveraging Federal Funds to Support More Robust IDH Utilization” webinar. • Participated in a panel discussion at the National Automated Clearinghouse Association (NACHA) Smarter Faster Payments conference to discuss the IDH BAV capability and performance. • Continued to work with the Department and their IDH Evaluation Research Team to inform the IDH evaluation, which is an initial study to provide insights on the IDH’s effectiveness for identifying potential fraud. • The Department provided funding to support future enhancements to the IDH functionality, including methods to detect potential UI tax fraud schemes and to access and use additional data sources, including government data sets.
    FY2023 Q4
    Completed
    Statutory Change
    In its FY 2024 budget submission, the Department proposed a comprehensive package of provisions designed to provide new and expanded tools and controls for states to help improve efforts to ensure entitled workers are properly paid and to prevent fraud and improper payments in the UI system. The package includes the following components: • Require states to use system(s) designated by the Secretary for cross-matching claimants to prevent and detect improper payments, including fraud, which would currently include the IDH. • Require states to use system(s) designated by the Secretary for electronic transmission of requests for information relating to UC and the provision of such information between the state UI agency and employers or their agents, which would currently include SIDES. • Require states to cross-match against the NDNH to better identify individuals continuing to claim UC after returning to work, which is one of the leading root causes of UI improper payments. • Require states to cross-match with a system(s) designated by the Secretary that contains information on individuals who are incarcerated, which would currently include the SSA’s PUPS. • Require states to disclose information to the DOL-OIG to conduct audits and investigations to discover fraud, waste, and abuse or inefficiencies in the UC programs. • Provide the Secretary with meaningful enforcement authority and the ability to reward good performance. This proposal would create a new remedy so that instead of withholding a state’s entire administrative grant for failing to meet the performance measures or achieve minimum technology standards, the Secretary can require a portion of the state’s administrative grant be used to correct failing performance and/or have the state participate in required technical assistance activities offered by USDOL. • Allow states to retain up to five percent of recovered fraudulent UI overpayments for program integrity use. • Require states to use penalty and interest collections solely for UI administration. • Allow states the authority to issue a formal warning when claimants are unclear on the work search requirements. • Allow states to use contract support in recovery efforts under the Treasury Offset Program (TOP). Furthermore, the ETA is considering changes to the UI confidentiality regulations at 20 CFR Part 603, to address the issue of requiring states to provide the DOL-OIG with access to state UI data, including for investigations and audit purposes.
    FY2023 Q4
    Completed
    Automation
    ETA will continue to encourage states to use SIDES and emphasize SIDES as a primary method to reduce improper payments and fraud in the states. The SIDES team will host the annual 2024 SIDES Seminar. In addition, the SIDES team will explore opportunities for additional updates and enhancements to SIDES. The SIDES team will continue to conduct outreach to employers and employers’ third-party administrators to encourage the adoption and use of SIDES and will continue to attend and exhibit at employer conferences to provide information regarding the use of SIDES to streamline the UI process in the states where they have employees.
    FY2027+
    Planned
    Behavioral/Psych Influence
    ETA will continue to provide BI recommendations to state UI programs through Tiger Team engagements and enhanced technical assistance activities. ETA will also continue to work with the UI Integrity Center and support states in the use of BI in their UI programs. The UI Integrity Center will continue to increase the materials available in the BI Toolkit and provide targeted BI technical assistance to states.
    FY2027+
    Planned
    Training
    ETA will continue to provide training to states on critical guidance, UI performance measures, ETA UI reporting requirements, and other UI-related topics as needed. ETA will also continue to promote the training resources provided by the UI Integrity Center. The UI National Integrity Academy, will continue to support states’ training needs by developing new training materials, adding new lessons to existing certificate programs, customizing training programs for states, training newly hired staff, and providing existing UI staff with refresher and skill-enhancement training. ETA and the UI Integrity Center will also continue providing UI-related presentations and trainings at virtual and in-person conferences.
    FY2027+
    Planned
    Change Process
    ETA will continue to provide guidance and resources to alert states regarding new UI program requirements; provide updates to existing UI requirements, processes, or policies; and/or provide important program trainings, UI integrity resources, and operational recommendations. The Department's will continue work with states to address immediate needs and issues that lead to achieving improvements of UI customer experiences and operational processes, while also making recommendations and proposing solutions to address fraud and support more equitable access for legitimate claimants. The UI Integrity Center will continue to provide states with consultative and technical assistance services to reduce the improper payment rate and promote prevention, detection, and recovery of UI improper payments and fraudulent payments.
    FY2027+
    Planned
    Cross Enterprise Sharing
    ETA will continue to meet regularly with the DOL-OIG to discuss emerging UI fraud issues, streamline communication with states, and coordinate fraud prevention and recovery efforts. The UI Integrity Center will continue to develop integrity-related resources, including operational recommendations, promising practice templates, and various resources and guides for states to make UI program improvements and address integrity challenges and add those resources to the UI Collection in the Library.
    FY2027+
    Planned
    Audit
    ETA will continue to conduct oversight and monitoring of state UI programs in line with the ETOs to ensure states’ conformity and compliance with federal and state UC law, rules, regulations, and policies. ETA Regional Offices will review states’ SQSP and IAP submissions and their corresponding quarterly updates, ETA 9178 reports submitted for grant funding, and ETA UI Required Reports for completeness and accuracy.
    FY2027+
    Planned
    Predictive Analytics
    ETA will continue to strongly encourage states to adopt an array of solutions, tools, strategies, and techniques to prevent and detect fraud and strengthen ID verification, including support for states to use all available functionality in the IDH and to take advantage of the Department's National ID Verification Offering. ETA will continue to support enhancements to the IDH and will explore additional data sources for inclusion in the IDH to continuously improve fraud prevention and detection and reduce UI improper payments.
    FY2027+
    Planned
    Statutory Change
    The Department of Labor will continue to provide legislative technical assistance on proposed UI Integrity legislation as needed. In addition, ETA will continue its consideration of potential changes to the UI confidentiality regulations at 20 CFR Part 603, that would, in part, address the issue of providing the DOL-OIG with access to state UI data, including for investigations and audit.
    FY2025
    Planned

Overpayments

The state agency identified an issue but did not properly follow procedures or complete required forms and/or provided incorrect information or did not resolve the issue(s). Alternatively, the issue could have been the result of a third-party error/incorrect information. In addition, these issues may involve instances where the state agency was resolving the error or had detected the error as a result of a crossmatch with National Directory of New Hire (NDNH) or wage records and an issue was detected after the payment was issued. State agencies operate the Unemployment Insurance (UI) program. Thus, overpayments originate from state agency administration issues and are not within the Federal agency’s control. Responses to questions referring to activities “within the agency’s control” reflect matters within state agencies’ control.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $935.03 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $79.1 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $855.93 M

The UI program is a unique federal-state partnership based on Federal law but administered through individual state laws by 53 state UI agencies. States vary in their information technology systems, level of automation, staffing capacity, and methods and strategies for prevention, detection, and recovery of improper payments and fraud. Additionally, no two states' written laws, regulations, and policies specifying eligibility conditions are identical, and differences in these conditions influence the potential for error and improper payments. Two states could have identical laws but may interpret them quite differently. States with stringent or complex provisions tend to have higher improper payment rates than those with simpler, more straightforward provisions. Furthermore, Section 303(a)(1) of the Social Security Act requires UI payments to be made “when due” and, once a person is determined eligible, this law prohibits states from suspending payments until an official determination has been made that payments are no longer due. This statutory factor requires states to make payments that may later be determined as improper as a result of obtaining new information. For good policy reasons, states must continue paying benefits until due process occurs (notice and an opportunity for a hearing is provided before benefit payments are stopped). This UI program structural feature is a primary driver for top root causes of UI improper payments.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $3,084.41 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $3,084.41 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.0 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Employment $1,881.49 M
Overpayments Outside Agency Control Identity $92.53 M
Overpayments Outside Agency Control Receiving Benefits from Other Sources $1,110.39 M
Overpayments Within Agency Control Employment $626.47 M
Overpayments Within Agency Control Identity $46.75 M
Overpayments Within Agency Control Receiving Benefits from Other Sources $261.81 M

Overpayment type Mitigation strategies taken Mitigation strategies planned
Overpayments within the agency’s control Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $154.54 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $116.36 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $38.18 M

Eligibility element/information needed Eligibility amount
Dependency $13.91 M
Employment $119.0 M
Receiving Benefits from Other Sources $21.64 M

Mitigation strategies taken Mitigation strategies planned
Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$154.54 M

Unknown Payment Details

Unknown payments were caused due to insufficient staff due to retirement, staff turnover, and lack of experienced staff to complete investigations. In addition, staff continued to work on backlog reduction resulting from the temporary, pandemic-related unemployment compensation (UC) programs and to assist in fraud detection and identity verification in the UC programs.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $461.7 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation
States $461.7 M In order to determine if a payment is proper or improper, state staff must obtain the required information (including identity verification, employment and wage history, separation information, etc.) to make a decision of eligibility. The state must verify the accuracy of the information received by the claimant, employers, and/or third parties. The failure to document the results of any step in the process or the failure to obtain the information results in a question of whether the correct person and correct amount were paid.

