Department of Labor Demands Immediate Action From Governors on Unemployment Fraud

The Department of Labor issued a demand to governors to tackle unemployment insurance fraud or face penalties, the agency said on June 17.

All 50 states and three U.S. territories must immediately deal with any misuse of funds in the unemployment program because lax oversight, outdated systems, identity verification problems, and other issues have “allowed unprecedented fraud to flourish,” the department said in a statement.

The move is another example of the Trump administration’s push to target fraudulent activity in state programs that receive federal funding.

Since last year, President Donald Trump has signed a number of measures to combat what the administration deems fraud, waste, and abuse.

“We are officially putting governors on notice,” Acting Labor Secretary Keith Sonderling said in a statement about the new push. “The American people will no longer tolerate the blatant waste, fraud, and abuse of their hard-earned tax dollars—no state should allow it either. If states allow it, they will suffer the consequences.”

The department would use “every available enforcement tool” to push the states into compliance in dealing with unemployment insurance fraud, including “withholding administrative funds from states for the first time in history,” it said.

It would also partner with the Department of Labor’s inspector general’s office to enforce it. Labor Department Inspector General Anthony D’Esposito added that he and the secretary would move to “recover stolen money” and would “ensure unemployment benefits only go to eligible Americans.”

“States that fail to safeguard these programs jeopardize benefits intended for hardworking Americans who demonstrate a legitimate need for temporary assistance,” the department said, adding that it would be sending out guidance and more specific directives in the coming weeks.

Sonderling is currently serving on the Task Force to Eliminate Fraud headed by Vice President JD Vance, a move announced by the White House earlier this year.

Responding to the creation of the task force, Trump said Vance would primarily focus on states run by Democratic lawmakers such as California, Illinois, Minnesota, Maine, and New York.

“His focus will be ‘EVERYWHERE,’ ​but primarily in those Blue States,” ​Trump said in an April 3 post on Truth ⁠Social, asserting that the recovery of funds in some states would be enough to balance the federal budget.

Some states, including California and Minnesota, have denied accusations of fraud levied by the Trump administration.

This year, California Gov. Gavin Newsom made multiple statements on X saying that his state has addressed fraud, namely in the health care sector.

Minnesota Gov. Tim Walz, who announced earlier this year he would not be seeking reelection, asserted in a U.S. House of Representatives hearing that cases of fraud in his state were initially uncovered by state agencies, including the Minnesota Department of Education, which then turned them over to the FBI and other federal agencies.