Work Search Requirements for UI Claimants

Federal law establishes a work search requirement for UI eligibility, but  the specific work search activities UI claimants are expected to conduct  vary by state, according to a DOL report. To be eligible for  unemployment benefits, individuals are generally required to actively  search for work under federal law. States report the results of their  BAM case reviews to DOL—including overpayments and  underpayments—through an online data system. 2. Specifically, in fiscal year 2013, approximately $1 billion in  estimated work search overpayments were made to claimants who were  not actively searching for work and, in fiscal year 2017, the amount  increased to close to an estimated $1.36 billion (see fig. 3). Conducting More Work Search Investigations Is Associated With Lower Estimated Work Search Overpayment Rates, As Is the Use of Formal Warnings

Based on our analysis of DOL data, we found that certain state  administrative practices, including investigating a higher percentage of  claimant-reported work search activities and frequent use of formal  warnings, were associated with lower reported state work search  overpayment rates. However, DOL recently determined that federal law  does not permit states to warn claimants the first time they failed to meet  work search requirements (i.e., issue formal warnings) instead of  establishing that an overpayment was made. 5). GAO’s analysis of DOL data shows that in fiscal year 2017, estimated  work search overpayments were nearly $1.4 billion, but potentially would  have been an estimated $1.8 billion greater if states had not issued  formal warnings and established overpayments. On  the other hand, states that did not have formal warning policies counted  such cases as overpayments, which are factored into DOL’s reported  improper payments rate. DOL officials told us in July 2017 they would soon issue a letter to  states to inform them that they are no longer permitted to use formal  warnings when they determine that claimants failed to meet work search  requirements. To date, DOL has not issued such a letter. Selected States Used Multiple Approaches to Address Work Search Overpayments, but Cited Challenges Verifying Claimants’ Work Search Activities

Selected states used multiple approaches to address work search  overpayments, including online systems to facilitate the work search  reporting and verification process, work search audits beyond the BAM  audits, and messaging to inform claimants of their work search  responsibilities. The online systems, work search  audits, and messaging helped prompt work search activities and prevent  work search overpayments in some cases, according to state officials. Some state officials said that  messaging encouraged accurate reporting. DOL Directs States to Investigate a Sample of Claimants’ Work Searches, but Has Not Clarified Procedures on Verifying Work Search

Although DOL monitors states’ work search overpayment rate estimates  and has provided assistance to help states address such overpayments,  it has provided limited direction to states on the level of effort states must  make to verify whether claimants are actively searching for work. Some states reported to DOL that they did not  investigate work search activities for a majority of their BAM cases even  though work search was required and the claimant reported job contacts. By  providing clear direction to states about work search verification  requirements and monitoring states’ implementation of these  requirements, DOL would have greater assurance that states are  complying with its requirements. Without providing states with this information and monitoring  their response, states will continue to report inconsistent information on  the extent of work search overpayments. Recommendations for Executive Action

We are making the following four recommendations to the Department of  Labor:
The Assistant Secretary of DOL’s Employment and Training  Administration should provide states with information about its  determination that the use of state formal warning policies is no longer  permissible under federal law. In its written comments, reproduced in appendix IV,  DOL agreed with all four of our recommendations and stated that it would  take action to address them.
Why GAO Did This Study

The UI program, which is overseen by DOL and administered by states, paid $30 billion to about 5.7 million individuals in 2017. Under federal law, to be eligible for benefits, individuals are generally required to actively search for work, but the specific work search requirements vary by state. Yet, states found that some benefits were overpaid to UI claimants who were ineligible because they were not meeting work search requirements. GAO was asked to review improper payments due to UI claimants' failure to actively search for work. Building on GAO's prior work ( GAO-18-133R ), this report examines (1) state administrative practices associated with work search overpayments; (2) selected states' approaches to address work search overpayments; and (3) DOL's oversight and support of states' efforts.
GAO analyzed DOL data, including the results of state reviews of a representative random sample of UI payments made from fiscal years 2013 through 2017. GAO also reviewed UI information from six states selected for variation in work search requirements and overpayment rates, interviewed DOL and state officials, and reviewed relevant federal laws, regulations, and guidance.

What GAO Found

GAO's analysis of Department of Labor (DOL) data found that certain state administrative practices, such as reviewing a higher percentage of claimant-reported work search activities and frequent use of formal warnings, were associated with lower estimated work search overpayment rates for the Unemployment Insurance (UI) program. According to DOL data, 22 states were warning claimants after the first discovered occurrence of their failure to meet work search requirements (i.e., issuing formal warnings) rather than reporting that an overpayment was made, while the other states were reporting such cases as overpayments. In 2017, DOL determined that federal law does not permit states to use such policies. GAO's analysis of DOL data shows that in fiscal year 2017, estimated work search overpayments were nearly $1.4 billion (see fig.), but would have been an estimated $1.8 billion (+/-$0.2 billion) greater if states had not issued formal warnings and established overpayments. DOL officials told GAO in July 2017 that the agency would issue a letter to states informing them that federal law does not permit them to warn claimants instead of establishing an overpayment. To date, DOL has not issued the letter. Until DOL provides states with such notification, states may continue to report inconsistent information on overpayments.
State officials GAO interviewed reported using multiple approaches to address work search overpayments, including using their online systems that automate collecting information on claimants' work search activities; conducting audits of claimants work search activities beyond those required; and sending automated messages to claimants regarding their work search requirements. Officials said that their approaches encouraged claimants to conduct a more active work search and prevented work search overpayments in some cases.
DOL monitors states' work search overpayment rate estimates and has helped states address such overpayments, but lacks clear procedures for how states should verify claimants' work search activities. DOL directs states to verify a “sufficient” number of work search activities during their audits but has not provided information on what is considered sufficient. DOL data show that some states did not review claimants' work search activities for a majority of audited cases. DOL officials said that the agency plans to clarify its procedures after issuing a letter about formal warnings. By clarifying these procedures, DOL will have greater assurance that states are complying with verification requirements.

What GAO Recommends

GAO is making four recommendations to DOL, including that it provide states information about its determination that the use of state formal warning policies is no longer permissible and clarify its work search verification requirements. DOL agreed with GAO's recommendations and stated that it would take action to address them.