Mitigation strategies taken Mitigation strategies planned
Training Training

Evaluation of corrective actions

All of ETA’s UI integrity strategies are focused on reducing the top root causes of improper payments and mitigating fraud risks in the UC programs. ETA will continue to develop new and update existing integrity strategies to address the top root causes of UI improper payments and emerging fraud risks.

ETA will continue to evaluate the effectiveness of UI integrity strategies, document best practices, and provide guidance and technical assistance to states to improve UI program operations and reduce improper payments. ETA will continue to align UI fraud risk management activities with the leading practices in GAO's Fraud Risk Framework and strive to meet the Department’s “low” risk tolerance by continuing to assess program risks and employ strategies to further reduce improper payments and fraud in the UC programs.

ETA will continue to ensure UI program integrity remains a top agency priority. The Department will regularly assess and update its antifraud and improper payment reduction strategies and continuously evolve strategies and antifraud controls to combat emerging fraud schemes and address the highest residual risks identified in the UI Fraud Risk Profile. As new fraud threats emerge, the Department will update the UI Fraud Risk Profile and ensure any new strategies to mitigate risks are incorporated and tracked in the UI Integrity Strategic Plan.

Future payment integrity outlook

Employment & Training Administration - Federal State Unemployment Insurance has established a baseline.

ETA will continue to utilize all of its Integrity tools and resources to improve the future improper payment rate. ETA anticipates more state engagement in integrity initiatives and therefore sets a lower reduction target for FY2024.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $43,360 M
Current year +1 estimated future improper payments $6,429.42 M
Current year +1 estimated future unknown payments $711.18 M
Current year +1 estimated future improper payment and unknown payment rate 16.47 %
Current year +1 estimated future improper payment and unknown payment reduction target 15.0 %

The program's current year improper payment and unknown payment rate of 16.47 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

The National overpayment, unknown, and underpayment rates (improper payments) are driven on the processes and performance of the states. During the pandemic, states transitioned experienced staff from their normal duties to assist with the unprecedented claims volume to operate the regular UI
programs as well as implementing and administering the temporary pandemic programs authorized by the CARES act. Other factors that prevented states from reducing improper payments include such factors such as outdated IT systems, loss of experienced staff, new inexperience staff, and the reduction of
administrative funding, which significantly impacted resources and staffing level.

ETA has not determined a tolerable rate. Setting a tolerable rate will need to take the states' operations into account. The National overpayment, unknown, and underpayment rates (improper payments) are driven on the processes and performance of the states. During the pandemic, states transitioned experienced staff from their normal duties to assist with the unprecedented claims volume to operate the regular UI programs as well as implementing and administering the temporary pandemic programs authorized by the CARES act. Other factors that prevented states from reducing improper payments include such factors such as outdated IT systems, loss of experienced staff, new inexperience staff, and the reduction of administrative funding, which significantly impacted resources and staffing level.

The FY 2024 President’s Budget request proposes a comprehensive package of provisions designed to provide new and expanded tools and controls for states to help improve efforts to ensure entitled workers are properly paid and to prevent fraud and improper payments in the UI system. This includes a number of provisions to improve the administration and integrity of the UI program. The budget submission includes requested increases in UI National Activities funding for program integrity and anti-fraud activities to support ID verification services in the states, and funding to support technology modernization that will improve States’ abilities to detect and prevent fraud and other improper payments in the program.

Additional programmatic information

The UI program is a unique federal-state partnership based on Federal law but administered through individual state laws by 53 state UI agencies. States vary in their information technology systems, level of automation, staffing capacity, and methods and strategies for prevention, detection, and recovery of improper payments and fraud. Additionally, no two states' written laws, regulations, and policies specifying eligibility conditions are identical, and differences in these conditions influence the potential for error and improper payments. Two states could have identical laws but may interpret them quite differently. States with stringent or complex provisions tend to have higher improper payment rates than those with simpler, more straightforward provisions.

Furthermore, Section 303(a)(1) of the Social Security Act requires UI payments to be made “when due” and once a person is determined eligible, this law prohibits states from suspending payments until an official determination has been made that payments are no longer due. This statutory factor requires states to make payments that may later be determined as improper as a result of obtaining new information. For good policy reasons, states must continue paying benefits until due process occurs (notice and an opportunity for a hearing is provided before benefit payments are stopped). This UI program structural feature is a primary driver for some of the top root causes of UI improper payments.

The Department places a heightened priority on overall UI program integrity and mitigating UI fraud risks. The UI system has been, and continues to be, targeted by sophisticated and organized fraud, perpetrated by domestic and international criminal organizations. The frequency and complexity of fraud attacks, specifically ID fraud, against state UC programs increased significantly during the COVID-19 pandemic. State UI systems were overwhelmed by record numbers of claims amidst an unprecedented increase in unemployment triggered by the public health crisis. When Congress created new temporary unemployment programs (some of which lacked basic program integrity controls designed to prevent improper payments, including fraud) and enacted laws to expedite the delivery of benefits, states were expected to rapidly implement and administer these new programs. The combination of decades of underfunding, outdated state UI IT systems, record claims volumes, and weaker integrity controls in 2020, provided an opportunity for criminals to exploit vulnerabilities in state UI systems, which resulted in elevated rates of improper payments. Serious underfunding and outdated technology systems limited states’ responsiveness and efficiency. While states worked tirelessly to rapidly combat relentless fraud attacks, the fraud schemes continue to evolve to circumvent many of the prevention and detection tools and strategies implemented by states.

In FY 2023, states continued to address elevated levels of backlogs caused from the impacts of the COVID-19 pandemic. States continue to focus their attention and available resources on reducing backlogs accumulated from high claims volume and combatting the substantial increases in UI fraud. Many states continue implementing new or updating existing fraud prevention and detection tools, including ID verification solutions and services.

ETA has actively and aggressively continued to address fraud and improper payments in the UC programs by providing support to states through guidance, technical assistance, and additional funding opportunities. ETA continues to prioritize UI program integrity as a top agency priority. ETA also continues to evolve and oversee implementation of improper payment reduction and fraud mitigation strategies that target the highest root causes of improper payments and address emerging and evolving risks. For more details on ETA’s FY 2023 UI program integrity actions see the FY 2023 UI Integrity Strategic Plan available at https://oui.doleta.gov/unemploy/integrity_plan.asp.

The Department’s ETA bases the UI improper payment estimates on results of the Benefit Accuracy Measurement (BAM) survey, which examines a nationwide statistically valid sample of payments made in the three largest permanently authorized Unemployment Compensation (UC) programs: State UI, Unemployment Compensation for Federal Employees (UCFE), and Unemployment Compensation for Ex-service members (UCX). The BAM sample does not include payments made under episodic programs such as Extended Benefits (EB) and temporary programs like the Emergency Unemployment Compensation (EUC) program and the UI-related programs created by the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020, including Pandemic Unemployment Assistance (PUA), Pandemic Emergency Unemployment Compensation (PEUC), and Federal Pandemic Unemployment Compensation (FPUC). However, after discussion with OMB, ETA has applied the regular UI improper payment rate to the FPUC and PEUC benefit outlays since FY 2021 to help ensure transparent, timely reporting. FPUC and PEUC expired in law on September 6, 2021, though many states ended these benefits before that date. The Department has continued to include PEUC in regular UI program reporting in FY 2023. PEUC net outlays of $33 million consist of wind-down operations. DOL is including in its OMB Payment Integrity DataCall responses the negative amount of outlays in FPUC (negative $82 million) to provide transparency for this high-profile pandemic program. The negative value reflects the impact of states recovering overpayments and reconciling accounts that exceed payouts for the reporting period for this expired pandemic-related benefit. These recovery audit recoveries will be reflected in the OMB Data Call’s Agency wide Survey per the guidance received. This negative net outlay was not used to artificially reduce normal UI program reported outlays or IP estimates.

