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A new report from the Washington State Auditor’s Office found the state’s Employment Security Department did not have adequate internal controls and did not follow state requirements related to the Paid Family and Medical Leave program.
In a Thursday email to The Center Square, a spokesperson indicated SAO was not putting out a news release but linked a copy of the report stating, “It has an unusual finding related to the Paid Family and Medical Leave program.”
Paid Family and Medical Leave is a statewide insurance program that the Legislature authorized in 2017.
Employees and employers contribute to the fund, which provides eligible employees with up to 12 weeks of paid family or medical leave or a combination of the two.
As reported in the audit findings, “Employees can file a claim for leave directly with the Employment Security Department, which is responsible for validating qualifying events, confirming employees have worked 820 hours and calculating benefit amounts.”
ESD also administers the Unemployment Insurance program, which provides benefits to eligible unemployed workers.
Double-dipping claims appear to be the issue.
SAO reported that in fiscal year 2023, ESD processed about 2.2 million PFML claims totaling $1.3 billion. During this same period, the department paid about $1.2 billion in UI claims. State law prohibits clients from receiving PFML benefits if they receive UI payments for the same benefit week, but according to SAO, many people have been double-dipping, and ESD didn’t catch it, as required by law.
“So ESD is paying two different benefit claims for the same week, which is not allowed by state law,” said Jim Brownell, assistant director of State Audit and Special Investigations at SAO, in a Thursday interview with The Center Square.
“Internally, the department in January of 2023 had implemented a process to start doing this crossmatch, and we verified that,” Brownell continued. “The problem goes into the next part of our finding, which is they were doing this crossmatch, but they weren’t doing anything with the results, of which they are required to do by state law.”
ESD has said it needs more money.
“They’ve asked for additional funding from the Legislature to assist them with these endeavors. But it’s one thing to identify these claimants, and it’s another to do something about it, which we haven’t seen progress in the last two fiscal years,” Brownell added, pointing to previous audit findings against ESD and other state agencies.
ESD does have records of claimants who either fraudulently or mistakenly applied for benefits from both programs, he pointed out.
“We saw evidence of their crossmatch, so we knew that they were finding these individuals, and I believe it was from their Social Security numbers to match,” Brownell continued, conceding the agencies involved are siloed and operate with lots of staff members.
“There was no follow through on the department's behalf to take any action to assess overpayments and to investigate whether these crossmatches were legitimate,” he said.
Using PFML and UI payment data, SAO crossmatched claims that ESD paid during the same benefit period to determine whether clients received payments for both programs.
“Our job is to shed light on these types of issues and make recommendations and hope that our government agencies do their part and follow the law,” Brownell said.
According to the audit, SAO found 2,270 instances, totaling $1.9 million, in which it appeared that ESD paid claimants both PFML and UI benefits during the same period.
According to the audit, ESD identified potential overpayments as a result of crossmatch processes, but it did not assess any overpayments.
“The Department similarly has not begun assessing penalties or interest relating to employer premiums,” the audit said. “The Department expected to have an official overpayment plan in place by the end of June 2023, but has not implemented it at the time of report.”
Elizabeth New, the director of the Center for Worker Rights at the Washington Policy Center think tank, is not surprised by the findings.
“It’s interesting that Gov. Inslee and others were celebrating this program’s five-year mark without acknowledging how many other workers are losing out on income every paycheck and may never benefit from this account,” she said.
ESD’s response included in the audit report suggested the agency has not been given enough time or resources to correct the errors.
“ESD’s corrective action was not estimated to be completed until December 2024. It is typical for a corrective action to take time to implement as it involves allocation of personnel, IT systems and funds,” ESD said. “At this time this work is likely to be completed by December 2025. The department notes that the timeline was delayed because of difficulty filling and onboarding key vacancies after funding was provided and the need to complete IT enabling work to lay the foundation for the successful completion of projects.”
ESD went on to say it’s “Requesting resources in FY 26-27 to establish a team within our Customer Compliance Division focused on customers who apply for multiple programs to provide direct assistance up-front and further prevent risk of overpayment.”
As previously reported by The Center Square, Washington’s Paid Family Medical Leave program has been far more popular than lawmakers anticipated, with payouts expected to exceed contributions before the end of 2024.
In 2023, more than 210,000 Washington workers took advantage of the benefit, with the state paying out close to $1.5 billion, up 24% from the previous year.
Earlier this year, lawmakers on the Senate Labor & Commerce Committee discussed raising employee/employer deductions to shore up the fund.
"Because this finding reports noncompliance with state law, the Office of Financial Management is required by RCW 43.09.312 (1) to submit the agency’s response and plan for remediation to the Governor, the Joint Legislative Audit and Review Committee and the relevant fiscal and policy committees of the Senate and House of Representatives,” the SAO report said.
The Center Square reached out to ESD for comment on the audit report.
An emailed response referenced page 11 of the SAO report, which states, “Although the Department has begun to manually identify claimants receiving both PFML and UI benefits, it is not following state law by assessing overpayments and recovering improper payment.”
The email went on to note, “In July 2024, the Employment Security Department received funding to hire the staff required to complete work to automate our system for assessing and recovering overpayments. The development work on the system is scheduled to begin in January 2025 and will be completed in December 2025.”