Armed with a new funding source, the U.S. Department of Labor is now moving forward with an action plan to modernize and improve the infrastructure of the country’s unemployment insurance system.The need for improvements in unemployment services comes during a time when the COVID-19 pandemic left millions of people nationwide out of work for weeks or months at a time, further straining already outdated systems.Incidences of fraudulent unemployment claims also have heightened the need for widespread system upgrades.“The pandemic underscored the need for modernization of the 53 different systems that administer unemployment insurance benefits in the United States, and it exposed significant vulnerabilities in state technology to criminals looking for an opportunity,” said U.S. Secretary of Labor Marty Walsh, in a news release detailing some of the improvement strategies.Now, the Department of Labor will utilize $2 billion that was allocated from the American Rescue Plan on initiatives that are geared toward preventing and detecting fraud, promoting equitable access to unemployment insurance benefits, making timely payments and reducing backlogs.

Action items for improvements in unemployment services include:

• Allocating $260 million in equity grants to improve claimant outreach and customer services processes. Those funds also will be used to implement strategies to reduce claims backlog and improve access for claimants at lower income thresholds. States may also earmark some of this grant money for public awareness campaigns and improvements in the delivery of unemployment services.
• Providing $140 million combined in grants for states to put toward fraud-prevention measures, such as subscription costs for identification verification programs, creating and expanding data analytics and implementing cybersecurity defense strategies.
• Committing $100 million in previously unobligated money from the Coronavirus Aid, Relief and Economic Security (CARES) Act to fight fraud and also implement more stringent cybersecurity measures for the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs beyond the extension of benefits.

The Department of Labor says the goal of these efforts is to tackle the most pressing short-term issues with the unemployment insurance system while also addressing some of its long-term challenges.The end result, the Department of Labor says, is a revamped information technology system that is accessible, safe and less vulnerable to failures associated with future surges in unemployment claims.The Department of Labor also outlined additional initiatives that it says are geared toward overall improvement of the unemployment insurance system long term. They include:

• Implementing direct technical assistance through the use of multi-disciplinary teams consisting of specialists in fraud detection, equity and customer service experience, the unemployment insurance program itself and behavioral insights. Teams also will be made up of business intelligence analysts, computer systems engineers and architects, and project managers. These teams also will work closely with state-run programs to conduct intensive discovery assessments to address fraud and equitable access and provide resources for identification verification.
• Adding expertise and capacity to work with vendors on addressing the various types of attacks targeting the unemployment insurance system.
• Modernizing antiquated state technology by developing solutions that can be adopted as part of ongoing modernization and improvement efforts for unemployment services. The plan also includes developing shared information technology solutions to help better integrate state and federal systems.

Learn more: How to protect yourself as cases of fraudulent unemployment claims soar in Kansas, across U.S.

Employer implications

The sharp rise in unemployment fraud cases nationwide has implications for employers as well.Business leaders know that greater incidences of successful unemployment claims lead to a higher state unemployment tax rate through the State Unemployment Tax Act (SUTA).A person who falls victim to a fraudulent unemployment claim or claims also likely raises employer concern about a more wide-spread identity theft problem throughout an organization.Syndeo, an outsourced human resources provider, assists small- and mid-sized businesses to monitor unemployment claims and mitigate unnecessary cases. Syndeo also works directly with the Kansas Department of Labor to flag potentially fraudulent claims and alert individuals whose identity may have been compromised.These efforts intensified throughout the COVID-19 pandemic.About us: As the Heartland’s leading employer services company, Syndeo partners with local business owners to help them minimize risk, improve efficiency and maximize profitability allowing them the freedom to focus on growth and fulfilling their mission. Syndeo fulfills its mission by taking on all of the HR responsibilities for our clients’ workforce, including employee relations, benefits, risk management and payroll. Winner of the 2020 and 2021 Best of HR Services Award through ClearlyRated for providing superior client service. See our ClearlyRated profile here.