  • FY 2024 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2023 - 06/2024


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.88

  • Actions taken & planned to mitigate improper payments

    Mitigation strategy Description of the corrective action Completion date Status
    Automation
    ETA continued to support expansion and updates to the State Information Data Exchange System (SIDES). SIDES improves the timeliness and quality of job separation information from employers, thus reducing the number of improper payments to claimants who are determined to be ineligible for UI due to disqualifying job separations, such as quitting without good cause or being discharged for misconduct. Another key antifraud and improper payment reduction strategy includes exploring and pursuing additional data sources and services that could be made available to state UI agencies to support states with identifying and preventing fraud, reducing improper payments, and ensuring timely and accurate eligibility determinations. The Department is also using American Rescue Plan Act (ARPA) funds to make available to states (for up to two years subject to available funding) both in-person and digital, government-operated, ID verification services, known as the National ID Verification Offering (NIDVO). NIDVO provides a remote, mobile ready digital ID verification solution through Login.gov, in partnership with GSA’s Login.gov. In-person ID verification is available to participating states at over 19,000 retail post office locations across the country in partnership with USPS. The Department also used ARPA funds to provide states with implementation grants to automate and improve business processes identified through recent Tiger Team engagements with 36 state UI agencies. ETA develops, updates, oversees, and communicates UI antifraud strategies and program integrity controls through its robust and dynamic UI Integrity Strategic Plan. While this plan provides a detailed accounting of ETA’s FY 2024 actions, the plan is not made publicly available, as it contains confidential or sensitive information regarding the Department’s UI fraud risk mitigation and improper payment reduction activities to strengthen UI program integrity.
    FY2024 Q4
    Completed
    Behavioral/Psych Influence
    The Department-funded UI Integrity Center provides behavioral science information and expertise, evidence-based insights, and support for state UI agencies seeking to achieve better outcomes on challenging program problems. The UI Integrity Center Behavioral Insights (BI) team continued to develop and publish new resources in the BI Toolkit States, in partnership with the Department, identified over 600 projects to make meaningful improvements to UI program operations and the customer experience (CX). The Department provided funding through ARPA grants to support state projects and is providing ongoing technical assistance and training to states and investing in and/or developing new tools and resources to support states in improving the administration and operation of UI programs. These efforts involve helping states address unique challenges by engaging with states and supporting the implementation of states’ projects as they make improvements to UI systems, processes, communications, and CX.
    FY2024 Q4
    Completed
    Training
    ETA provided UI-related training to states administering the UI programs through webinars, meetings, and targeted technical assistance. The trainings covered numerous UI-related topics including, critical guidance, UI performance measures, ETA UI reporting requirements, and targeted trainings based on specific UI programs areas. Additionally, ETA funds and oversees the UI Integrity Center, which provides training to state UI agencies through the UI National Integrity Academy (Academy). The Academy is dedicated to providing rigorous and relevant training programs and materials to states and provides no-cost interrelated certificates that offer UI program integrity training for state staff via online, eLearning lessons/modules and through virtual and in person instructor-led training that leads to credentials. ETA also encourages states to attend relevant UI-related training conferences and symposiums and announces training resources and events through Training and Employment Notices (TENS). ETA and the UI Integrity Center regularly present and provide UI program-related trainings and workshops during these events.
    FY2024 Q4
    Completed
    Change Process
    ETA provided guidance and resources to states to alert states regarding new UI program requirements; provided updates to existing UI requirements, processes, or policies; and/or provided information on important program trainings, UI integrity resources, and operational recommendations. ETA also continued to provide significant funding to states to improve UI program integrity and modernize state UI IT systems. In total, ETA awarded $783 million in grants directly to states, under ARPA, with the goals to prevent and detect fraud, promote equitable access, and ensure the timely payment of benefits. Among other things, the funding is being used by states for numerous program integrity strategies and solutions, including updating processes, procedures, and tools to combat fraud, strengthen ID verification, reduce improper payments, recover overpayments, assess and address fraud risks, protect victims of ID fraud, modernize state UI IT systems, and evaluate data to ensure effectiveness and equity in fraud prevention and detection efforts. Additionally, ETA worked with states to implement both in-person and digital, government-operated, ID verification services through NIDVO, onboarding a total of 15 states to at least one of the NIDVO services in FY 2024. Lastly, the UI Integrity Center provided states with consultative and technical assistance services and provided operational recommendations and best practices to support states' adoption of strategies and process improvements that reduce the improper payment rate and promote prevention, detection, and recovery of UI improper and fraudulent payments.
    FY2024 Q4
    Completed
    Cross Enterprise Sharing
    ETA and the Department’s Office of Inspector General (DOL- OIG) continued to meet regularly to discuss emerging UI fraud issues and antifraud measures that target high risk areas. The open dialog between ETA and DOL-OIG provides opportunities to streamline communication with states and coordinate fraud prevention and overpayment recovery efforts. ETA Regional Offices also continued hosting joint, regional ETA/DOL-OIG calls with states to improve communication and collaboration at the Regional Office level between states and the DOL-OIG. The calls allow the DOL-OIG and states to share fraud trends and analysis, discuss recommendations and effective strategies for responding to emerging fraud schemes, offer updates on prosecution efforts, and facilitate sharing of UI fraud and integrity-related challenges and best practices among states. The Department also participated on several cross-governmental workgroups, which offer an opportunity to develop relationships with other federal agencies and learn from other agencies about their fraud risk management processes for different federal programs. Additionally, ETA continued to participate on banking workgroup calls to discuss ongoing fraud prevention and detection issues and overpayment recovery efforts. The calls help keep banking organizations, federal government agencies, and law enforcement agencies aware of the emerging fraud schemes targeting different sectors, while also streamlining communications to aid in the recovery and return of fraudulently obtained and overpaid funds and benefits. In working with states, the UI Integrity Center develops and disseminates tools and products to highlight best practices and provides operational recommendations to improve UI program performance and reduce improper payments. The UI Integrity Center’s Knowledge Exchange Library (Library) is an online, searchable, knowledge-sharing platform that includes a repository of all UI Integrity Center resources including, model state operational processes, promising state practices, integrity podcasts and webinars, and recommendations to strengthen UI program integrity. The UI Insurance Integrity Center continued to add resource documents to the Library in FY 2024.
    FY2024 Q4
    Completed
    Audit
    ETA National and Regional Office staff are collectively responsible for federal oversight of state administration of UI programs. Employment and Training Orders (ETOs) provide direction to ETA staff on processes for a wide array of oversight reviews and performance accountability activities. ETA requires states to submit a State Quality Service Plan (SQSP) each year. The SQSP is the principal vehicle used by state UI programs to plan, record, and manage improvement efforts as they strive for excellence in service. It represents an approach to the UI performance management and planning process that allows for an exchange of information between Federal and state partners to enhance the UI program’s ability to reflect their joint commitment to performance excellence and client-centered services. As part of the SQSP process, each state must address UI program performance deficiencies by submitting corrective action plans (CAPs) for UI performance measures falling below the Acceptable Level of Performance (ALP). States provide quarterly updates on their CAPs. In addition, states must complete an Integrity Action Plan (IAP), outlining the state’s UI program integrity and antifraud strategies. The IAP requires states to discuss their actions and planned activities to prevent and detect fraud, reduce improper payments, and improve overpayment recoveries. As part of the IAP, states also report UI fraud risk mitigation strategies and address any additional UI integrity and fraud risk topics, including fraud and integrity-related National Priorities identified in the annual SQSP Additional Planning Guidance. ETA also conducted quarterly state engagement calls with states implementing projects using ARPA funds. These calls provide an opportunity for ETA leadership to emphasize the urgency of action and discuss progress towards project implementation. The calls also allowed the Department to identify areas to facilitate enhanced technical assistance and capture lessons learned from individual states that can be shared back with the broader UI system.
    FY2024 Q4
    Completed
    Predictive Analytics
    The Department continued to strongly encourages states to employ a multi-layered approach to combat fraud, which requires states to adopt an array of strategies and tools to more effectively identify potentially fraudulent activity and prevent improper payments. Leveraging a multi-layered approach means states are using multiple defense strategies to address fraud. The Department considers NIDVO one of many the tools available to support states with the multi-layered approach, by offering government-operated ID verification options. ETA also continued to support and provide funding for enhancements to the UI Integrity Center’s IDH, which is a secure, robust, centralized, multi-state data system that allows participating states to cross-match, compare, and analyze UC claims data against a variety of datasets for enhanced prevention and detection of improper payments and fraud in UC programs. In FY 2024, the Department and Treasury jointly announced an exciting new data sharing partnership between Treasury’s Fiscal Service and the UI Integrity Center to make DNP data sources and services available to the IDH to further support states in identifying fraud, preventing and detecting improper payments, and strengthening UI program integrity (see TEN No. 28-23). The UI Integrity Center also developed and released into production the IDH Employer Data Module, which provides a fictitious employer repository in the IDH to support states with the detection of UI tax fraud schemes, including fictitious employers. ETA also continued to work with the Social Security Administration, ETA Regional Offices, and the National Association of State Workforce Agencies’ (NASWA) Interstate Connection Network (ICON) team to facilitate and expedite states’ connection to the Prisoner Update Processing System (PUPS) incarceration data exchange. ETA, in partnership with the Social Security Administration and NASWA, established the secure data exchange between the ICON system and PUPS to provide states with the ability to cross-match UI claims data with incarceration records to assist states in making accurate UI eligibility determinations (see Unemployment Insurance Program Letter (UIPL) No. 01-22) at https://www.dol.gov/agencies/eta/advisories/unemployment-insurance-program-letter-no-01-22.
    FY2024 Q4
    Completed
    Statutory Change
    In its FY 2025 budget submission, the Department proposed a comprehensive package of provisions designed to provide new and expanded tools and controls for states to help improve efforts to ensure entitled workers are properly paid and to prevent fraud and improper payments in the UI system. The package includes the following components: • Require states to use system(s) designated by the Secretary for cross-matching claimants to prevent and detect improper payments, including fraud, which would currently include the IDH. • Require states to use system(s) designated by the Secretary for electronic transmission of requests for information relating to UC and the provision of such information between the state UI agency and employers or their agents, which would currently include SIDES. • Require states to cross-match against the NDNH to better identify individuals continuing to claim UC after returning to work, which is one of the leading root causes of UI improper payments. • Require states to cross-match with a system(s) designated by the Secretary that contains information on individuals who are incarcerated, such as the Social Security Administration’s PUPS or other systems for crossmatching incarceration data. This should result in increased prevention and detection of improper and fraudulent payments. • Require states to disclose information to the DOL-OIG to conduct audits and investigations to discover fraud, waste, and abuse or inefficiencies in the UC programs. • Provide the Secretary with meaningful enforcement authority and the ability to reward good performance. This proposal would create a new remedy so that instead of withholding a state’s entire administrative grant for failing to meet the performance measures or achieve minimum technology standards, the Secretary can require a portion of the state’s administrative grant be used to correct failing performance and/or have the state participate in required technical assistance activities offered by the Department. • Allow states to retain up to five percent of recovered fraudulent UI overpayments for program integrity use. • Require states to use penalty and interest collections solely for UI administration. • Allow states the authority to issue a formal warning when claimants are unclear on the work search requirements. • Allow states to use contract support in recovery efforts under the Treasury Offset Program (TOP). The Department issued a UI Transformation Plan (Building Resilience: A plan to transform unemployment insurance) on April 5, 2024. The plan included a compilation of legislative reforms needed to support transformation of the UI system. See Appendix III of the plan https://oui.doleta.gov/unemploy/transformation_plan.asp. Furthermore, the ETA is in the process of making changes to the UI confidentiality regulations at 20 CFR Part 603, to address the issue of requiring states to provide the DOL-OIG with access to state UI data, including for investigations and audit purposes.
    FY2024 Q4
    Completed
    Automation
    ETA will continue to encourage states to use SIDES and emphasize SIDES as a primary method to reduce improper payments and fraud in the states. The SIDES team will host the annual 2025 SIDES Seminar. In addition, the SIDES team will explore opportunities for additional updates and enhancements to SIDES. The SIDES team will continue to conduct outreach to employers and employers’ third-party administrators to encourage the adoption and use of SIDES and will continue to attend and exhibit at employer conferences to provide information regarding the use of SIDES to streamline the UI process in the states where they have employees.
    FY2028+
    Planned
    Behavioral/Psych Influence
    ETA will continue to provide BI recommendations to state UI programs and offer enhanced technical assistance activities in BI, plain language, and CX. ETA will also continue to work with the UI Integrity Center and support states in the use of BI in their UI programs. The UI Integrity Center will continue to increase the materials available in the BI Toolkit and provide targeted BI technical assistance to states.
    FY2028+
    Planned
    Training
    ETA will continue to invest in and provide training to states on critical guidance, UI performance measures, ETA UI reporting requirements, and other UI-related topics as needed. ETA will also continue to promote the training resources provided by the UI Integrity Center. The UI National Integrity Academy, will continue to support states’ training needs by developing new training materials, adding more lessons to existing certificate programs, customizing training programs for states, training newly hired staff, and providing existing UI staff with refresher and skill-enhancement training. ETA and the UI Integrity Center will also continue providing UI-related presentations and trainings at virtual and in-person conferences.
    FY2028+
    Planned
    Change Process
    ETA will continue to provide guidance and resources to alert states regarding new UI program requirements; provide updates to existing UI requirements, processes, or policies; and/or provide important program trainings, UI integrity resources, and operational recommendations. The Department's will continue work with states to address immediate needs and issues that lead to achieving improvements in operational processes and CX, while also making recommendations and proposing solutions to address fraud and support more equitable access for legitimate claimants. The UI Integrity Center will continue to provide states with consultative and technical assistance services to reduce the improper payment rate and promote prevention, detection, and recovery of UI improper payments and fraudulent payments.
    FY2028+
    Planned
    Cross Enterprise Sharing
    ETA will continue to meet regularly with the DOL-OIG to discuss emerging UI fraud issues, streamline communication with states, and coordinate fraud prevention and recovery efforts. ETA Regional Offices will continue hosting joint, regional ETA/DOL-OIG calls with states to improve communication and collaboration at the Regional Office level between states and the DOL-OIG. Additionally, ETA will continue to participate on banking workgroup calls to discuss ongoing fraud prevention and detection issues and overpayment recovery efforts. The Department will also continue to participate on cross-governmental workgroups to learn from other agencies about their fraud risk management processes for different federal programs and contribute to the development of tools and resources that can benefits payment integrity efforts for government programs. The UI Integrity Center will continue to develop integrity-related resources, including operational recommendations, promising practice templates, and various resources and guides for states to make UI program improvements and address integrity challenges and add those resources to the UI Collection in the Library.
    FY2028+
    Planned
    Audit
    ETA will continue to conduct oversight and monitoring of state UI programs in line with the ETOs to ensure states’ conformity and compliance with federal and state UC law, rules, regulations, and policies. ETA Regional Offices will review states’ SQSP and IAP submissions and their corresponding quarterly updates, reports submitted for grant funding, and ETA UI Required Reports for completeness and accuracy. ETA Regional Offices will review states’ SQSP and IAP submissions and their corresponding quarterly updates, reports submitted for grant funding, and ETA UI Required Reports for completeness and accuracy.
    FY2028+
    Planned
    Predictive Analytics
    ETA will continue to strongly encourage states to employ a multi-layered to fraud prevention and detection, by adopting an array of solutions, tools, strategies, and techniques to better identify potential fraud. ETA will also continue supporting states in onboarding to and improving NIDVO services and in more robust use of the IDH. Additionally, ETA will support enhancements to the IDH and explore additional data sources for inclusion in the IDH to continuously improve fraud prevention and detection and reduce UI improper payments.
    FY2028+
    Planned
    Statutory Change
    The Department will continue to provide legislative technical assistance on proposed UI Integrity legislation as needed and promote the Department’s UI integrity legislative package as set out in the FY 2025 budget proposal. In addition, ETA will continue its progress to make changes to the UI confidentiality regulations at 20 CFR Part 603, that would, in part, address the issue of providing the DOL-OIG with access to state UI data, including for investigations and audit.
    FY2028+
    Planned

