Recent information exposed by whistleblowers at the State Employment Security Department (ESD) have re-enforced the need to improve transparency in the process and the criteria used to approve unemployment claims. As reported by the Puget Sound Business Journal, the department has repeatedly changed the claim qualification criteria with little explanation to the public as to the reason why.
In the most recent policy change, ESD has relaxed the adjudication process to allow claims to be processed faster. This policy change, however, also exposes the Unemployment Trust Insurance Fund (UTIF) to the potential for more fraudulent claims. Without adjudication review, the department will not be required to verify the claim legitimacy with the employer. As an example, an unemployment claim made when an employee quits their job citing an ‘Employer moved the worksite’ will no longer be verified with the employer.
This creates the potential for false claims that normally would have been verified by ESD and would result in the disqualification of an applicant (RCW 50.20.070).
It appears the relaxation of the adjudication criteria was to reduce the backlog of claims in response to the changes made to ESD systems on April 4, 2020. As the Puget Sound Business Journal reported, that change exposed the UTIF to additional fraud while making legitimate claims more difficult to process. While the backlog needs to be cleared, removing the adjudication process is not the right approach.
The changes in April, and the more recent relaxation to the adjudication rules, illustrate the need for ESD to have additional oversight that would provide rule stability to prevent fraud and reduce legitimate claim delays.
Regular audits of the UTIF and improvements in transparency are needed to restore public trust in the system. At minimum, the Joint Legislative Audit & Review Committee (JLARC) should report back to the legislature with a full analysis of the deficiencies in ESD systems with recommendations for additional process transparency and oversight. A legislative committee hearing is needed now to review the current situation with both the trust fund balance and backlogged unemployment payments.
ESD should be more transparent with its processes and not arbitrarily change unemployment qualification criteria.
Regular bicameral legislative oversight of ESD is required.