New York's $751M in improper UI payments draws a federal strike team
Summary
New York improperly paid $751.0 million in unemployment benefits in 2025 -- a 22.8% error rate and, at 15.4%, the highest fraud rate of any state, more than triple the national average. That total exceeds what California paid out improperly despite California distributing nearly twice as many benefit dollars -- and it comes even as New York's own numbers are improving: the U.S. Department of Labor's inspector general deployed a joint federal Strike Team to the state on July 13, 2026, a month after warning all 53 state and territory governors it would start withholding administrative funding from noncompliant states.
A bigger fraud bill than California, on half the caseload
New York's $751.0 million improperly paid is the largest dollar total of any state in 's dataset -- ahead of California's $576.2 million, even though California paid out nearly twice as much in total benefits ($6.52 billion versus New York's $3.29 billion). Massachusetts ($329.3 million), Illinois ($320.1 million), and New Jersey ($250.1 million) round out the top five. New York's fraud rate alone, 15.4%, is more than double Rhode Island's 6.36% -- the next-highest state -- and more than three times DOL's 4.90% national aggregate fraud rate⧉ for the same reporting cycle.
View data as table
| New York | 750,990,655 |
|---|---|
| California | 576,218,215 |
| Massachusetts | 329,279,330 |
| Illinois | 320,054,473 |
| New Jersey | 250,136,829 |
Where the money actually went missing
The mechanism, by 's own breakdown, is mostly mundane rather than exotic: 53.8% of New York's $735.1 million in overpayment dollars -- $395.4 million -- traces to "Work Search," meaning claimants kept collecting checks after they stopped verifying, or never adequately proved, the job-search activity the program requires as a condition of payment. Disqualifying separations from work (people fired for cause or who quit without good reason, but were paid anyway) added $168.1 million; unreported earnings while on claim added another $89.5 million. Responsibility tracks the same pattern: 72.8% of the overpayment dollars ($535.5 million) are attributed to the claimant alone, versus 27.2% involving any employer or state-agency error.
View data as table
| Work Search (claimant didn't verify job-search activity) | 395,440,025 |
|---|---|
| Separation Issues (left/lost job under disqualifying circumstances) | 168,091,376 |
| Benefit Year Earnings (worked while collecting, unreported) | 89,530,737 |
| Other (pension offsets, wage issues, availability) | 82,077,978 |
The rate is falling -- Washington escalated anyway
New York's numbers are, on 's own data, improving: the state's combined improper-payment rate fell from 30.79% in calendar year 2024 to 22.8% in 2025, and its fraud rate fell from 23.6% to 15.4% over the same period -- a decline of roughly $180 million in dollar terms. That improvement did not stop the escalation. The federal Payment Integrity Information Act of 2019⧉ sets a 10% improper-payment-rate ceiling for the UI program; New York's 22.8% is still more than double that statutory line. On June 17, 2026⧉, a month before the Strike Team deployed, Acting Labor Secretary Keith Sonderling sent letters to the governors of all 53 states and territories naming New York, California, and Illinois as the worst offenders and announcing would, for the first time in the program's history, use withholding of state administrative funds as an enforcement tool. "Additional guidance and directives will be issued to the states in the coming weeks," the letter said -- guidance New York has not yet publicly received as of this writing.
The takeaway
- New York leads every state in improper-payment dollars and in fraud rate. $751.0 million improperly paid in CY2025 -- more than California despite half the total benefit volume -- and a 15.4% fraud rate more than triple the 4.90% national average.
- The harm isn't exotic; it's unverified job searches. 53.8% of New York's overpayment dollars trace to claimants who didn't establish they were actually looking for work while collecting benefits -- a mechanism the state's own claims system failed to catch before the money went out.
- Improvement didn't stop escalation. New York's error and fraud rates both fell sharply from 2024 to 2025, yet still deployed an Strike Team on July 13 -- weeks after threatening, for the first time ever, to withhold states' administrative funding over UI fraud.
's calendar-year-2025 dataset is preliminary: the workbook cited here was prepared May 12, 2026 at a 95.35% case-completion rate and is subject to revision as remaining sampled cases close out. New York's fraud-dollar figure ($507.3 million) is this piece's own computation -- 15.4% of $3.29 billion paid -- which independently matches -'s own rounded $507 million claim in its July 13 press release.