Overpayments

The state agency identified an issue but did not properly follow procedures or complete required forms and/or provided incorrect information or did not resolve the issue(s). Alternatively, the issue could have been the result of a third-party error/incorrect information. In addition, these issues may involve instances where the state agency was resolving the error or had detected the error as a result of a crossmatch with National Directory of New Hire (NDNH) or wage records and an issue was detected after the payment was issued. State agencies operate the Unemployment Insurance (UI) program. Thus, overpayments originate from state agency administration issues and are not within the Federal agency’s control. Report headings referring to activities “within the agency’s control” reflect matters within state agencies’ control.
Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $982.17 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $106.24 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $875.93 M

The UI program is a unique federal-state partnership based on Federal law but administered through individual state laws by 53 state UI agencies. States vary in their information technology (IT) systems, level of automation, staffing capacity, and methods and strategies for prevention, detection, and recovery of improper payments and fraud. Additionally, no two states' written laws, regulations, and policies specifying eligibility conditions are identical, and differences in these conditions influence the potential for error and improper payments. Two states could have identical laws but may interpret them quite differently. States with stringent or complex provisions tend to have higher improper payment rates than those with simpler, more straightforward provisions. Furthermore, Section 303(a)(1) of the Social Security Act (SSA) requires UI payments to be made “when due” and, once a person is determined eligible, this law prohibits states from suspending payments until an official determination has been made that payments are no longer due. This statutory factor requires states to make payments that may later be determined as improper as a result of obtaining new information. For good policy reasons, states must continue paying benefits until due process occurs (notice and an opportunity for a hearing is provided before benefit payments are stopped). This UI program structural feature is a primary driver for top root causes of UI improper payments. Moreover, unlike many other benefit programs, eligibility for UI benefits is determined on a weekly basis. There are more opportunities to make errors and for improper payments to be created.
Overpayment root cause Overpayment amount
Amount of overpayments outside the agency's control $3,933.39 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $3,933.39 M
The amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $0.0 M

Overpayment type Eligibility element/information needed Eligibility amount
Overpayments Outside Agency Control Citizenship $1.77 M
Overpayments Outside Agency Control Dependency $4.8 M
Overpayments Outside Agency Control Employment $3,050.93 M
Overpayments Outside Agency Control Identity $16.05 M
Overpayments Outside Agency Control Receiving Benefits from Other Sources $859.84 M
Overpayments Within Agency Control Citizenship $0.44 M
Overpayments Within Agency Control Dependency $1.2 M
Overpayments Within Agency Control Employment $761.82 M
Overpayments Within Agency Control Identity $4.01 M
Overpayments Within Agency Control Receiving Benefits from Other Sources $214.7 M

Overpayment type Mitigation strategies taken Mitigation strategies planned
Overpayments within the agency’s control Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training

Underpayments

Underpayment root cause Underpayment amount
Amount of underpayments $157.68 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $130.93 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $26.75 M

Eligibility element/information needed Eligibility amount
Dependency $20.5 M
Employment $115.11 M
Receiving Benefits from Other Sources $22.08 M

Mitigation strategies taken Mitigation strategies planned
Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training

Technically improper payments

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

Additional information

$157.68 M

Unknown Payment Details

Unknown payments were caused due to insufficient staff due to retirement, staff turnover, and lack of experienced staff to complete investigations. In addition, staff continued to work on backlog reduction resulting from the temporary, pandemic-related unemployment compensation (UC) programs and to assist in fraud detection and identity (ID) verification in the UC programs.

