Monday morning musings for workplace watchers
DOL Says Fight Fraud or Else | The Blind Eye Defense
Parker Purifoy: The Labor Department is threatening to withhold funds from unemployment insurance programs unless states crack down on fraud.
The DOL sent letters to the governors of 53 states and territories last week to demand “immediate action” to prevent fraud and waste in the unemployment insurance program. The letters, sent by acting Labor Secretary Keith Sonderling and the DOL’s Office of the Inspector General, said the department would use “every available enforcement tool,” including withholding administrative funds from states.
“If states allow it, they will suffer the consequences,” Sonderling said in a statement. “This department is no longer afraid to use every lever available to ensure taxpayer money is protected.”
The DOL funds unemployment insurance programs along with states to give benefits to approximately 1.8 million people.
The DOL called out three Democratic states in its statement—California, New York, and Illinois—as “glaring examples.”
The letters are part of a partnership between DOL leadership and the department’s Inspector General Anthony D’Esposito. Both D’Esposito and Sonderling also serve on Vice President JD Vance’s anti-fraud task force.
D’Esposito, who has been using the IG’s powers to criminally prosecute citizens for fraud since taking office last year, has been accused by government watchdogs of politicizing a traditionally nonpartisan role and using it to raise his own profile within the Trump administration.
The IG’s office announced earlier this year that nearly $1 billion in unemployment funds are tied up in big banks and state coffers. The DOL has also launched “strike teams” to investigate UI systems in several states—including Minnesota and California.
Michele Evermore, senior fellow at the National Employment Law Project and former policy official at DOL under the Biden administration, said that cutting off states’ federal funds would harm tens of thousands of workers who legitimately need unemployment benefits.
“Unemployment is not just a lifeline, it is a connection to reemployment resources that will get people back to a job that is a good replacement for their last job,” she said. “This administration is trying to absolve itself of its responsibility to work with states to get them the tools they need to fight highly coordinated international criminals perpetrating increasingly sophisticated attacks.”
Robert Iafolla: A federal appeals court will ponder whether a life science and research conglomerate can force an ex-employee’s class action into individual arbitration on the basis of unopened emails.
The case, up for oral argument Monday, gives the appeals court the opportunity to test the outer boundaries of what it takes to reach a valid agreement to resolve workplace disputes in arbitration rather than a courtroom.
Although federal agencies don’t regularly track the prevalence of mandatory arbitration in employment, academic studies estimate it has expanded from covering 10% to more than 50% of nonunion workers in the private sector over the past 30 years. Proponents claim mandatory arbitration results in faster and cheaper dispute resolution, while opponents argue that it unfairly shields companies from employment law liability.
Thermo Fisher rolled out its arbitration agreement with class action waiver via email in 2019. The email contained notice of the agreement—stating that workers had 45 days to opt out—as well as links to its terms and a frequently asked questions document.
Rickes, who was let go in a mass layoff in 2023, filed a lawsuit that included class claims for alleged age bias and a violation of wage law, as well as a representative claim under the state’s Private Attorney General Act.
Judge Gonzalo Curiel, an Obama appointee, rejected the company’s bid to move the case into arbitration. Rickes said he never saw the emails and the company couldn’t provide an acknowledgment, so his consent to the agreement can’t be implied, the judge said.
Ninth Circuit Judges Kim Wardlaw, a Clinton appointee, John Owens, an Obama appointee, and Ana de Alba, a Biden appointee, will consider Thermo Fisher’s appeal.
The company is represented by Jackson Lewis PC. Rickes is represented by Mouton Law.
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