Purpose

The objective of our examination was to determine whether NYDOL properly assessed penalties in accordance with Federal and State law for unemployment insurance (UI) overpayments that resulted from claimants’ willful misrepresentations to obtain benefits.

Background

UI benefits are temporary income for eligible workers who become unemployed through no fault of their own. An overpayment occurs when a claimant receives benefits in excess of the amount entitled. Overpayments are considered willful when claimants knowingly misrepresent information to obtain UI benefits. New York State Labor Law § 594 and 42 United States Code § 503 require that at the time the State establishes (e.g., makes a final determination) that a claimant has received an overpayment resulting from a willful misrepresentation, a penalty shall be imposed on the claimant.

Key Findings

We found NYDOL did not consistently assess penalties in accordance with law and/or NYDOL procedures resulting in the failure to assess up to $311,775 in penalties—more than 10 percent of the penalty amount we examined. This includes up to 1,679 penalties valued at $307,753 that were not assessed at all and up to 71 penalties valued at $4,022 that were under-assessed by NYDOL. In addition, staff recorded 6,405 overpayments incorrectly, but these recording errors did not affect the penalty amount. We found these errors were caused by either NYDOL officials providing staff with unwritten agency policy that was contrary to law, or staff not following established procedures.

Key Recommendations

• Assess the proper penalty amount for the 1,679 in non-assessed and 71 under-assessed penalties identified in this report.
• Review, as appropriate, the 159,957 overpayments our auditors did not examine to ensure accuracy of the assessed penalties and data. Adjust the penalties and data as necessary.
• Periodically review, update and document NYDOL policies and procedures for accuracy, clarity and consistency with State and Federal laws.
• Timely communicate NYDOL policies and procedures and related updates to staff.
• Ensure appropriate supervisory oversight of staff to confirm compliance with NYDOL policies and procedures.