The amount of payments that could either be proper or improper but the agency is unable to determine whether they were proper or improper as a result of insufficient or lack of documentation is $538.97 M


Cause of insufficient or lack of documentation & why the documentation is needed for determination of payment type
Payment cause Amount Description of the documentation that was not provided and explanation of why the program is unable to conclude whether the payment is proper or improper without that documentation
States $538.97 M In order to determine if a payment is proper or improper, state staff must obtain the required information (including ID verification, employment and wage history, separation information, etc.) to make a decision of eligibility. The state must verify the accuracy of the information received by the claimant, employers, and/or third parties. The failure to document the results of any step in the process or the failure to obtain the information results in a question of whether the correct person and correct amount were paid.

Mitigation strategies taken Mitigation strategies planned
Training Training

Evaluation of corrective actions

The Department will continue to provide legislative technical assistance on proposed UI Integrity legislation as needed and promote the Department’s UI integrity legislative package as set out in the FY 2025 budget proposal. In addition, ETA will continue its progress to make changes to the UI confidentiality regulations at 20 CFR Part 603, that would, in part, address the issue of providing the DOL-OIG with access to state UI data, including for investigations and audit.

ETA develops comprehensive integrity strategies aimed at mitigating fraud risks and reducing improper payments. ETA remains focused on exploring, researching, identifying, investing in, and providing states with new tools, resources, strategies, and guidance to help states combat the continually changing and newly emerging types of sophisticated fraud impacting the UI system. This includes providing states with best practices and solutions to address their most difficult integrity challenges, including improper payment root cause reduction and fraud prevention. In addition to reducing improper payments and combatting fraud, other ETA top priorities include providing timely guidance, technical assistance, and oversight to states related to proper administration of all UC programs.

State onboarding to use the IDH continued to increase in FY 2024. Enhancements made to the IDH helped states more effectively prioritize IDH results, provided states with better data analytics to streamline their investigative efforts, and offered more robust data sources for cross-matching. Training enrollments increased and additional UI integrity-related resources were added to the Library to help states identify opportunities to improve UI program operations and reduce improper payments. ETA and the UI Integrity Center also engaged with states to provide operational recommendations and assist states with projects aimed to improve UI service delivery, CX, timeliness and backlog, equitable access, and fraud prevention and detection.
ETA’s actions taken to reduce improper payments and address fraud in FY 2024 have shown progress as demonstrated by the continued decrease in the UI improper payment rate. While the estimated improper payment rate for the UI program remains above 10 percent, the rate reported for 2024 continued decreasing from the rates reported in 2023, 2022, and 2021. ETA is committed to continuing to assess program risks and employ strategies to further reduce improper payments and fraud in the UC programs and bring the estimated UI improper payment rate into compliance with the Payment Integrity Information Act (PIIA). ETA will continue building on its work from FY 2024 to further reduce improper payments in FY 2025.

All of Department’s UI antifraud strategies and integrity controls are focused on reducing the top root causes of improper payments and mitigating fraud risks in the UC programs. The Department conducts its UI fraud risk management activities in alignment with the leading practices in the Government Accountability Office’s (GAO) Fraud Risk Framework and strives to meet the Department’s determined risk tolerance level by continuing to assess program risks and employ strategies to further reduce improper payments and fraud in the UC programs. ETA develops, updates, oversees, and communicates UI antifraud strategies and program integrity controls through its robust and dynamic UI Integrity Strategic Plan. While this plan provides a detailed accounting of ETA’s FY 2024 actions, the plan is not made publicly available, as it contains confidential or sensitive information regarding ETA’s UI fraud risk mitigation and improper payment reduction activities to strengthen UI program integrity. The Department will continue to develop new and update existing antifraud strategies and integrity controls to address the top root causes of UI improper payments and combat emerging fraud risks. ETA will also continue to evaluate the effectiveness of UI program integrity and antifraud strategies, document best practices, and provide guidance and technical assistance to states to improve UI program operations and reduce improper payments.

In FY 2024 the Department completely aligned existing UI fraud risk management activities with the leading practices provided in the GAO’s Fraud Risk Framework and the leading practices are thoroughly embedded in the daily UI integrity work. Through the development of a UI Fraud Risk Profile, the Department further strengthened an organizational culture that views the creation, evaluation, monitoring, and evolution of risk mitigation strategies as an ongoing process. The Department updates, oversees, and communicates the UI antifraud strategies through its dynamic UI Integrity Strategic Plan, which continuously evolves and includes antifraud strategies and integrity controls to combat the highest residual risks identified in the UI Fraud Risk Profile and further reduce the top root causes of improper payments. As new fraud threats emerge, the Department updates the UI Fraud Risk Profile and ensures any new antifraud strategies and improper payment controls are incorporated and tracked in the UI Integrity Strategic Plan. Whenever an antifraud strategy/improper payment control is fully implemented, the Department assesses is effectiveness. If the strategy/control proves to be effective, the Department reevaluates the priority level ranking of the risk and if the risk falls within the Department’s established tolerance level, management determines if the residual risk warrants further priority and decides if additional or new strategies/controls are necessary to further reduce the risk.

Since the UI program is funded and administered through a Federal-state partnership, both the Department and state UI agencies have a vested interest in ensuring UI program integrity and are jointly responsible for managing the process of assessing and mitigating fraud risks to the UI programs, reducing improper payments, and prioritizing payment integrity activities. In FY 2024, the Department developed and published UI fraud risk management webpages on the WorkforceGPS UI Community of Practice, to remind states of their UI fraud risk management responsibilities and to communicate national identified fraud risks to state UI programs (see TEN No. 32-23). Also, in the FY 2025 SQSP guidance, ETA required states to report in their IAP the state’s actions to evaluate UI fraud risks and implement and maintain sufficient controls to effectively prevent fraud and reduce improper payments, including the state progress in developing their own state-specific antifraud strategies (see UIPL No. 16-24). To helps support state with UI fraud risk management and the development of state-specific antifraud strategies, the Department requested the UI Integrity Center to develop a program to provide such support. As a result, in FY 2024 the UI Integrity Center created and launched a UI Anti-fraud Strategic Planning Service, which is designed to help states develop an internal assessment and mitigation strategies to reduce fraud risks in the UI program.

ETA will continue building on its work from FY 2024 to prioritize and implement UI program integrity activities to further reduce improper payments in FY 2025.

Future payment integrity outlook

Employment & Training Administration - Federal State Unemployment Insurance has established a baseline.

The Department strives to reduce improper payments below the estimated future improper payment and unknown rate. ETA will continue to utilize all of its integrity tools and resources to improve the future improper payment rate. ETA anticipates continued state engagement in integrity initiatives and therefore sets a lower reduction target for FY2025.

Out-Year improper payment and unknown payment projections and target
Current year +1 estimated future outlays $44,050 M
Current year +1 estimated future improper payments $6,349.37 M
Current year +1 estimated future unknown payments $674.54 M
Current year +1 estimated future improper payment and unknown payment rate 15.95 %
Current year +1 estimated future improper payment and unknown payment reduction target 14.25 %

The program's current year improper payment and unknown payment rate of 15.95 % may or may not be the tolerable rate. The agency has not yet determined the tolerable rate for this program.

While the Department has determined a fraud risk tolerance level for the UI program, OUI has not yet determined an IP tolerable rate for this program. The National overpayment, unknown, and underpayment rates (improper payments) are driven on the processes and performance of the states. Factors that prevent states from reducing improper payments include such factors such as outdated IT systems, loss of experienced staff, new inexperience staff, and the reduction of administrative funding, which significantly impacts resources and staffing level. A "tolerable rate baseline" could not be derived during the historic spike in claims during the Pandemic. As the program enters a post-pandemic environment, OUI can begin to examine a baseline to determine a tolerable rate.

