By Vin Gurrieri

Law360 (June 1, 2020, 6:39 PM EDT) -- The U.S. Department of Labor's chief internal watchdog cautioned House lawmakers Monday that a "significant" risk of fraud surrounds one of the programs Congress recently created that expands unemployment insurance for workers displaced because of the coronavirus pandemic. 

The DOL's inspector general, Scott S. Dahl, who has held the position since 2013, focused his testimony before the House Subcommittee on Government Operations largely on portions of the Coronavirus Aid, Relief and Economic Security Act, dubbed the CARES Act, that he believes lack adequate safeguards to prevent states from improperly paying out vast amounts of benefits to claimants.

Rep. Carolyn Maloney, D-N.Y., who chairs the full Committee on Oversight and Reform, quizzed Dahl about a memo his office issued on May 26 expressing concern that the Pandemic Unemployment Assistance program is "highly vulnerable" to fraud or improper payments since states are relying on potential claimants to self-certify that they qualify. The program is a component of the CARES Act that provides benefits to eligible people affected by COVID-19 who don't typically qualify for unemployment insurance benefits, like independent contractors or workers in the so-called gig economy.

Dahl stressed the importance of "strong oversight" being exercised over the DOL's unemployment insurance program given that about 40 million Americans have filed for unemployment insurance during the coronavirus pandemic. He told Maloney that his office sees the risk of fraud, waste and abuse in the PUA program as "significant" while adding that "we're seeing evidence of this in our investigations."

The Labor Department's inspector general also told Maloney that the DOL responded to his recommendation that the states, among other things, should require potential PUA claimants to document their earnings by saying that they "had a different interpretation of what's permitted under the CARES Act in terms of imposing requirements and documentation."

"And they elected to go the route of the other recommendations that we made in terms of seeking clarification from Congress or a legislative fix to allow that guidance to go out," Dahl said.

Rep. Gerry E. Connolly, D-Va., chair of the Government Operations subcommittee, said the hearing, styled as a virtual briefing, was part of a series of similar sessions with inspectors general to delve into the federal government's COVID-19 response efforts.

Besides the issues involving unemployment insurance, the briefing also touched on the broader issue of inspectors general's independence.

In late May, Maloney, House Majority Leader Steny Hoyer, D-Md., and several other top Democratic lawmakers introduced a bill that requires any removal of an inspector general to be for cause, a response to President Donald Trump's allegedly retaliatory firings of watchdogs investigating his administration.

The Inspector General Independence Act would bar the president from removing any inspector general from their role outside of nine specific reasons, such as permanent incapacity, neglect of their duties or an abuse of their authority, which would require documentation to prove. Connolly and Maloney touted the legislation during Monday's briefing.

In response to a question from Maloney about how the DOL IG's office is ensuring its independence, Dahl said that the IG's office has longstanding processes in place that it follows meticulously to "protect the work we are doing and preserve our credibility."

During a later portion of the briefing when the topic once again came up, Dahl said his office "always report[s] the unvarnished truth no matter what the consequences and we'll continue to do so."

The session also touched on the issue of worker safety amid the pandemic, a subject that has turned controversial as various unions and workers' advocates have criticized the Occupational Safety and Health Administration for not doing enough to protect workers from COVID-19 and declining to issue a binding emergency rule mandating safety measures that employers need to take.

Labor Secretary Eugene Scalia and Loren Sweatt, principal deputy assistant secretary of labor for occupational safety and health, have each defended the agency's approach, with Scalia saying recently that industry-specific guidance that OSHA has put out along with its enforcement efforts render a formal rule unnecessary to protect workers during the pandemic.

Rep. Jamie Raskin, D-Md., who during the hearing categorized OSHA as being "AWOL" while the virus has spread and criticized it for not issuing an emergency safety regulation, asked Dahl for his take on OSHA's activity.

Dahl responded by saying that his office is "evaluating" the various guidance that OSHA has issued as well as its "activities in terms of their efforts in protecting employees as they return to work," with a report detailing the IG office's findings slated for release by the end of the month. 

--Editing by Jack Karp.

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