November 14, 2022
Lost Wages Assistance: Benefits and Program Integrity
In response to unemployment caused by the COVID-19
Florida (four weeks), and Idaho (five weeks). Eligible
pandemic, Congress created several temporary
claimants might have received as much as $1,800 in LWA
Unemployment Insurance (UI) benefits through legislation.
if their jurisdiction participated in the program for the full
One of these temporary COVID-19 UI benefits—Federal
six weeks (claimants from Kentucky, Montana, and Guam
Pandemic Unemployment Compensation (FPUC)—
may have received as much as $2,400). According to
supplemented weekly UI benefits by $600 a week from
FEMA data, LWA expenditures amounted to $36.5 billion.
March 29, 2020, through July 25, 2020. FPUC was
Eligibility
subsequently reauthorized at $300 a week from December
Claimants in participating jurisdictions did not need to
27, 2020, through September 4, 2021. During the five-
apply separately for LWA to receive the supplemental
month lapse in FPUC authorization in the summer of 2020,
benefits. Instead, individuals were potentially eligible if
President Donald Trump used executive action to create the
they received at least $100 per week (before taxes and
new Lost Wages Assistance (LWA) benefit to temporarily
deductions) from one of the permanent-law UI programs
supplement UI benefits, relying upon existing authority in
(e.g., Unemployment Compensation [UC], Extended
the Robert T. Stafford Disaster Relief and Emergency
Benefits, Self-Employment Assistance, Short-Time
Assistance Act (42 U.S.C. §§5121 et seq.).
Compensation, and Trade Readjustment Allowances) or
Lost Wages Assistance
from one of the temporary COVID-19 UI programs.
Individuals were required to self-certify that they were
On August, 8, 2020, President Trump issued a Presidential
unemployed or partially unemployed due to disruptions
Memorandum authorizing other needs assistance (ONA) for
caused by the pandemic in order to be eligible for LWA.
major disasters declared by the President pursuant to
Section 401 of the Stafford Act (42 U.S.C. §5170) for the
Disaster Unemployment Assistance (DUA) benefits are
COVID-19 pandemic. In part, the creation of LWA was a
separately authorized under Section 410 of the Stafford Act
response to the expiration (on July 25, 2020) of the
(42 U.S.C. §5177) and were not included in the list of
enhanced FPUC $600 weekly supplement. The now-
eligible benefits to be supplemented by LWA. During this
expired LWA benefit was payable for a period of
period, any DUA payment would have been based on
unemployment that began retroactively on or after July 26,
eligibility due to a disaster other than the COVID-19
2020, and ended on or before September 6, 2020.
declaration used to create the LWA program.
As described in Federal Emergency Management Agency
Administration
(FEMA) guidelines to the states, the LWA program was
authorized to provide up to $44 billion in grants to states to
LWA was administered by each participating jurisdiction
supplement the weekly benefits of certain eligible UI
through a grant agreement with FEMA. Each jurisdiction
claimants in participating states, subject to a cost-sharing
distributed the funds through their UI system, as a
requirement of 25% for ONA under Section 408 of the
supplemental payment. The Presidential Memorandum
Stafford Act (42 U.S.C. §5174(g)(2)). States were able to
directed the Department of Labor (DOL) to provide
satisfy this cost-sharing requirement by either paying $100
technical assistance to FEMA and the participating
a week to eligible claimants or by demonstrating that the
jurisdictions on the implementation of LWA through the
total UI benefits paid with state unemployment funds in the
existing UI system.
aggregate met the amount of the 25% match.
As detailed in the Presidential Memorandum, the LWA
Benefit Payments
administrative structure relied heavily on the framework for
Fifty-four jurisdictions—49 states (all except South
administering DUA benefits. As required by the
Dakota), the District of Columbia, Guam, the
memorandum, DOL’s Employment and Training
Commonwealth of the Northern Mariana Islands (CNMI),
Administration (ETA) issued guidance to states on the
Puerto Rico, and the U.S. Virgin Islands—applied for and
implementation of LWA on August 12, 2020. ETA and
received grant awards to make LWA payments. LWA
FEMA provided additional technical assistance separately
benefits were paid to eligible claimants with underlying
to the CNMI and Guam regarding the state match
weekly UI benefit amounts of at least $100 as a $300-per-
requirement because those jurisdictions do not operate
week supplement (federally financed), or, if a state chose to
permanent-law UI programs.
contribute an additional $100 a week in state funds, the
Improper Payments
total supplement would have been $400 a week. Kentucky,
Montana, and Guam elected to contribute the additional
An improper payment is any payment that should not have
$100, for a total $400 weekly supplement in those
been made or that was made in an incorrect amount under
jurisdictions. All participating jurisdictions paid up to six
statutory, administrative, or other legally applicable
weeks of LWA benefits except the CNMI (three weeks),
requirements. This includes any payment to an ineligible
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Lost Wages Assistance: Benefits and Program Integrity
recipient or made as a result of fraud. Improper payments
Continued Assistance for Unemployed Workers Act of
include both overpayments and underpayments.
2020 (Division N, Title II, Subtitle A, of the Consolidated
Appropriations Act, 2021; P.L. 116-260). Section 262
UI and DUA Improper Payments