While the Department has determined a fraud risk tolerance level for the UI program, OUI has not yet determined an IP tolerable rate for this program. Setting a tolerable rate will need to take the states' operations into account. The National overpayment, unknown, and underpayment rates (improper payments) are driven on the processes and performance of the states. During the pandemic, states transitioned experienced staff from their normal duties to assist with the unprecedented claims volume to operate the regular UI programs as well as implementing and administering the temporary pandemic UI programs. Other factors that prevented states from reducing improper payments include such factors such as outdated IT systems, loss of experienced staff, new inexperience staff, and the reduction of administrative funding, which significantly impacted resources and staffing level. A "tolerable rate baseline" couldn't be derived during the historic spike in claims during the Pandemic. As the program enters a post-pandemic environment, OUI can begin to examine a baseline to determine a tolerable rate

The FY 2025 President’s Budget request proposes a comprehensive package of provisions designed to provide new and expanded tools and controls for states to help improve efforts to ensure entitled workers are properly paid and to prevent fraud and improper payments in the UI system. This includes a number of provisions to improve the administration and integrity of the UI program. The budget submission includes requested increases in UI administrative funding, UI National Activities funding for program integrity and anti-fraud activities to support ID verification services in the states, and funding to support technology modernization that will improve states’ abilities to detect and prevent fraud and other improper payments in the program.

Additional programmatic information

In June 2022, in recognition of the UI system’s challenges (both before and during the pandemic), the GAO added “the UI system to its list of federal areas at ‘High Risk’ for waste, fraud, abuse, and mismanagement, or in need of broad-based transformation” and recommended that the Department “develop and implement a plan for transforming UI that meets GAO's high-risk criteria for transformations”. In response, the Department developed a comprehensive, strategic approach to improving the future integrity of the UI system by directing ARPA funds and Department-provided supports directly to states to address fraud prevention and UI system modernization.

On April 5, 2024, the Department released a comprehensive UI Transformation Plan, Building Resilience: A comprehensive plan to transform unemployment insurance at https://oui.doleta.gov/unemploy/transformation_plan.asp. This plan provides insights into the lessons learned throughout the pandemic and represents an accounting of activities and strategies completed, underway, and being pursued by the Department, along with recommendations for necessary legislative action.

The Department takes its oversight of federally funded programs very seriously. Strengthening UI program integrity, by reducing improper payments and mitigating fraud risks, remains a top priority for the Department. The Department’s UI Transformation Plan and UI Integrity Strategic Plan both contain numerous corrective actions and strategies to address improper payments and combat fraud. The Department remains committed to reducing the UI improper payment rate and coming into compliance with the requirements set forth in PIIA, by supporting states with payment accuracy and fraud prevention.

Accountability for detecting, preventing, and recovering improper payments

ETA continues to hold managers and states accountable for reduction of improper payments and recovery of overpayments. 53 states (including Puerto Rico, US Virgin Islands, and Washington D.C.) administer the UI program and set priorities within available resources. ETA uses performance measures to evaluate states’ UI operations and has established an FY 2025 Agency Priority Goal to reduce the UI improper payment rate. States are also required to report illegal/fraudulent activity to the DOL-OIG (see UIPL No. 04-17). ETA and the UI Integrity Center support states to prevent, detect, and recover improper payments and combat fraud. ETA requires states to conduct overpayment detection and recovery activities, and BAM units conduct investigations to assess payment accuracy. ETA uses BAM improper payment data to assess UI program risks and develop mitigation strategies.

Additionally, the Department completely aligned its UI fraud risk management activities with the leading practices in GAO’s Fraud Risk Framework. The UI program has internal controls in place and continues to enhance these resources to deter improper payments and fraud. ETA’s UI Integrity Strategic Plan addresses the top root causes of improper payments and outlines integrity actions and antifraud strategies to support states in reducing improper payments and mitigating fraud risks.

Furthermore, development, delivery, and/or implementation of these initiatives by managers and states is outlined in ETA’s annual Agency Management Plan. Annual performance standards for managers reference strategies and include the completion of the activities/milestones below:

• SQSP process requires states to submit IAPs to identify state-specific root causes, strategies to address each root cause, and CAPs if the improper payment rate is above 10%.

• Provide annual funding and direction, and partner with the UI Integrity Center to provide tools, training, and technical assistance to implement innovative strategies to prevent, detect and reduce improper payments and fraud.

• Ensure states conduct annual the BAM survey to measure improper payments and root causes. ETA reviews BAM state data for validity, analyzes trends, and makes data available at: https://www.dol.gov/agencies/eta/unemployment-insurance-payment-accuracy/data.

• Monitor progress on the performance measures that states must meet.

• States failing to meet performance criteria are required to submit annual CAPs that include strategies to improve state performance. ETA’s oversight process includes quarterly reviews on CAP milestones and updates; triennial peer reviews for BAM, Appeals, and Benefits Timeliness and Quality; and enhanced quarterly monitoring and technical assistance to states with a high improper payment rate or chronic poor performance.

  • FY 2025 improper payment estimates

    Chart legend and breakdown

    Payment accuracy rate

    Improper payment rate

    Unknown payment rate


    Sampling & estimation methodology details

    Sampling timeframe:

    07/2024 - 06/2025


    Confidence interval:

    95% to <100%


    Margin of error:

    +/-0.87

Causes

Unemployment (UI) improper payment estimates are based on results of the Benefit Accuracy Measurement (BAM) survey, which examines a nationwide statistically valid sample of payments made in the three largest permanently authorized Unemployment Compensation (UC) programs: State UI program, Unemployment Compensation for Federal Employees, and Unemployment Compensation for Ex-service members. In addition to estimating the UI improper payment rate, ETA produces data from the BAM survey identifying the top root causes of improper payments. The top root causes of UI improper payments for 2025 were: Work Search, Benefit Year Earnings (BYE), and Separation improper payments.

Work Search improper payments occur when UI claimants fail to properly document their work search efforts or fail to comply with state work search requirements. Federal law requires that, as a condition of eligibility, all states require UI claimants to make an active search for work. However, the specific work search requirements vary greatly across state laws and states do not uniformly require UI claimants to report these activities prior to releasing payment. States with stringent work search requirements typically record higher overpayment rates than states with broader work search requirements. Most Work Search overpayments do not typically occur due to fraudulent activity. Many Work Search improper payments result from mistakes made by claimants, either because the claimant misunderstood the state’s work search requirements or because the claimant did not keep good records documenting their work search efforts. Further, if a claimant does provide documentation of their work search efforts, state UI agencies struggle to verify work search attempts with employers. Most employers do not maintain detailed records of all job inquiries and/or applications and there are no incentives for employers to do so.

BYE improper payments often occur when a UI claimant intentionally or unintentionally fails to report earnings or underreports their earnings to receive benefits – when intentionally withheld, state law may find it to be fraudulent. BYE improper payments may also result from a UI claimant’s misunderstanding regarding how to report their earnings. For example, a UI claimant may report only their net wages instead of their gross wages, as required. Another common cause of BYE improper payments occurs when a UI claimant waits to report their earnings from employment until they are paid by the employer instead of reporting when earned.

Separation improper payments occur when UI claimants receive benefits and are later determined to be ineligible due to a disqualifying separation from previous employment. Employer participation is critical for maintaining program integrity and states must request information from employers on the reason for the claimant’s separation from employment. However, if states are unable to get timely and accurate information from employers, states are legally required to make a determination using the best available information (also known as the “payment when due” requirement discussed in more detail below). Failure of employers or their third-party administrators to provide timely and adequate information on the reason for an individual’s separation from employment presents a major challenge to addressing Separation improper payments. Additionally, individuals may misrepresent or misunderstand their separation reason at the time of filing – either intentionally (which may result in a finding of fraud under state UI law) or unintentionally (e.g., when communication at the time of separation between the worker and their employer was unclear).

Unknown payments occur when the Federal deadlines for improper payment reporting come earlier than BAM deadlines for case completion. If BAM does not have time to complete all cases prior to Federal improper payment reporting, outstanding cases become unknown improper payments. Unknown improper payments are also caused by insufficient and/or untrained state BAM staff. This is found in states experiencing significant turnover of staff which may be the result of retirements and/or state hiring constraints – contributing to a lack of both staff capacity in general and particularly experienced staff to complete investigations.

The UI program is a federal-state partnership based on Federal law and administered through individual state laws by 53 different state UI agencies (the 53 “state UI agencies” are the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, and the U.S. Virgin Islands. See 26 U.S.C. § 3306(j)(1)). State UI agencies vary in their organizational structures within state government and infrastructure, such as information technology systems, level of automation, and staffing capacity. While all states must meet certain federal requirements, state laws also vary in methods and strategies for prevention, detection, and recovery of improper payments. Additionally, no two states' laws, regulations, and policies specifying UI eligibility conditions are identical, and differences in these conditions influence the potential for error and improper payments. States with stringent or complex provisions tend to have higher improper payment rates than those with simpler, more straightforward provisions.

Section 303(a)(1) of the Social Security Act requires UI payments to be made “when due.” Once a person is determined initially eligible, states are prohibited from suspending payments beyond a certain time period if a new eligibility issue arises and while it is investigated – until an official determination on the new eligibility issue has been made that payments are no longer due. Put another way, after an individual is determined to be eligible, states must continue paying benefits until due process occurs (notice and an opportunity for a hearing is provided before benefit payments are stopped) for the newly-discovered issue, which means that some payments may later be determined improper as a result of obtaining new information. Moreover, unlike many other benefit programs, eligibility for UI benefits is determined on a weekly basis and this frequency creates more opportunities to make errors and for improper payments to be created.