What happens next, and who owns it: the - Strike Team, deployed July 13, 2026, is tasked with targeted case reviews, data-analytics work, and civil and criminal investigations inside New York's UI agency, run jointly by 's Employment and Training Administration and the Office of Inspector General. has not published a timeline for the administrative-funding withholding it threatened in its June 17 letter; the letter itself promised only that "additional guidance and directives will be issued to the states in the coming weeks."
Sources(6) ▾
- U.S. Department of Labor, Office of Inspector General, U.S. Department of Labor, Office of Inspector General Deploys Joint Strike Team to New York, Crushing Rampant Unemployment Insurance Fraud (2026-07-13) — - press release announcing the deployment of a joint federal Strike Team to New York, embedding special agents with Strike Team members inside the state's UI agency. States New York's CY2025 improper-payment and fraud totals and describes the Strike Team's mandate. Fetched directly from oig.dol.gov and read in full. oig.dol.gov · original document
- U.S. Department of Labor, Employment and Training Administration, US Department of Labor demands immediate action from governors on unemployment insurance fraud (2026-06-17) — press release announcing formal letters sent to the governors of all 53 U.S. states and territories, naming California, New York, and Illinois as the most glaring examples of UI fraud and improper payments, and announcing 's intent to withhold administrative funds from noncompliant states for the first time in the program's history. Fetched via a Wayback Machine capture (live dol.gov blocks automated fetches) and read in full. dol.gov · original document
- U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, Unemployment Insurance Improper Payment Rates -- Calendar Year Ending December 31, 2025 (state-by-state workbook) (2026-05-12) — Official Benefit Accuracy Measurement (BAM) survey workbook covering January-December 2025 UI benefit payments by state, prepared by ETA's Office of Unemployment Insurance on 12 May 2026 at a 95.35% case-completion rate (subject to revision on completion). Sheets used: 'Improper Payment Rates' (paid/overpaid/underpaid amounts and rates by state, including the fraud rate), 'Overpayments by Cause', and 'Overpayments by Responsibility'. Fetched directly (live dol.gov blocks automated fetches of the download page but serves the file itself) and parsed in full with openpyxl. dol.gov · original document
- U.S. Department of Labor, Employment and Training Administration, Office of Unemployment Insurance, Unemployment Insurance Improper Payment Rates -- Calendar Year Ending December 31, 2024 (state-by-state workbook) (2025-09-18) — Same BAM-survey workbook series as doc-dol-ipia-2025, covering calendar year 2024, prepared 18 September 2025 at a 97.55% case-completion rate. Used here only for New York's year-over-year comparison. Fetched directly and parsed with openpyxl. dol.gov · original document
- U.S. Department of Labor, Employment and Training Administration, Unemployment Insurance Payment Accuracy by State -- New York (period July 1, 2021 - June 30, 2024) (2026-01-13) — 's state-specific UI payment-accuracy page for New York, stating the Payment Integrity Information Act of 2019's 10%-improper-payment-rate performance requirement and New York's estimated 3-year improper payment rate (25.09%, period July 2021-June 2024, a different window than the CY2025/CY2024 calendar-year figures used elsewhere in this piece). Live dol.gov blocks automated fetches; retrieved via a Wayback Machine capture dated 2026-01-13 and read in full. dol.gov · original document
- U.S. Department of Labor, Employment and Training Administration, UI Benefit Payment Improper Payment Rates and Changes (2026-05-11) — 's national-aggregate UI payment-accuracy summary, comparing the two most recent reporting cycles and stating the Payment Integrity Information Act of 2019's 10% improper-payment-rate requirement. Used here to give New York's numbers a national and statutory baseline. Fetched directly and converted with pdftotext -layout; read in full. oui.doleta.gov · original document
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The U.S. Department of Labor's Office of Inspector General -- the department's own independent watchdog -- deployed a joint federal Strike Team to New York⧉ on July 13, 2026, embedding special agents directly alongside New York's state unemployment agency to pursue fraud investigations and civil and criminal referrals. The trigger was the state's own year-end numbers: 's Benefit Accuracy Measurement survey⧉ found New York improperly paid $750,990,655 in unemployment benefits in calendar year 2025 -- a 22.8% error rate on $3.29 billion distributed -- and posted a 15.4% fraud rate, the highest of any state tracks.