How the Oregon Employment Department sacrificed quality to gain speed

Throughout the pandemic, the agency that administers unemployment benefits in Oregon faced relentless pressure to speed up. Deadlines from a class action lawsuit only increased the stakes.

Last year, the Oregon Employment Department was sued over long delays getting benefits to tens of thousands of people whose jobs were slammed by the pandemic. When it settled that lawsuit, the agency agreed to a timeline for working faster.

OPB conducted interviews and reviewed documents over the past five months that illustrate one way the agency sacrificed quality to gain speed. The Employment Department made a policy shift that was not explained to employers — but some agency staff fear it could hurt businesses financially.

As part of the settlement, the Employment Department promised it would meet federal standards for adjudicating cases on time.

Adjudication is the process for determining whether a person is eligible for benefits. Adjudicators examine how a worker became separated from their job — whether they were laid off, quit, or got fired. In Oregon, people who quit or were fired might still get benefits. It all depends on the details of what happened.

Those detailed determinations typically require input from workers and employers. In the pandemic, the agency fell months behind.

So last fall, agency leaders quietly made a change: They decided to speed up adjudication by reducing efforts to get employers’ side of the story.

“We took shortcuts,” said an adjudicator who requested their name be withheld to protect their job. “We took a bunch of shortcuts that could affect people’s lives.”

Acting state employment director David Gerstenfeld confirmed the change and described it as a temporary tradeoff between quality and speed.

“We want to get information from employers because, frankly, it’s a better decision if we get more information,” he said. “But we couldn’t afford to hold up resolving the thousands or at some points tens of thousands of people whose claims needed adjudication.”

Standard practice: Why an Employment Department call matters to employers

To understand the change, it helps to understand why a phone call from the Employment Department matters to employers such as Barbara Sidway.

The owner of Baker City’s Geiser Grand Hotel has a long history with the Employment Department — more than 20 years. She knows the process well.

In normal times, the agency notifies her by mail when a worker files for benefits. If it’s a layoff, she doesn’t respond. Benefits can start uncontested. But if an employee quit or was discharged, she faxes back a short form with her side of the story.

“And then we get a call, usually within a week,” Sidway said. An adjudicator starts asking questions, “and we give them the facts that we know.”

The pandemic blew that routine apart.

“The process has been so extraordinarily delayed as to boggle the mind,” she said.

Sidway described an employee who quit without good cause in March 2020, before widespread COVID-19 restrictions began. The worker filed for benefits, but Sidway wasn’t notified until May. She faxed in her initial response, protesting the benefits, and waited.

She never spoke to an adjudicator.

“I got a voicemail message that I returned within an hour of it being left. And I never heard from that person again,” she said.

Sidway called again. The agency never called back. Her former worker was awarded benefits.

Nearly one year after the pandemic hit, an appeals board sided with Sidway. That left her former employee owing the state months of benefits they thought they could keep.

And Sidway worried other benefits had been awarded without her knowledge — potentially affecting her tax rate. That’s because an employer’s unemployment taxes can rise when their workers frequently use benefits.

Sidway’s story shows how crucial communication is when there are questions about who should get benefits. But when the pandemic eliminated 285,000 of the state’s jobs in a matter of weeks, the system overloaded.

The changes in Salem: “Things are incredibly urgent”

On Oct. 28, 2020, the Employment Department announced the launch of “Focus Adjudication” — a push to process the backlogged claims of more than 50,000 people who had been stuck waiting for adjudication.

The agency had hired hundreds of new adjudicators, but most of them were still green. It was looking for more ways to speed up.

Agency officials tossed around ideas by email. They agreed on a proposal from Gerstenfeld. It involved the bureaucratic-sounding notice called Form 220 or Notice of Claim Filed.

This is the notification employers are supposed to get when a worker files for benefits. Returning it, as Barbara Sidway had done, preserves an employer’s appeal rights. That matters to employers, whose tax rates rise according to how often their workers get benefits. The form also gives employers a chance to begin explaining the circumstances of an employee’s departure.

Form 220 is not meant to be the last word, however. Thorough investigations help prevent fraud. Adjudicators have long been trained to contact employers for more information, whether or not they respond to the initial notice.