State agencies operate the UI program and administer benefit payments. Thus, overpayments originate from state UI agency program administration issues. DOL has limited reach by which to hold states accountable. Specifically, if DOL determines a state is out of conformity and/or substantial compliance with federal law, it can withhold certification of a state's law after notice and hearing. This results in the loss of federal unemployment tax credits for employers in the state and/or the state's ability to receive administrative grants to operate the program. DOL does not however have meaningful enforcement to compel such efforts at a more intermediate level. Additionally, federal law does not provide DOL with the authority to prescribe beyond a certain level how states administer the program.

For many improper payments in the UI program, a state UI agency may identify an issue but fail to properly or timely follow its procedures for due process and resolution. Alternatively, the issue could have been the result of a third-party error/incorrect information. Improper payments may also occur in instances where the state agency was resolving the error or had detected the error as a result of a crossmatch (e.g., National Directory of New Hire or wage records) and an issue was detected after the payment was made because the data was not available in the cross-match data source at the time the payment was due by law.

Overpayment root cause Overpayment amount
Amount of overpayments within the agency's control $955.5 M
Amount of overpayments outside the agency's control $3,809.45 M
Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $3,952.71 M
Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $812.24 M

Underpayment root cause Underpayment amount
Amount of underpayments $187.64 M
The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist $0.0 M
The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment $140.59 M
The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment $47.05 M

The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation $0.0 M

The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation $646.85 M

Prevention

Strengthening UI program integrity and reducing improper payments are top priorities for ETA. Effective antifraud and improper payment reduction strategies employ a multi-layered approach, which requires leveraging an array of controls, tools, strategies, and resources to detect and fight fraud and reduce improper payments early, and wherever possible, before a payment is made. ETA’s actions to improve UI program integrity include:
• Holding states accountable for reducing improper payments and correcting UI program performance deficiencies through monitoring and oversight;
• Providing states with access to relevant UI program training and resources that support improvements to UI program integrity;
• Providing states with improved access to data sources and services to prevent and detect fraud and reduce improper payments;
• Strengthening states’ access to enhanced identity verification services;
• Continued partnership with the Department’s Office of Inspector General (DOL-OIG) to collaborate on UI fraud matters and streamline the recovery of overpayments; and
• Where appropriate under federal statute, issuing UI program guidance to states.

These actions are multi-year strategies aimed at reducing improper payments in the UI program. Throughout FY 2025, ETA celebrated several significant UI program integrity achievements. For example, ETA built upon its ongoing partnership with the U.S. Department of Treasury’s Treasury Bureau of the Fiscal Service (Fiscal Service) and the UI Integrity Center to provide state UI agencies with expanded access to Do Not Pay (DNP) data sources and services through the UI Integrity Data Hub (IDH). ETA initially announced its partnership with Fiscal Service in May 2024, and provided states with access to the first DNP data sources in July 2024 (see Training and Employment Notice (TEN) No. 28-23). Throughout FY 2025, ETA continued investing in this important partnership and announced the addition of two more DNP payment integrity data sources for states to access (see TEN No. 26-24). ETA held a webinar for states in June 2025 to provide information to states about the two new data sources and encouraged states to onboard to the updated IDH Participation Agreement (PA) amendments, which are required to access the new data sources. By the end of FY 2025, 49 states had onboarded to both new IDH PA amendments. This partnership will continue in FY 2026, providing state UI agencies with more new and enhanced data sources and services.

As an additional resource to states, ETA funds the UI Integrity Center to support states with the prevention, detection, and recovery of improper payments, including combatting fraud. The UI Integrity Center is a critical integrity resource for state UI agencies, working in partnership with ETA to:
• Conduct ongoing data analysis of state UI improper payment rates and root causes and engage directly with states to provide recommendation and technical assistance to improve UI program integrity and strengthen performance.
• Provide rigorous and relevant UI program training programs and materials for states, including no-cost interrelated certificates that offer integrity training for state staff via online, eLearning modules and virtual instructor led trainings that lead to credentials.
• Develop and disseminate UI program integrity resources and promote innovative new tools and products that are transferable and scalable for all states to reduce UI improper payments and enhance fraud management operations.
• Operate and enhance the IDH to provide states valuable data sources for cross-matching to better identity potential fraud and reduce improper payments in the UI program.
• Maintain the Knowledge Exchange Library, an online, searchable, knowledge-sharing platform that includes a repository of model state operational processes, promising state practices, and recommendations to strengthen UI program integrity.

Additionally, in FY 2025, ETA facilitated the return of over $520 million in suspected fraudulent UI payments to a state through ongoing collaboration and partnership with DOL-OIG. ETA also issued guidance in July 2025 reminding states of procedural requirements when funds are returned by a bank or financial institution and providing instructions to states regarding the methodology states must use to allocate returned funds across UC programs when no identifying claim information is available. The guidance also provided additional information and clarification regarding the reporting of overpayment activities on UI Required Reports (see Unemployment Insurance Program Letter (UIPL) No. 13-25). Coordination and collaboration between ETA and DOL-OIG on UI fraud matters and overpayment recovery will continue in FY 2026.

Further, ETA continued to support ID verification services for 21 states to access digital ID verification services through the General Services Administration’s Login.gov and/or in-person verification through the United States Postal Service. ETA is advancing its investment in these ID verification services and hosted a webinar for states in September 2025 to learn more about enhancements to the Login.gov and USPS services. ETA intends to continue to support states’ use of these services in FY 2026.

ETA’s UI Integrity Strategic Plan contains additional UI antifraud and improper payment reduction strategies, and actions associated with the implementation of each strategy will continue to be tracked throughout FY 2026.
All of the strategies outlined in ETA’s UI Integrity Strategic Plan aim to mitigate fraud and improper payments in UC programs. Each strategy is aligned with the associated risk(s) identified in the UI Fraud Risk Profile to ensure strategies are targeting the highest risks of improper payments in the UI program.

While fraud is a contributing factor to improper payments, most improper payments are not fraudulent – occurring because of mistakes made by state UI agencies, UI claimants, and/or the lack of timely or adequate responses from employers. For example, a claimant’s misunderstanding of a state’s UI requirement(s) and/or failure to keep adequate documentation are leading factors contributing to high improper payments in the UI program. Employers also play an important role in reducing improper payments by providing timely and accurate responses to the UI agency when the employer receives requests for information regarding an employee’s wages and/or earnings, or the reason for an individual’s separation from employment. As such, these eligibility-related non-fraud issues have and continue to be the primary drivers of UI improper payments with the top three leading root causes being Work Search, BYE, and Separation improper payments.

The two primary types of fraud impacting UC programs include eligibility fraud and ID fraud.
• Eligibility fraud occurs when benefits or services are acquired as a result of false information provided with the intent to receive benefits for which an individual would not otherwise be eligible. State law determines the criteria for establishing a fraud determination. Examples of UI eligibility fraud include claimants intentionally not reporting earnings from employment after returning to work, working full time while still collecting unemployment, or misrepresenting their reason for separation from employment.
• ID fraud occurs when one person or a group of persons uses the identifying information of another person to illegally receive benefits. ID fraud also occurs when an individual’s UI account is taken over by a person or group and the benefit payments are re-directed to another account by changing data such as the bank account and/or address after the claim has been established (i.e., payment redirect/ATO fraud). ID fraud includes fictitious employer schemes, which involve the creation of companies that exist only on paper with no actual employees, business operations, or business expenses for the sole purpose of reporting fake wages and subsequently filing fraudulent unemployment claims using the fake wages. In addition to using stolen IDs or misusing an individual’s ID, synthetic ID fraud is another form of ID fraud that occurs when real and/or fake information is combined to create a new false ID (e.g., a real stolen Social Security Number (SSN) is combined with a fake name, address, and date of birth).

ETA is investing in new and/or enhancing existing tools, datasets, and resources and making these available to aid states in more quickly identifying potential fraud and improper payments. For example, investments in the IDH include adding more DNP data sources and improving employer-related data to increase states’ ability and timeliness in preventing and detecting improper payments.

To address Work Search and BYE improper payments, state UI agencies must ensure UI claimants understand their responsibilities to conduct an active search for work and accurately report earnings from employment. Using plain language in UI communications, which includes providing UI claimants with clear instructions regarding reporting and documentation requirements, has proven successful in helping states decrease Work Search and BYE improper payments. State UI agencies are also using behavioral insights (BI) practices, which apply understandings about human behavior to strategies that can improve decision-making and UI program outcomes, to help reduce improper payments across these root causes. The Department and the UI Integrity Center provide resources to support states in improving the use of plain language when providing complex instructions and incorporating BI techniques to help claimants make better decisions and comply with program requirements. ETA also encourages states to gather work search activities from UI claimants at the time of filing a weekly claim for benefits – before payment is released.

