The U.S. Department of Labor has announced a proposed rule aimed at addressing fraud in unemployment compensation programs. The Notice of Proposed Rulemaking seeks to require states to share unemployment compensation (UC) information with federal officials, including the department’s Office of Inspector General.
According to Secretary of Labor Lori Chavez-DeRemer, “From recovering over $500 million in fraudulent unemployment insurance payments to clawing back billions in unspent and unusable COVID-era unemployment funds, the Labor Department is laser-focused on restoring integrity to our nation’s unemployment insurance programs and safeguarding Americans’ hard-earned tax dollars. This commonsense proposal will further help us prevent criminals and fraudsters from ripping off taxpayers. Under the direction of President Trump, we’ll continue doubling down on our efforts to root out waste, fraud, and abuse to put the American Worker First.”
The proposal supports Executive Order 14243 issued by President Trump, which focuses on eliminating information silos that can hinder oversight efforts. During the pandemic, states experienced a surge in sophisticated fraud schemes targeting unemployment benefits. The department’s inspector general has estimated that as much as $191 billion in benefits may have been improperly paid during this period.
Under current rules, states may disclose UC information to federal authorities but are not required to do so. The new rule would make such disclosures mandatory when requested for oversight or audit purposes. This change is intended to help federal agencies investigate complex fraud cases across multiple states, identify weaknesses in state systems, ensure lawful administration of program funds, and protect against future fraudulent activities.
Once published in the Federal Register, the proposed rule will be open for public comment for 30 days. The department invites feedback from all stakeholders before finalizing the regulation.
Individuals who suspect wrongdoing related to Labor Department programs are encouraged to contact the Office of Inspector General hotline at (800) 347-3756 or visit www.oig.dol.gov/hotlinecontact.htm.
