State unemployment officials paid more than $400 million to workers who probably weren't eligible, a report by the Louisiana Legislative Auditor found.
The main source of the improper payments seems to be employers' failure to respond to requests for information; the report found that LWC workers authorized payments when they couldn't verify the claims. The lagging information was due to an extension provided to employers by the legislature, the report found.
The huge increase in claims, due to the pandemic, also was a problem; the report estimates that the number of claims increased by 2,000 percent.
The report looked at unemployment payments between January 2020 and September 2020. During that time, more than $405.3 million was paid to 97,585 people who didn't meet the criteria of: (1) been classified as an employee by their employer; (2) lost income or their job through no fault of their own; and (3) earned no more than $247 per week from any secondary employer or source of income.
"To determine an individual’s eligibility for these benefits, LWC compares information submitted by the applicants to reports employers are required to file with LWC," the report states. "LWC indicated that its ability to verify individuals’ eligibility for unemployment benefits was hampered by the significant increase in the number of applications submitted during the COVID-19 pandemic and legislative action that gave employers additional time to submit their wage reports to LWC."
The auditors looked at the Louisiana Workforce Commission’s (LWC) Unemployment Insurance program (State UI) and federally-funded COVID-19 pandemic-related unemployment assistance programs (Federal UI) to determine if individuals who do not appear to have been eligible based on their income received unemployment benefits.
Between March 2020 and December 2020, $6.87 billion in payments were made to 694,391 people, the report found.
Louisiana’s seasonally adjusted unemployment rate grew from 5.2% in February 2020 to 13.1% in April 2020,1 and the total number of unemployment claims increased by more than 2,000%, from 16,798 on February 29, 2020, to 366,798 on April 25, 2020, the report found.
LWC provided a detailed plan to deal with the issues moving forward, including attempts to re-coup money paid to unemployed workers. That would include a determination as to whether fraud was involved. Claims determined to be fraud will be dealt with differently, the report states.
To read the entire report, click here.