NYS Department of Labor’s Billion-Dollar Mistake

The COVID-19 pandemic led to the New York State Department of Labor paying billions of dollars to support those affected. A record $19 billion was spent on unemployment insurance benefits during the initial pandemic closure. A recent audit found that an estimated $11 billion in payments were improper or fraudulent due to poor oversight and outdated systems.

The state’s comptroller’s office explained these errors were due to an aging unemployment system that the DOL has been aware of for more than a decade. A majority of officials from the DOL agreed with the audit’s findings and recommendations. The outdated system created challenges in monitoring and analyzing fraudulent claims.

The NYS unemployment insurance program is funded by taxes collected from employers. Current tax rates are at the highest level allowed for all businesses, with companies paying as much as a $200 increase per employee. With over $7.7 billion in debt owed to the federal government; New Yorkers question what the $12.6 billion received from the American Recovery Plan Act is being used towards, as 30 other states have used their grants to pay off their UI debts.

“The state Department of Labor’s antiquated UI system was ill-equipped to handle the challenges posed by the extraordinary demand caused by the pandemic for unemployment benefits and more lenient federal eligibility requirements.” – NYS Comptroller Thomas DiNapoli

“The department needs to recoup fraudulent payments and correct its mistakes. I was pleased the department agreed with our recommendations & is moving to implement them.”



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