2 hours ago
Keith Sonderling sent letters to 53 states and US territories demanding action to “combat waste, fraud, and abuse” wrong nan unemployment security program, threatening to withhold administrative costs from states for nan first clip history.
“We are officially putting governors connected notice,” said nan acting US caput of labor. “The American group will nary longer tolerate nan blatant waste, fraud, and maltreatment of their hard-earned taxation dollars – nary authorities should let it either. If states let it, they will suffer nan consequences. This section is nary longer acrophobic to usage each lever disposable to guarantee payer money is protected.”
The agency did not supply information connected fraud aliases alleged fraud successful unemployment systems, but highlighted 3 Democrat-led states – California, New York, and Illinois – and made claims astir each.
They opportunity California owes $20bn to nan national authorities for a indebtedness during nan Covid-19 pandemic. California has struggled paying disconnected nan loan, arsenic they did pinch a akin national indebtedness received during nan 2008 economical recession, due to nan existent setup of really employers are taxed to money unemployment. The unemployment payroll taxation strategy successful California has been unchanged since 1984 astatine a taxable costs ceiling of $7,000 connected a workers’ wages and maximum taxation complaint of 5.4%, leaving nan authorities pinch insufficient costs to screen its unemployment reserve while legislators connected some sides of nan governmental aisle person been moving to effort to resoluteness nan issue.
The Department of Labor besides claimed that New York loses an estimated $2m per time successful unemployment security fraud and improper payments, but did not differentiate betwixt nan two. They besides cited that Illinois has improper payments of $320m, astatine a complaint of 14%.
Improper payments are not fraud, alternatively are astir often cited as owed to antiquated technology, pinch an estimated improper costs complaint of 14.9% crossed nan US.
While New York, California and Illinois person precocious improper costs rates compared to nan remainder of nan US, respective Republican states besides person starring improper costs rates. Florida is reporting a 36.43% improper costs rate, much than double nan complaint successful California astatine 16.85%, based connected information from 2021 to 2024.
“Fraud is still a problem and it hasn’t gone distant since nan commencement of nan pandemic but this property merchandise is portion of nan problem, why nan fraud isn’t going away,” Michele Evermore, elder chap astatine nan National Academy of Social Insurance, told nan Guardian.
She noted that states should beryllium capable to activity thief from nan US Department of Labor alternatively of being blamed solely for nan rumor – pinch threats.
“No authorities wants to salary fraudulent benefits to criminal actors,” she added. “It should beryllium an each of government, each of nine response, alternatively of calling retired governors they person a governmental beef with. It’s not nan correct measurement to soberly and stoically woody pinch a problem that everybody faces.”
Sonderling appeared connected Fox News connected Wednesday greeting to talk nan letters.
“I will fundamentally trim disconnected nan states’ administrative costs and past they won’t beryllium capable to administer this unemployment security owed to nan fraud,” said Sonderling, who past claimed Democrat governors are nan states pinch nan highest fraud, without citing immoderate grounds aliases information to substantiate nan claim.
In May 2025, nan Department of Labor sent letters to authorities unemployment agencies requiring them to return immoderate unspent costs allocated successful nan American Rescue Plan Act (ARPA), a move criticized by unemployment experts for nan disruption it would origin to states successful nan midst of modernizing their unemployment systems and efforts to conflict fraud.
Estimated fraud during nan Covid-19 pandemic successful unemployment security crossed nan US betwixt April 2020 to May 2023 was between $100bn to $135m, according to nan Government Accountability Office, though nan Department of Labor based on nan estimate was overstated.
