Labor Department evolves efforts to assist states in UI delivery

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A pilot project meant to give the federal government a more central role in unemployment insurance delivery, is raising questions inside the Department of Labor and in Congress about the role of identity verification and enforcement authority over states in the system.

The Department of Labor's pilot to develop modular tech for state unemployment systems is evolving as the department confronts questions about the role of identity verification in the system long-term, as well as the power of its own enforcement authority over the states that actually deliver benefits.

The department has an ongoing claimant experience pilot with the U.S. Digital Service, Arkansas and New Jersey started late last year. 

Getting involved in the actual tech used for unemployment systems, a service delivered through over 50 distinct systems at the state and territorial level, is a new venture for the department.

The original goal was to develop modular pieces of tech for states to use, with a specific focus on identity verification and login processes. But some specifics have shifted, said Michele Evermore, who is currently deputy director for policy in the Department of Labor's Office of Unemployment Insurance but leaving that post next month.

"We're learning that for this particular thing, building a central piece of tech is probably not exactly the right way to go," she said of the initial pilot efforts. "At the outset… the idea was we should be able to develop a login process for both states. The login process is one of the things that we're finding is the most dramatically different across states."

In New Jersey, the Labor Dept.  has been optimizing the state's unemployment website for mobile users and making the interface more user-friendly, said Evermore. 

The login process is one of the things that we're finding is the most dramatically different across states.
Michele Evermore, deputy director for policy in the Department of Labor's Office of Unemployment Insurance

In Arkansas, the team is trying out the General Services Administration's, a shared sign-on service that has expanded since its inception to offer identity proofing capabilities, as a digital alternative to the state's in-person identity verification process.

According to the Arkansas Division of Workforce Services' how-to page filing for jobless aid in the state, new claimants have to verify their identity either through or by presenting a government-issued ID in person at an DWS office. only recently made itself available to state and local programs in early 2021. GSA is looking to scale up capabilities and increase adoption. The service verifies identities by checking issue ID-issuers like Departments of Motor Vehicles and credit, financial and phone records. It's still working to get third-party certification as being compliant at identity assurance level 2 – a standard for digital identity set by the National Institute of Standards and Technology.

If the pilot in Arkansas is successful, could potentially be used in the jobless aid system across states, said Evermore.

The Labor Department has sample, open source code from the two efforts – identity proofing and initial claim uptake – on its website. 

Now, the agency is considering other parts of unemployment where centralized, modular tech would be more feasible, as well as how the department can better assist states throughout the modernization process, said Evermore. One takeaway so far is the importance of standardization.

"Really, in the early stages, what we need to do is streamline certain processes and streamline standards so that we know what good looks like, we know what we expect of a modernized IT system and then we can build from there," she said.

The unemployment system was thrust into the spotlight during the pandemic when many states struggled to deliver benefits and fight off surges in fraud. Enhanced federal support for UI and the extension of benefits to gig workers helped drive a boom in improper payments as fraudsters took advantage of lax validation requirements and antique legacy technology fielded by states. 

Now, most states are now using identity verification at some point in their unemployment process, said Evermore. But how exactly identity verification should be used is still being worked out. Some states might only ask someone to go through an identity verification process after they've been flagged as potentially fraudulent, while others require it of all applicants.

Historically, the unemployment system has relied on a check with employers to verify individuals applying for the benefit – a "high standard," said Evermore. 

"Is identity verification absolutely necessary for every single one of those people?" she asked. "Maybe not."

Officials are still figuring out where identity verification should be inserted in the unemployment process so that it doesn't affect people's due process rights.

The department has said in regulations that identity verification "can't be the absolute front door, because otherwise then you have a vendor or a piece of technology making adjudication decisions essentially," said Evermore. "There has to be an application in place before the identity verification happens, so that if the identity verification comes back and says this person is a no… that person gets an appealable determination or gets information about how to move forward."

Evermore said Congress needs to take on the issue.

"We can't make it all equal and work right without fundamental UI reform. There need to be floors across states," she said, as well as consistent funding.

The Labor Department has limited authority to hold states to the standards it sets in the unemployment system. Evermore said the department's enforcement powers in states are "lacking." The main tool is withholding administrative funding from states, which already generally struggle with funding.

"That's not going to lead to better outcomes, so the Department of Labor just doesn't do that," said Evermore.

Rep. Steven Horsford (D-Nev.) proposed a bill that would give the department authority to withhold 15% of a state's administrative funding if they violate federal performance requirements and give that money to the state to fix those problems.

For now, the department's pilot and other unemployment work are ongoing as it works through a $2 billion investment from the 2021 American Rescue Plan Act. 

Some of that has been going to a series of grant programs focused on equity, access and fraud. 

The department also has "tiger teams" of experts that have helped 26 states so far on improvements, according to Evermore, who said she hopes they can be a more permanent solution for the department to push changes in states.

Finally, the department has a set of efforts with Rhode Island and Montana focused on plain language in the system by redesigning forms to make them more understandable. The hope is that these model forms for common notices across systems will be useful in other states, said Evermore.