Unemployment Insurance (UI) Improper Payments

Core Strategies to Reduce Improper Payments


DOL is implementing a number of strategies to help states address Unemployment Insurance (UI) improper payments. Reducing the improper payment rate requires strong federal-state collaboration and intense focus by the entire UI system. DOL announced a call to action to all states to ensure that payment integrity remains a top priority and to foster the development of state specific strategies to prevent improper payments. This call to action reinforced that "everyone owns integrity" across the UI system and provided the expectation that states continuously assess their root causes of improper payments and implement state-specific action plans to reduce their rates.

Core Strategies to Reduce Improper Payments

For Fiscal Year (FY) 2016, DOL is tracking state implementation of seven core strategies which can be used to effectively lower the rate of UI improper payments. Many states are already implementing these strategies, and DOL is working to highlight best practices and encourage states to replicate what works.

State Quality Service Plan (SQSP) / Strategic Plan Development — The SQSP is intended to be a dynamic document states use not only to ensure strong program performance, but also to guide key management decisions, such as where to focus resources. The SQSP should focus state efforts to ensure well-balanced performance across the range of UI activities. The SQSP also is designed to be flexible to accommodate, among other things, multi-year planning and significant changes in circumstances during the planning cycle. States can use this flexibility to incorporate the elements from the program Integrity strategic plans developed by their Cross-Functional Task Forces into the SQSP to address improper payments.

State Information Data Exchange System (SIDES) Implementation — SIDES is a web based system that allows electronic transmission of UI information requests from UI agencies to multi-state employers and/or Third Party Administrators, as well as transmission of replies containing the requested information back to the UI agencies. The current implementation of SIDES allows for the exchange of separation and earnings verification information.

Treasury Offset Program (TOP) — Implementation of the U.S. Department of the Treasury's TOP to recover certain unemployment debts from Federal income tax refunds.

Claimant-Employer Messaging — Implementation of a statewide claimant-employer messaging campaign designed to: 1) improve claimants' awareness of their responsibility to report any work and earnings if they are claiming benefits, 2) improve claimants' understanding of work search requirements as a condition of eligibility for benefits, and 3) improve employers' awareness of their responsibility to respond to state requests for separation information and/or earnings/wage verifications. A detailed claimant-employer messaging toolkit was published in UIPL No. 11-12 with sample products for states to consider incorporating into their messaging campaigns.

Employment Service (ES) Registration — Implementing technology or other solutions designed to address improper payments due to a claimant's failure to register with the state's Employment Service or job bank in accordance with the state's UI law.

National Directory of New Hires (NDNH) — For several years, DOL has encouraged states' use of the NDNH to reduce improper payments in the UI program. The NDNH came about as a result of The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) and includes state directories of new hires (SDNH) and a national directory of new hires. These new hire directories, which were created for the purpose of child support enforcement, have allowed for improved access to wage data and data from other states regarding new hires and wages. Studies conducted about NDNH have concluded that the use of this tool results in earlier detection of improper payments, therefore increasing the likelihood of recovery. Detailed recommended operating procedures (ROPs) were published in UIPL No. 19-11 to provide states with information about best practices in conducting this match.

UI Integrity Center of Excellence (Center) — DOL funded the Center's development through a cooperative agreement with the New York State Department of Labor, in partnership with the National Association of State Workforce Agencies. The Center's goal is to promote the development and implementation of innovative integrity strategies, including the prevention and detection of fraud, in the UI program. The key deliverables of the Center include:

  • Sophisticated new data analytics and predictive modeling tools to improve the prevention and detection of improper payments;
  • A secure portal for the communication of fraud schemes in the UI program;
  • Development and dissemination of integrity training modules;
  • Information related to best practices and model UI program operations;
  • Products to help states improve their integrity operations; and
  • On-site technical assistance to identify operational changes that will improve program integrity.