“If the employer doesn’t respond to the Notice of Claim Filed, we are responsible for continuing the investigation,” reads state guidance.

That responsibility is so important, federal guidelines print it in bold.

“The employer’s failure to respond to a notice of initial claim filing does not absolve the SWA (state workforce agency) from further investigation,” reads guidance from the U.S. Department of Labor.

But on Oct. 30, two days after “Focus Adjudication” was announced, Gerstenfeld suggested a different approach: relying on the claimant’s side of the story to award or deny certain benefits. If a worker said they quit, adjudicators no longer had to follow up with employers who didn’t return the form. Another manager cautioned they should make sure notices had gone to the right employer.

In the emails, Gerstenfeld acknowledged the approach would likely fail federal quality standards. But he said it still gave employers a chance to respond, protecting their right to due process. The forms were clearly marked “time sensitive,” with a 10-day deadline to weigh in or lose appeal rights.

“Is it in operation yet?” he emailed a few days later. His tone was pressing.

“Things are incredibly urgent,” he wrote, “and any day we have not started something that gains us productivity is a day longer that a number of people have to wait for their adjudication to be resolved when it has already been many months.”

Over the following weeks the policy expanded. If claimants said they had quit or been fired — typically major flags for investigation — adjudicators could skip talking to employers who hadn’t responded to the notice. In the agency’s view, those employers had their chance.

As of mid-July 2021, that policy was still in place. And Gerstenfeld was right — it did fail federal quality standards.

The adjudicators

The changes quickly alarmed some adjudicators, who worried employers’ rights were being violated.

“We are overwhelmingly undermining the employer’s right to due process,” said one adjudicator in February. “We’re just not giving it to them.”

Two adjudicators shared their concerns with OPB this winter and spring, requesting their names be withheld to protect their jobs.

They worried some employers couldn’t respond to the notifications of workers’ claims — because they didn’t get them. After all, the agency had hundreds of new staff navigating a complex, unwieldy system. Most notices go out by mail but, in the pandemic, many businesses were shuttered for months. Under the new policy, if employers didn’t respond to a notice they didn’t get, they might miss their chance to tell their story.

“We’re finding all sorts of decisions that were written without a 220 going to the correct place, so the employer didn’t respond,” said the second adjudicator. “We’re getting calls from angry employers saying, ‘I never even talked to you about this, how can the decision be made on this?’”

“We are not sending out notices to employers on a very large scale,” said the first adjudicator. “Then we are issuing decisions about individuals’ eligibility for unemployment without calling those employers. We are doubling and tripling down on the errors we are making.”

This adjudicator said technical changes designed to make it easier for workers to start and stop claiming benefits also increased the risk employers could be left out of the loop.

“We have claims where somebody went back to work and quit. Went back to work and was fired. Got new work and quit. Got new work and was fired,” they said. If a worker didn’t disclose their new separation, it became harder for the state to notify employers before benefits were paid.

Throughout the pandemic, the Employment Department’s mantra has been: Get the most help to the most people. That has meant tradeoffs.

For Gerstenfeld, the change to adjudication is a temporary tradeoff between quality and speed.

“We’re certainly following the law,” he said. “We’re confident that we’re protecting the employers’ due process rights.” The agency says employers have multiple routes to challenge decisions with which they disagree.

“Once we’re able to get the adjudication issues resolved within shorter timeframes, we certainly want to go back,” Gerstenfeld said, “and change some of the temporary standards we’ve had to put in place.”

In late March, the agency failed a review of federal quality standards, earning a score of just 22% — its lowest in at least two decades. It was one of the worst scores reported in the country.

More than half of Oregon’s adjudication cases reviewed for separation issues scored “inadequate” or worse in the “employer information” section. That meant material facts from the employer were missing, but there was no evidence an adjudicator made a reasonable attempt to obtain them.

While some adjudicators — and some business owners — have worried behind the scenes, the state’s employers have also won tax relief.

In the 2021 session, Oregon legislators passed a law softening the blow on employers whose unemployment tax burden was expected to climb significantly in the coming years.

The measure is expected to save employers $2.4 billion through 2029.