Punching In: Trump’s Crackdown on UI Fraud Brings New Fraud Risk

Tuesday morning musings for workplace watchers.

DOL Grabs More UI Data| Bishops Push Envelope on Pregnancy Bias Rules

Rebecca Rainey: The US Labor Department will create a national database of unemployment insurance claims to crack down on fraud in the jobless aid system, permanently expanding the agency’s access to confidential and sensitive information about jobless aid claimants.

The plan, released in a Federal Register notice Aug. 29, broadens a Trump administration effort to gather confidential UI claim data at the DOL’s Employment and Training Administration, data that’s historically only been held at the agency’s independent Office of the Inspector General.

One former DOL official said that the proposal as written could be incredibly costly, given the additional scope of data sought and the requirements put on state agencies.

Language in the rulemaking references back to a March executive order titled “Stopping Waste, Fraud, and Abuse by Eliminating Information Silos,” which directed the DOL’s IG to provide the Secretary of Labor with “unfettered access” to “unemployment data and related payment records.”

“I can’t think that means anything but wage data,” said Michele Evermore, who worked on unemployment insurance modernization during the Biden administration. “That’s a huge issue. It’s going to be a huge cost to the state. That’s everybody who works at a job that is covered under unemployment.”

The DOL acknowledged that some states will have to update their technology systems to provide the data sought under the proposal, but the agency is unable to calculate how many states will need to make upgrades or buy entirely new systems. Agency leadership says it’ll combat abuse in the system.

“This commonsense proposal will further help us prevent criminals and fraudsters from ripping off taxpayers,” Secretary of Labor Lori Chavez-DeRemer said in a statement. “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.”

Maintaining all claims in a single database could also present a fraud risk, Evermore said.

“I think that actually having a national database at this point, that’s one huge point of failure,” Evermore said. “During the pandemic, at least the fraudsters had to break in 53 different doors rather than just one database.”

The proposal would require states to disclose UI claim data for purposes of oversight and audits, a disclosure that was previously optional for states, who are the actual owners of the data.

UI claim data historically wasn’t collected by the DOL OIG until the coronavirus pandemic in 2020, when mass business closures led to a deluge of claims and emergency jobless aid programs passed by Congress waived some verification requirements. The DOL eventually required states to provide the data to its OIG to receive grant funding to modernize and shore up their unemployment insurance computer systems.

A similar proposal to collect datafrom the states was considered during the Biden administration, but the data would have remained at OIG, not at the DOL’s ETA.

The Trump DOL has already attempted to use unemployment insurance data to highlight waste and inefficiencies of the system.

After the president issued the “Eliminating Information Silos” executive order in March, the Department of Government Efficiency posted it had found thousands of fraudulent claims going back to 2020, a finding that experts criticized for misreading how UI claims were coded.

Workers hang a large photo of US President Donald Trump on the facade of the Department of Labor headquarters building in Washington, DC.

Photo by Drew ANGERER / AFP

Rebecca Klar: A flurry of filings by the US Conference of Catholic Bishops in both Louisiana federal court and the US Court of Appeals for the Fifth Circuit show lingering legal questions following a May decision nixing an abortion-related section of the EEOC’s Pregnant Workers Fairness Act rule.

The bishops asked both the US District Court for the Western District of Louisiana, as well as, via interlocutory appeal, the Fifth Circuit, to even further restrict the Equal Employment Opportunity Commission’s embattled regulation.

The bulk of the litigation currently sits before the appeals court, but the lower court will hold a hearing Sept. 3 on a motion to bar the rule’s enforcement against plaintiffs while the appeal plays out.

The May decision vacated the portion of the rule that mandates employers accommodate workers’ “purely elective abortions” as a “related medical condition” tied to pregnancy. But the bishops now seek to address what they view as remaining potential in the law to require abortion-related accommodations, including when abortions could stem from PWFA-covered medical conditions.

The group has said it will have to accommodate abortions that happen due to “conditions such as a minor case of anxiety or even ‘changes in hormone levels,’ which are universal in pregnancy.”

Also in play is a Religious Freedom Restoration Act claim that could exempt the bishops from complying with the abortion-related portions of the rule.

The group had argued in the district court that the PWFA’s narrower case-by-case approach to religious belief-based employer exemptions from the rule doesn’t apply, and civil rights law allows much broader ability to opt out.

Despite an acting chair that has opposed the PWFA rule as written, the EEOC said in a recent brief the bishops aren’t under imminent threat of harm from the regulation.

There have been no charges filed under the PWFA based on a failure to accommodate for abortion for any employer, the EEOC added.

Christine Bestor Townsend, an Ogletree Deakins employment attorney, said the lack of charges isn’t surprising, as an accommodation would likely look like a time off request—which employees can request without necessarily using PWFA.

Regardless of the EEOC’s current litigation position, the rule appears subject to change soon, once Republican Acting Chair Andrea Lucas secures an EEOC voting quorum—with alterations going potentially beyond the court-ordered restrictions for “purely elective abortions.”

We’re punching out. Daily Labor Report subscribers please check in for updates during the week, and feel free to reach out to us.