DiNapoli says DOL paid $11B in fraudulent unemployment

ALBANY, N.Y. (WTEN) — From Washington, The Committee on Oversight and Accountability has requested New York’s Department of Labor Commissioner, Roberta Reardon turn over documents to investigate $11B in fraudulent unemployment insurance. According to their November report, the Comptroller’s Office estimated the state paid this between April of 2020 to March of 2021.

“$11 billion is a huge amount, particularly important is that this is New York State money, paid for by businesses through a payroll tax, so this is not federal money,” said John Kaehny, Executive Director at Reinvent Albany.

In a statement, Jennifer Freeman, director of Communications at the Comptroller’s Office said: “Our audit found deficiencies in the New York Department of Labor’s oversight and management of its UI system which contributed to billions in improper payments. We urge DOL to implement our recommendations, which it agreed with, and make all efforts to recoup misspent funds.”

Kaehny said for years the Department of Labor was told to create a new system to handle unemployment benefits, “And then it was warned again in 2015 in an audit by the state comptroller of the same thing, and that audit specifically said ‘hey, by the way, in the event, that the law changes, or there’s a surge of applicants’ – which is exactly what happened during Covid –  ‘your computer system is going to break.’ Which is what happened.”

Some say the biggest downfall is that New York State businesses will bear the brunt of it all. “New York State businesses are already paying additional $200 more per employee than they were prior to the pandemic and that is $200 each year,” said Justin Wilcox, Executive Director of Upstate United.

This money, paying back the federal government for loans it provided to help New York cover the costs of unemployment claims. Both Kaehny and Wilcox say state lawmakers should have a joint hearing as soon as possible to get to the bottom of what happened and determine ways to prevent this moving forward. Capitol Correspondent, Amal Tlaige reached out to the Department of Labor for comment, but has not heard back.