Overview
The Executive Office of Labor and Workforce Development (EOLWD) is authorized by Section 1 of Chapter 23 of the Massachusetts General Laws and operates under the direction of the Secretary of Labor and Workforce Development, who is appointed by the Governor. EOLWD comprises six departments and three organizations that offer a wide range of programs and resources for employers and job seekers: the Department of Unemployment Assistance (DUA), the Department of Labor Standards, the Department of Industrial Accidents, the Department of Economic Research, the Department of Family and Medical Leave, the Department of Labor Relations, the Division of Apprentice Standards, the MassHire Department of Career Services, and the Council on the Underground Economy. EOLWD also oversees Commonwealth Corporation, which offers programs and services to help citizens of the Commonwealth secure employment.
The federal Social Security Act of 1935 created the unemployment insurance (UI) program as a joint federal-state partnership, with each state responsible for designing its own program within broad federal guidelines. The US Department of Labor (DOL) oversees the federal program, and DUA administers the Commonwealth’s UI program. The UI program provides temporary income assistance to eligible workers in Massachusetts and determines and collects employer contributions to the UI program. The Commonwealth provides up to 30 weeks of UI benefits to individuals who meet the initial and ongoing eligibility requirements during a period when they are unemployed.
DUA’s federally funded budget for its UI program was $62.9 million in fiscal year 2020, $62.0 million in fiscal year 2021, and $62.0 million in fiscal year 2022. As of January 2022, Massachusetts had received over $26.5 billion in pandemic-related unemployment funds to administer from the Families First Coronavirus Response Act and the Coronavirus, Aid, Relief, and Economic Security (CARES) Act.
DUA told us that it had approximately 200 employees before the start of the COVID-19 pandemic, but this number fluctuated throughout the audit period, with the ebb and flow of benefit claims—with the highest staffing level exceeding 2,000 individuals. These individuals consisted of DUA employees, employees from other Massachusetts agencies who were loaned to DUA, and third-party call center employees.
Pandemic Unemployment Assistance Program
The CARES Act was enacted on March 27, 2020, and the American Rescue Plan Act was enacted on March 11, 2021. These laws created numerous federal unemployment benefit programs to combat the historically high number of individuals who were unemployed because of the COVID-19 pandemic. Following the passage of the CARES Act and the American Rescue Plan Act, DUA implemented three new federally funded programs: the Federal Pandemic Unemployment Compensation program, the Pandemic Emergency Unemployment Compensation program, and the Pandemic Unemployment Assistance (PUA) program.
The PUA program was available to individuals whose incomes were affected by the COVID-19 pandemic and who were self-employed, seeking part-time employment, or otherwise would not qualify for UI benefits or qualify for extended benefits under state or federal law. Through multiple extensions, and the ability for individuals to submit benefit claims retroactive to February 2, 2020, the PUA program provided up to 79 weeks of benefits before being officially terminated September 4, 2021.
There were limitations within the system DUA used to administer UI benefits. Because of these limitations, DUA worked with a third-party contractor to implement a new system specifically designed to administer the PUA program. DUA used this PUA claim system to process PUA claims and document which individuals requested, received, and were denied PUA benefits.
Unemployment Insurance Trust Fund
According to Section 904(a) of the Social Security Act of 1935, the Secretary of the Treasury receives UI funds from states and holds these funds in the federal Unemployment Trust Fund. The funds, collected and deposited by states, come from employer contributions under the Federal Unemployment Tax Act and the State Unemployment Tax Act. Massachusetts collects these funds in the Unemployment Insurance Trust Fund (UITF). The UITF funds UI benefits paid by the state, while DUA’s administrative costs are paid directly by the federal government from Federal Unemployment Tax Act contributions.
Public and private for-profit employers in Massachusetts are subject to a contributory funding method where DUA calculates each employer’s contribution rate using factors such as whether it is a new or established employer,1 the employer’s account balances and activity over the previous 12 months, employee wages, and more. These employers make their contributions quarterly.
Government and nonprofit employers in Massachusetts may choose to reimburse DUA for the full amount of UI benefits paid to their former employees instead of making quarterly contributions using the above contributory method. Under the reimbursement method, DUA sends an employer a bill for any month in which there were charges to their account from unemployment benefit claims from former employees.
| Date published: | December 12, 2024 |
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