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Law360 (May 27, 2020, 9:59 PM EDT) -- The U.S. Department of Labor's internal watchdog has criticized the agency's recommendation that states allow gig workers to collect unemployment benefits during the COVID-19 pandemic without showing proof of past earnings, telling the department that "the associated risk of fraud is significant."
The Labor Department's Office of Inspector General (OIG) delivered this message in a memo to John Pallasch, the assistant secretary of the agency's Employment and Training Administration (ETA), on Tuesday.
The OIG fears that the agency's April 27 advice that states ask gig workers to self-certify their eligibility for COVID-19 unemployment benefits makes the Pandemic Unemployment Assistance (PUA) program susceptible to fraud, the office said.
The memo recommends that states require people to show proof of past earnings when applying for pandemic-related unemployment benefits.
"States need to implement measures, such as requiring claimants to document earnings to substantiate the initial [weekly benefit amount] determination, to establish and maintain integrity in the PUA program," Elliot Lewis, the head of the OIG's auditing office, wrote in the memo. "We believe that reliance solely on claimant self-certifications without evidence of eligibility and wages renders the PUA program highly vulnerable to improper payments and fraud."
If the ETA doesn't want to take the OIG's word for it, it should ask Congress to weigh in on whether people should be eligible for pandemic-related unemployment benefits without earnings documentation, the OIG wrote in the memo.
If the ETA, however, does want to listen to the OIG, it should release additional guidance amending its April 27 guidance, the watchdog recommended.
The Labor Department has been releasing guidance on how states should administer the unemployment provisions of the coronavirus relief bill since it became law in late March.
The relief bill, which created the PUA program, allows states to tack $600 per week onto regular unemployment benefits and dispense benefits to people who don't usually qualify, such as independent contractors, the self-employed and those who work as part of the so-called gig economy.
Spokespeople for the ETA were not immediately available for comment Wednesday.
--Additional reporting by Braden Campbell. Editing by Jay Jackson Jr.
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