Senate Finance Committee leadership released a bipartisan framework of legislation on Feb. 8 that would make key improvements to the nation’s unemployment insurance (UI) system, including the implementation of new technology.
Spearheaded by committee Chair Ron Wyden, D-Ore., and Ranking Member Mike Crapo, R-Idaho, the proposed improvements focus on program administration and integrity to combat UI fraud and improve access to benefits for eligible workers.
Fraud within the nation’s unemployment system skyrocketed after Congress enacted a historic expansion of the program in March 2020 to provide pandemic relief. State unemployment agencies were overwhelmed with record numbers of claims – and out-of-date IT systems to process them – and relaxed some requirements in an effort to get the money out the door quickly to those who had lost their jobs.
The Government Accountability Office (GAO) in September estimated that UI fraud during the COVID-19 pandemic reached a range of $100 billion to $135 billion.
“During the heat of the pandemic in 2020, state unemployment insurance systems routinely struggled to keep up as millions of Americans were laid off or furloughed,” Sen. Wyden said in a statement.
“This bipartisan framework would begin to make the UI system more resilient so that it’s up to the challenge during the next recession,” the senator said. “The key is understanding that better serving workers in a crisis and preventing fraud are not mutually exclusive. This framework would help states detect and prevent fraud while also ensuring that eligible workers can more easily apply for benefits and quickly receive what they are owed.”
The COVID-19 pandemic revealed that the UI program was both difficult for workers to access and vulnerable to fraud, the senators said.
The senators’ new bipartisan framework would prevent future UI fraud and help ensure those who defrauded the system during the pandemic are brought to justice. It would also provide relief for claimants who were overpaid and cannot afford repayment or face other hardships and take steps to make UI systems more accessible to eligible workers.
“This bipartisan framework takes crucial steps toward providing states’ unemployment systems with much-needed tools to recoup and prevent fraudulent claims,” Sen. Crapo said. “As we saw throughout the COVID-19 pandemic, fraudulent actors are a serious threat and prevent legitimate claimants from receiving timely payments. By building a stronger and more accessible UI system, we can ensure taxpayers are protected and those who need assistance receive it.”
On the technology front, the senators’ framework would implement new access and technology requirements for online claim filing systems and in-person alternatives. It also would require states to provide guidance to employers to facilitate their eligible workers’ access to benefits and provides for oversight of Federal investments into the administration of UI programs.
The framework also focuses on UI program integrity by requiring states to use existing databases – such as the National Directory of New Hires or the State Information Data Exchange – to help identify potentially fraudulent unemployment claims.
Finally, the legislative framework aims to improve UI fraud and overpayment recovery by extending the Federal statute of limitations for pandemic UI fraud to 10 years; allowing states to waive overpayments of pandemic UI; and allowing states to retain five percent of recovered overpayments of unemployment compensation and five percent of employer unemployment taxes collected as part of a state investigation.
The congressional framework released last week coincides with the Biden-Harris administration’s three-part proposal unveiled in March 2023 asking Congress for $1.6 billion to help provide Federal agencies and local governments with more funding to handle pandemic-related fraud claims, modernize identity verification systems, and support victims of identity theft.
The White House’s Senior Advisor and American Rescue Plan Coordinator Gene Sperling applauded the senators’ framework for aligning with President Biden’s anti-fraud proposal.
“Emergency unemployment benefits were a critical lifeline for millions of workers who lost jobs through no fault of their own during the pandemic,” Sperling said in a Feb. 8 statement. “But the implementation in 2020 exposed the need for stronger fraud prevention systems and greater investment in technology to modernize unemployment systems.”
“The bipartisan framework released today comprises several specific provisions from the President’s anti-fraud proposal, including extending the statute of limitations for pandemic UI fraud to 10 years, giving prosecutors the time needed to investigate and prosecute complex criminal syndicates, and requiring checks against existing government datasets that will prevent fraudulent unemployment insurance payments to ineligible recipients, including deceased individuals and prisoners,” he said. “The President looks forward to further action from Congress on additional components of his plan to prevent fraud, punish systemic fraud, and recover funds, while ensuring equitable access for legitimate claimants.”
