Labor Secretary Eugene Scalia isn't expected to ask Congress to revisit the law that expanded jobless benefits to the self-employed to require proof of earnings when he testifies before the Senate Finance Committee on Tuesday, according to a department memorandum.
Officials indicated in the same memo that the department sees the issue as one for Congress, and that it would "consult with Congress and offer technical assistance" if lawmakers opt to amend what is now self-certification of earnings. The memo acknowledges "increased potential for fraud."
The department's memo Friday to the Office of the Inspector General is an indication that officials are refusing to change policy — unless lawmakers direct them to — after the inspector general warned of a "high risk of fraud" if the self-employed aren't required to show proof of earnings. The inspector general's warning to the department came in a May 26 memo released publicly. Inspector General Scott S. Dahl said last week he would leave the post on June 21.
The issue potentially would affect many of the 10.7 million now receiving jobless benefits under provisions of the roughly $2 trillion COVID-19 relief act that expanded unemployment to the self-employed, gig workers, independent contractors and others, if the department advised the states to begin requiring documentation of earnings.
Such documentation is required under the Disaster Unemployment Assistance program, on which the coronavirus program is modeled, but agency lawyers maintain that Congress, in drafting the law, specified only two conditions: that a claimant is not eligible for regular unemployment benefits, and he or she “is self-employed, is seeking part-time employment, does not have sufficient work history, or otherwise would not qualify for regular unemployment…”
However, claimants are required to self-certify eligibility, potentially facing criminal prosecution if they make false statements in claiming benefits.
Senate Democrats wrote Scalia on Friday raising the issue of fraud in unemployment programs, citing press reports that the Secret Service had detected organized fraud rings targeting the expanded program. But the letter asked the department only to put “additional guidance, resources and support” into fraud prevention.
“Safeguarding state UI [unemployment insurance] systems against unscrupulous actors who seek to exploit the current public health crisis for economic gain requires a holistic response by the federal government in partnership with states,” the senators said.
In its reply to the OIG, Labor Department lawyers said that states should require documentation if the claimant seeks a benefit higher than the minimum, set by the law at one half the state average weekly benefit. But even those who get the minimum also receive a $600 plus-up also authorized by the law, through the end of July.