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2mo ago

Labor Department Puts Governors on Notice Over Pandemic‑Era Unemployment Fraud

The move raises the prospect that the administration could shut state unemployment operations by withholding federal administrative funding.

FILE - Keith Sonderling, President Donald Trump's nominee to be Deputy Secretary of Labor, appears before a Senate Committee on Health, Education, Labor, and Pensions hearing for his pending confirmation on Capitol Hill, Feb. 27, 2025, in Washington. (AP Photo/Rod Lamkey Jr., File)
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Overview

  • The Labor Department sent letters to the governors of 53 states and territories on Wednesday demanding immediate action to curb fraud, waste and improper payments in state unemployment insurance programs.
  • Acting Labor Secretary Keith Sonderling warned the department will use “every available tool,” including for the first time the authority to withhold federal administrative funds that pay state program operating costs.
  • The enforcement push is part of Vice President JD Vance’s Task Force to Eliminate Fraud and will be coordinated with the Labor Department’s Office of the Inspector General and other federal investigators to recover stolen funds.
  • Several states pushed back, with California blaming rushed pandemic rules and saying it is addressing fraud, while critics and Democratic officials call the move politically charged and predict legal challenges if funds are cut.
  • The Department cited long‑running pandemic‑era problems that the Government Accountability Office estimated at $100–$135 billion in improper UI payments, and it said additional directives to states will follow in coming weeks.