Michigan Auditor General Report Finds State’s Unemployment Agency Failed to Conduct Appropriate Background Checks

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A report from Michigan’s Office of the Auditor General has found that the Michigan Unemployment Insurance Agency failed to conduct suitable background checks before hiring individuals to sensitive positions and did not adequately limit access to sensitive information that it had in the state’s systems. This information was used by the agency to collect as well as pay and receive unemployment payments. The failure by the agency to properly restrict access to this information occurred during the COVID-19 pandemic as the state was paying out record levels of unemployment benefits.

The audit that uncovered this failure covered the period of March 15, 2020 through June 28, 2021, and during this time, the state paid $36.5 billion in unemployment payments. The record payouts caused a number of problems for the Unemployment Insurance Agency, such as state-induced errors in determining eligibility, long delays before awarding the unemployment benefits, along with frequent attempts to obtain fraudulent benefits.

The audit found that the Unemployment Insurance Agency did not have adequate access controls for its employees during the COVID-19 pandemic. The audit mentioned three material conditions that needed to be addressed by the Unemployment Insurance Agency.

One issue the audit found the agency had was that it did not have adequate procedures for ensuring that access to the system was removed when an employee was terminated. The problem became worse during the COVID-19 pandemic when a number of contract workers were hired to help with the increase in claims. The agency agreed that this was a problem but stated that they are putting a quality control process in place that will ensure that access to the system is removed from the terminated workers in a reasonable amount of time.

Another issue the audit found was that the Unemployment Insurance Agency failed to document or manage user accounts so as to ensure that employees only had access to sensitive information necessary to do their job. However, this problem should be solved on July 5, when a system upgrade takes effect. The upgrade should ensure that employees only receive the access necessary to do their job.

The audit found another one of the agency’s problems, which was a lack of training for employees as to how to handle the information they will have access to and the failure to conduct complete background checks, including Federal Bureau of Investigation fingerprinting, validation of residency, and a check with local law enforcement.

The agency enacted a policy of conducting criminal background checks on employees and fingerprinting as of April 12. It also stated that it intends to keep up with training and keep control of logs that track which employees have access to federal tax information.

Background checks are a critical part of the hiring process for guaranteeing safety for both staff and the public. As this report shows, employers should ensure that they have training and procedures in place to guarantee these background checks are performed appropriately, and information is stored and disposed of properly.

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