Department of Labor Demands Immediate Action From Governors on Unemployment Fraud

The agency warned that it could withhold funds to states that do not comply.

The U.S. Department of Labor headquarters in Washington, D.C., on Sept. 16, 2025. Daniel Becerril/Reuters

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U.S. territories must immediately deal with any misuse of funds in the unemployment program because lax oversight, outdated systems, identity verification problems, and other issues have “allowed unprecedented fraud to flourish,” the department said in a statement.