As unemployment exploded, New York loosened its rules

ALBANY — In late March, the third floor of Building 12 at the Harriman state office campus began to resemble a boiler room.

New York’s economy was crumbling from the shutdowns ordered by Gov. Andrew M. Cuomo to stem the spread of coronavirus. Millions of people lost their jobs and many were forced to file for unemployment benefits. The normally busy office where hundreds of state Labor Department call-center workers process those claims was in triage mode.

“The surge of applications crashed on New York like a wave, pushing our systems to the brink,” state labor Commissioner Roberta Reardon testified during an Aug. 13 legislative hearing on COVID-19’s impact on the workforce. “In a typical week before the coronavirus crisis, our call center averaged about 50,000 calls, but during the peak week in late March, our call center received over 8.2 million phone calls — a 16,000 percent increase.”

Behind the efforts to handle the historic number of jobless applications — heaped on a department using antiquated computer systems and low-paid workers — two narratives emerged from the state’s distribution of more than $41 billion in unemployment benefits and federal pandemic assistance.

The first is gleaned from a review of internal labor department correspondence and interviews over the past month with employees on the front lines of the call center. Those workers — all speaking on condition of anonymity for fear of losing their own jobs — contend an untold number of claims may have been overpaid or approved for people not entitled to receive them, including an inmate just released from prison, people who had not worked in at least 18 months and others who filed unemployment applications in multiple states.

They contend that key security protocols, which verify someone’s identity and employment history, were removed to expedite the applications as Cuomo’s administration faced criticism for the backlog.

“Submit, submit, submit,” one of the workers said, describing managerial directives that the person said were guided by members of Cuomo’s Executive Chamber staff, who had set up camp on the top floor of the five-story Harriman office building during the height of the crisis.

“People (in the office) were told to submit claims without calling claimants and to fudge things that were always important to us, like (providing) their mother’s maiden name, which is our security question,” the worker said. “We had high school students who had never worked a day in their life receiving $182 a week in benefits.”

In one case, another clerk said, an 80-year-old woman, who sounded like a teenager on the phone, filed a claim stating she had worked as a hairdresser for two days in early March. Although the claim was flagged to obtain three forms of identification from the applicant, the department’s retooled software program, which is used to process federal pandemic unemployment benefits, released 25 weeks of payments to the woman — more than $4,500 in state benefits ($182 per week) and $10,200 ($600 per week) in federal assistance.

The employees said priority also was given to the people whose state representatives, either senators or Assembly members, had provided their information directly to the Department of Labor. In some instances, the workers interviewed for this story said, they were ordered to drop what they were doing and contact those elected representatives’ constituents, sometimes only to learn the person had not even filed a claim.

“Does the federal government care that people in New York state Department of Labor are being so lackadaisical with their money?” one of the clerks said. “This has affected a lot of people — there are people who work for (the unemployment office) who drink every night. People are screaming and crying, the amount of stress. They know they are doing things they shouldn’t be doing. … It goes against their morals and ethics.”


The emotional fallout of the pandemic was also felt by the unemployed people stuck in limbo for weeks, even months, waiting for financial assistance. Morale in the office sunk as mandatory overtime for the staff kicked in on Mother’s Day; many have been forced to work evenings and weekends to clear the backlog. In what could serve as a metaphor for the pressure being felt within the agency, a pipe burst on the fourth floor of the Harriman building in mid-June, spewing water across the floor that seeped through the walls and into the third-floor call center.

“You should hear the stories of how people were sobbing on the phone, saying they had nothing to eat … (and) they were going to be evicted despite the policies put into place to help them,” a clerk said. “Grown men begging you to please help them.”

Another recounted a man showing up in the lobby — which has been closed to the public — because his identity had apparently been stolen and used to file for both unemployment benefits and a federal Paycheck Protection Program loan.

“We got his information, looked him up, and there’s a direct deposit on the claim,” a clerk said. “He said the loan for (the) small business was for $55,000 and was also put up in his name.”

On July 17, Michelle Martone, a fraud investigator for the Labor Department, sent an email to several colleagues asking that victims not be transferred to her directly but instead to a general mailbox.

“Over the past few days, I have received calls from victims directly referred to me and my phone number,” she wrote. “We are well over 35,000 victims at this time and although we have pulled in other staff to assist, we are struggling to keep up. I am also working on a (governor’s) Chamber project that takes the majority of my day — so taking several calls each day is slowing that process down.”

The surge of applications in March prompted the agency to begin hiring more than 2,000 “vendors” and 400 new clerks, many of whom initially received only a few days of training before being thrust into a job that involves a detailed process to ensure applicants qualify for benefits and are not committing fraud.

Most of the new hires were allowed to work from their residences, including in other states, after signing “non-disclosure agreements” assuring they would keep applicants’ personal financial information confidential. But there were apparently little or no background checks performed on the new hires, who included convicted felons and at least one fugitive with a criminal history that includes charges of identity theft, the Times Union found.

The Cuomo administration and the Labor Department have defended their efforts to get state and federal unemployment benefits to the people who lost jobs due to the pandemic. They said their rapid response plan methodically wiped out a backlog of unemployment applications, hastened the distribution of state and federal money to people in need and prevented about $1 billion in fraudulent payments.

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