allowed participating jurisdictions to waive repayment of
The UI program’s improper payment rate has long been of
LWA overpayments if the individual was not at fault for the
concern (see the discussion in CRS In Focus IF12243,
payment, and repayment would be contrary to equity and
Unemployment Insurance Program Integrity: Recent
good conscience. Additionally, Section 262 waived the
Developments). This rate was exceptionally high during the
requirement for states to repay FEMA for the LWA
COVID-19 pandemic. For example, for the third quarter of
overpayments that were waived under the section.
FY2022, ETA reported a UI improper payment rate for
However, states still must repay all remaining
FY2021 of 17.9%, with a total of $73.8 billion in improper
overpayments to FEMA.
payments. Additionally, DOL’s Office of the Inspector
General (DOL-OIG) flagged DUA administrative issues in
Resources
a report released on September 20, 2020. DOL-OIG stated
CRS Report R46687, Unemployment Insurance (UI)
that ETA had not established adequate controls to ensure
Benefits: Permanent-Law Programs and the COVID-19
states paid DUA benefits only to eligible individuals and
Pandemic Response.
paid them as promptly as administratively feasible after the
CRS Report RS22022, Disaster Unemployment Assistance
disasters of Hurricanes Harvey, Irma, and Maria.
(DUA).
Estimates of LWA Improper Payments
CRS Report R47015, FEMA’s Individuals and Households
LWA faced similar challenges to those of the UI and DUA
Program (IHP)—Implementation and Considerations for
programs. In its September 16, 2022, report, the
Congress.
Department of Homeland Security’s Office of the Inspector
CRS In Focus IF12243, Unemployment Insurance Program
General (DHS-OIG), audited 21 state UI programs that
Integrity: Recent Developments.
distributed approximately $30 billion in LWA (more than
The White House, “Memorandum on Authorizing the Other
80% of the total $36.5 billion paid in LWA). This review
Needs Assistance Program for Major Disaster Declarations
detected $3.3 billion in potentially fraudulent payments.
Related to Coronavirus Disease 2019,” August 8, 2020,
Additionally, it identified $21.6 million in overpayments
https://trumpwhitehouse.archives.gov/
and $403 million in payments made without obtaining
claimants’ required self
presidential-actions/memorandum-authorizing-needs-
-certifications of eligibility for
assistance-program-major-disaster-declarations-related-
LWA. One state was unable to capture self-certification of
coronavirus-disease-2019/.
regular UI beneficiaries and was responsible for $341
million (over 85%) of the missing self-certification
FEMA, Lost Wages Supplemental Payment Assistance
overpayments. (DHS-OIG calculated the LWA
Guidelines, April 22, 2022, https://www.fema.gov/disaster/
overpayments using different assumptions and methods
coronavirus/
than DOL uses; thus, the overpayment calculations are not
governments/supplemental-payments-lost-wages-
directly comparable.)
guidelines.
The report asserted that, in relying on the states’ UI
DOL, Employment and Training Administration,
programs to determine claimants’ eligibility and distribute
Unemployment Insurance Program Letter No. 27-20,
LWA, FEMA lost an opportunity to safeguard $36.5 billion
Presidential Memorandum on Authorizing the Other Needs
in disbursed LWA payments, directly affecting its ability to
Assistance Program for Major Disaster Declarations
respond to future emergencies and disasters. In response,
Related to Coronavirus Disease 2019 (COVID-19)-
FEMA officials stated their goal was to expedite LWA
Unemployment Insurance (UI)-Related Technical
benefits by fitting LWA program requirements into the
Assistance for States Administering Lost Wages Assistance
jurisdictions’ existing UI processes.
(LWA), August 12, 2020, https://www.dol.gov/agencies/eta/
advisories/unemployment-insurance-program-letter-no-27-
Improper Payment Recovery
20.
Under UI laws, states may waive a UI overpayment if that
overpayment was not the fault of the claimant and requiring
DOL, Office of Inspector General, ETA Should Do More to
repayment would be against “equity and good conscience”
Assist Vulnerable States to Prepare for Disaster
or would otherwise defeat the purpose of the state’s UI law.
Unemployment Assistance Implementation, 04-20-002-03-
Under the LWA grant agreements, participating
315, September 20, 2020, https://www.oig.dol.gov/public/
jurisdictions were responsible for recovering LWA
reports/oa/2020/04-20-002-03-315.pdf.
payments obtained fraudulently, expended for unauthorized
items or services, expended for items for which assistance
DHS, Office of the Inspector General, FEMA Did Not
is received from other means, and awards made in error (44
Implement Controls to Prevent More than $3.7 Billion in
C.F.R. §206.120(f)(5)). Any provision of a jurisdiction’s
Improper Payments from the Lost Wages Assistance
law authorizing waiver of recovery of improper payments,
Program, OIG-22-69, September 16, 2022,
including those discharged in bankruptcy, did not relieve
https://www.oversight.gov/sites/default/files/oig-reports/
the jurisdiction of the responsibility to return the total sum
DHS/OIG-22-69-Sep22.pdf.
of improperly expended funds to FEMA.
Julie M. Whittaker, Specialist in Income Security
This repayment requirement was modified in Section 262,
“Lost Wages Assistance Recoupment Fairness,” of
Katelin P. Isaacs, Specialist in Income Security
the
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Lost Wages Assistance: Benefits and Program Integrity

IF12249


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https://crsreports.congress.gov | IF12249 · VERSION 1 · NEW

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