New Labor Dept. office will focus on UI modernization

The office will implement a strategic modernization plan for unemployment insurance set to range from developing modular tech capabilities to identity verification.

United States Department of Labor in Washington, DC Editorial credit: Mark Van Scyoc /

The Department of Labor launched a new office to lead efforts to modernize and reform unemployment insurance (UI) systems, a benefit delivered through over 50 distinct systems at the state level.

The new Office of Unemployment Insurance Modernization is tasked with supporting UI modernization and managing the $2 billion already allotted to UI initiatives by the American Rescue Plan Act. The new office will be housed in the Office of the Secretary, but it will also work with other relevant DOL units like the Employment and Training Administration.

Labor Secretary Marty Walsh has been vocal about his commitment to solving chronic problems in the UI space, which intensified after the onset of the pandemic. States have faced twin onslaughts of more claimants and increasing fraudulent claims, and while the specifics vary system to system, many states are still administering the program with legacy technology.

A central role of the new office will be implementing a UI modernization plan announced by the agency earlier in August. It splits the $2 billion investment from the American Rescue Plan into different types of grants for states.

For starters, $260 million will be doled out as "equity grants," meant to be used to improve customer service and claimant outreach, reduce claims backlogs and improve access for low-income claimants.

The agency will give $140 million to states in the form of "fraud grants" administered by DOL's Employment and Training Administration. That money will cover the subscription costs for identity verification tools, the establishment and expansion of data analytics and the implementation of cybersecurity defense strategies.

As part of that plan, DOL will work with states on identity verification via a blanket purchase agreement with three vendors for cross-matching technology that will verify the identity of applicants when they file for unemployment insurance and will flag any suspicious activity that comes up after someone has filed.

The agency is also working with the U.S. Digital Service to create a set of modular tech that states can use as they modernize. That idea that DOL be a central source for modular tech solutions states can piece together to modernize has been pushed by some lawmakers in Congress.