Several states call in Deloitte for unemployment system upgrades

Big Four firm Deloitte has won a number of lucrative contracts to help state agencies expand and upgrade their unemployment insurance (UI) systems, amid an historic, Covid-fueled rush of claims.

The Covid-19 pandemic has driven a massive wave of traditional unemployment claims, while the CARES Act extended coverage through new jobless benefits categories, such as the Pandemic Unemployment Assistance (PUA) for gig workers and contractors. The country has seen 19 straight weeks of at least 1 million new jobless claims, as of July 30.

The unprecedented rush of claims beginning in March swamped state UI systems, which were unprepared for such demand. Many states called in external consultants to upgrade their processing systems, bolster call centers, and prevent fraud.

11 states spent a combined $173.8 million on contracts in the area, according to a report from Bloomberg Law. Deloitte won the largest share, at $141.1 million, while Accenture was awarded $19 million in contracts and EY won $14 million worth of consulting contracts.

Several states call in Deloitte for unemployment system upgrades

Many states struggled to set up a new system to deal with PUA claims, in addition to dealing with the large number of traditional UI claims, so they called in Deloitte. Ohio paid the firm $9.6 million to set up a PUA claims system, largely because Deloitte had an off-the-shelf product which could be quickly implemented, an Ohio Department of Jobs and Family Services spokesperson told Bloomberg Law.

Deloitte also set up Colorado’s PUA system under an existing contract for an estimated $3 million.

Meanwhile, the New York Department of Labor awarded Deloitte up to $87.8 million to work on call centers, data entry automation, and other areas.

Deloitte also won a $22 million contract in Illinois and a $17.6 million contract in California, according to Bloomberg Law.

Not all states are happy with the work that Deloitte has performed on their UI systems, however. Florida Gov. Ron DeSantis recently placed the company under investigation for its work on the state unemployment website, which went online in 2013. Deloitte was paid $78 million to create the website and system, which DeSantis likened to a “jalopy.”

There is a pending class action lawsuit in Florida on behalf of laid-off workers seeking damages from Deloitte and the Florida Department of Economic Opportunity for delays and dysfunctions in the claims system.

Deloitte says that it hasn’t been involved in maintaining the system for the last five years, and is therefore not accountable for how the system works now.

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