ETA also continues investing in, and improving, the State Information Data Exchange System (SIDES) to help state UI agencies prevent Separation improper payments. SIDES allows employers and their third-party administrators to provide state UI agencies with more timely and accurate information regarding an individual’s reason for separation from work.

These strategies, along with additional antifraud and improper payment reduction strategies outlined in ETA UI Integrity Strategic Plan, provide a comprehensive set of actions targeting the top UI improper payment risks. ETA allocates appropriate resources and prioritizes strategies proportional to the severity of the associated amount and rate of the root cause.

The Department follows the leading practices outlined in the Government Accountability Office’s (GAO) Fraud Risk Framework and has thoroughly embedded those practices in ETA’s daily UI integrity work. Fraud risk mitigation is a constant and ever-evolving process that requires assessing risks, designing and implementing strategies and control activities to mitigate assessed risks, and continuous evaluation of outcomes to adapt strategies/activities and improve risk responses. ETA maintains a UI Fraud Risk Profile, which identifies inherent fraud risks facing the UI program, assesses the likelihood and impact of inherent fraud risks, and prioritizes residual fraud risks. ETA also oversees and communicates its UI antifraud and improper payment reduction strategies to state UI agencies and through a dynamic UI Integrity Strategic Plan, which continuously evolves to include risk mitigation controls aimed at combatting fraud and reducing the top root causes of improper payments. ETA updates its UI Integrity Strategic Plan quarterly, tracking actions associated with the implementation of each strategy. After a strategy is fully implemented and has been in place for a reasonable amount of time to collect data and conduct an evaluation, ETA assesses the effectiveness of the strategy. If a strategy is effective at decreasing the UI fraud or improper payment risk it was developed to address, the Department reassesses the risk ratings in its UI Fraud Risk Profile, which, in turn may lead to re-prioritization of strategies to address higher residual risks. If ETA determines a strategy was not effective, ETA develops additional risk mitigation controls. This process is repeated until the risk is reduced to within an acceptable tolerance level.

Since the UI program is primarily funded by employers through state and federal tax liability and administered through a Federal-state partnership, both the Department and state UI agencies have a vested interest in ensuring UI program integrity and are jointly responsible for managing the process of assessing and mitigating fraud risks to the UI programs, reducing improper payments, and prioritizing payment integrity activities. ETA provides funding, at levels appropriated by Congress, to states to administer the UI program and conducts monitoring of states’ performance and operations to hold states accountable for proper UI program administration and for meeting the established UI performance metrics. Additionally, ETA issues guidance in accordance with Federal statute and makes announcements to states about program training, UI integrity resources, and operational recommendations.

However, eligibility for UI benefits is determined by states in accordance with state laws and only states can directly prevent, detect, and recover improper payments. ETA requires states to report on their actions to evaluate UI fraud risks and implement and maintain sufficient controls to effectively prevent fraud and reduce improper payments, including the states progress in developing their own state-specific antifraud strategies. States are also required to report on their use of required and recommended UI program integrity functions, as well as their actions taken to recover overpayments.

ETA’s actions to reduce improper payments and address fraud in FY 2025 proved adequate as demonstrated by the continued decrease from the rates reported in 2024, 2023, 2022, and 2021. However, the estimated improper payment rate for the UI program remains above 10 percent and ETA is committed to continuing to assess program risks and employ strategies to further reduce improper payments and fraud in the UC programs and bring the estimated UI improper payment rate into compliance with PIIA.

Payment type Mitigation strategies taken Mitigation strategies planned
Overpayments Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training
Underpayments Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training Audit, Automation, Behavioral/Psych Influence, Change Process, Cross Enterprise Sharing, Predictive Analytics, Statutory Change, Training
Unknown payments Training Automation,Training

Eligibility element/information needed Description of the eligbility element/information
Citizenship Recognized as a United States citizen through birth or naturalization, or as a lawfully present non-citizen in the United States
Dependency Describes who the recipient/beneficiary relies on as a primary source of support
Employment The employment status of the recipient/beneficiary
Identity Able to establish that someone is uniquely who they claim to be
Receiving Benefits from Other Sources Beneficiary or recipient is receiving benefits from an additional source

Additional information

Protecting American workers by reducing fraud, waste, and abuse in the UI system is a top priority for ETA. To achieve this objective, ETA’s vision for improving the UI system is centered around three elements: Repair, Reform, and Overhaul.
• Repair represents a reminder to states about the existing obligations within the UI program and holding states accountable for UI program performance.
• Reform focuses on meaningful policy and operational changes that will promote integrity and timeliness within the UI system. This includes aligning UI modernization with America’s Talent Strategy (see America’s Talent Strategy: Building the Workforce for the Golden Age at https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/2025/08/Americas-Talent-Strategy-Building-the-Workforce-for-the-Golden-Age.pdf) to maximize efficiency and effectiveness in propelling American workers into high-wage careers, upholding the dignity of hard work, and delivering the talent businesses need to power the nation’s economic resurgence.
• Overhaul emphasizes transformative and innovative changes that will fundamentally enhance the UI system and bring it into the modern economy.

Strengthening UI program integrity and reducing IP requires dedicated focus, strong processes, and a system-wide commitment. ETA’s FY 2026 efforts to reduce improper payments build on many of the strategies started in FY 2025, and include providing enhanced ID verification services for states and continuing to facilitate access to critical payment integrity data sources states need for cross-matching and data analytics. ETA will also increase its oversight of states with improper payment rates exceeding 10 percent and hold states accountable for reducing their rates to an acceptable level.

Reduction target

9.99 %

Improper payments and unknown payments are driven by the processes and performance of 53 different state UI agencies. Factors that prevent states from reducing improper payments include variation in state organization structures and infrastructure such as outdated IT systems, loss of experienced staff and constraints in onboarding new staff, as well as complex and/or stringent state-specific UI laws for eligibility requirements such as work search activities. The reduction and/or flat-funding of federal administrative grants to states is also a significant factor that inhibits state progress towards reducing the improper payment rate.

DOL is constrained in its ability to hold states accountable. Specifically, if DOL determines a state is out of conformity and/or substantial compliance with federal law, it can withhold certification of a state's law after notice and hearing. This results in the loss of federal unemployment tax credits for employers in the state and/or the state's ability to receive administrative grants to operate the program. DOL however does not have meaningful enforcement to compel such efforts at a more intermediate level. Additionally, federal law does not provide DOL with the authority to prescribe beyond a certain level how states administer the program. Further, in FY 2025, ETA experienced a significant reduction in staffing levels of those responsible for monitoring and overseeing state operations. This creates challenges with being able to rapidly implement improper payment reduction strategies, effectively monitor states’ UI operations, and provide timely guidance and resources to state UI agencies to improve program integrity and UI performance outcomes.

The FY 2026 President’s Budget request includes a number of provisions to improve the administration and integrity of the UI program. The budget submission includes requested increases in UI administrative funding, continued funding for the UI Integrity Center, UI National Activities funding for program integrity and anti-fraud activities to support ID verification services in the states, and funding to support technology modernization that will improve states’ abilities to detect and prevent fraud and other improper payments in the program.

ETA continues to hold states accountable for reduction of improper payments and recovery of overpayments. Specifically, 53 states (including Puerto Rico, US Virgin Islands, and Washington D.C.) administer separate UI programs under state law and in accordance with federal law. ETA uses performance measures to evaluate state UI operations and has established an aggressive FY 2026 goal to reduce the UI improper payment rate to 9.9 percent.

Through the State Quality Service Plan (SQSP) process, states are required to submit Integrity Action Plants to identify state-specific root causes of improper payments and strategies to address each root cause. Additionally, states with improper payment rates at or above 10% are required to develop corrective action plans (CAPs) aimed at reducing their improper payment rate. States are also required to report allegations which the state reasonably believes constitutes UC fraud, waste, abuse, mismanagement, or misconduct to the DOL-OIG (see UIPL No. 04-17, Change 1). ETA’s oversight process includes quarterly reviews of CAP milestones and updates; peer reviews for BAM, Appeals, and Benefits Timeliness and Quality; and enhanced quarterly monitoring and technical assistance to states with a high improper payment rate or chronic poor performance.

ETA uses BAM improper payment data to assess UI program risks and develop mitigation strategies. ETA provides states with dedicated resources to conduct the BAM survey to measure improper payments and root causes. ETA reviews BAM state data for validity, analyzes trends, and makes this data publicly available at:
https://www.dol.gov/agencies/eta/unemployment-insurance-payment-accuracy/data

Additionally, the Department completely aligned its UI fraud risk management activities with the leading practices in GAO’s Fraud Risk Framework. The UI program has internal controls in place and continues to enhance these resources to deter improper payments and fraud. ETA’s UI Integrity Strategic Plan addresses the top root causes of improper payments and outlines integrity actions and antifraud strategies to support states in reducing improper payments and mitigating fraud risks.

$187.64 M