Audit: TN Labor Department fails to meet federal unemployment payment timeliness standards

Tennessee’s Department of Labor and Workforce Development has failed to comply with federal standards for prompt payout of unemployment insurance claims, and payments continue to be delayed significantly even after the COVID-19 pandemic, an audit by the Tennessee Comptroller has found.

Tennesseans who lose their job through no fault of their own may be eligible for up to $275 per week in unemployment benefits for up to 26 weeks in a year. Federal law requires states to pay unemployment benefits promptly to eligible residents.

The state labor department's unemployment division did not meet federal standards for prompt payment from 2021 through 2023, according to an audit of the agency's functions from 2018 to 2023 released on Monday.

Only about 50% of first payments were made within 14 days this year, and about 65% of first payments were made within 35 days of an application.

“Because the division is not meeting first payment standards, claimants are waiting longer to receive unemployment benefits to which they are entitled,” the audit states.

Rusty Felts, assistant commissioner for employment security at the agency, told lawmakers during a legislative hearing on Tuesday the department concurs with the findings and recognizes the "importance of that federal metric."

“Tennessee is addressing that in all the ways that we know how to get back to that federal standard," he said.

Felts told lawmakers the department has already raised the percentage of first-pay timeliness from a low of 50% when the audit was done to 65% to 70% consistently. Agency officials have also met with their U.S. Department of Labor counterparts in Atlanta in an effort to continue to get back on track.

Customer service woes

The agency also continues to struggle with customer service capacity. During the pandemic, the department hired contract workers to provide better customer service response and online live chat for claimants during high-volume claim periods during the pandemic. However, contract workers were not permanent staff capable of fully resolving claims.

According to the audit, the division received more than 2.7 million customer service requests during April 2020 alone. But since the pandemic, the agency has not adjusted its customer service capacity to meet demand, despite the volume of unemployment-related requests remaining at twice pre-pandemic levels.

“Before the COVID-19 pandemic, department staff generally solved tickets within 1 business day. For calendar year 2023 through April, agents averaged 18.3 hours to first reply to a new ticket and 10 days to mark a ticket as solved,” the audit states.

In the audit report, the department blamed understaffing and a backlog of unprocessed unemployment claims for the delays, which they say they've already begun to address. The agency is developing a new policy for customer service performance, which it aims to have drafted by Dec. 31.

Tennessee is now 47 of 53 federally monitored agencies for timeliness of payment of intrastate unemployment benefits, according to the U.S. Department of Labor, down from 27th of 53 in 2018.

The Legislative Government Operations Subcommittee on Commerce, Labor, Transportation, and Agriculture recommended a four-year extension of the department following their audit presentation on Tuesday morning. The extension is subject to final approval during the legislative session next year.

Vivian Jones covers state politics and government for The Tennessean. Reach her at vjones@tennessean.com.

This article originally appeared on Nashville Tennessean: Tennessee labor dept still sees customer service, timeliness issues