State audits find late unemployment payments, $47 million in fraud overpayments
RALEIGH — Two new state audits found continuing problems in North Carolina’s unemployment benefits system, including late first payments and more than $47 million in unemployment benefit fraud overpayments.
The North Carolina Office of the State Auditor released the audits Wednesday, focusing on the Division of Employment Security, which manages unemployment benefits within the N.C. Department of Commerce.
One follow-up audit reviewed first unemployment benefit payments from July 1, 2024, through Nov. 30, 2025. Auditors found that the Division of Employment Security did not issue 28% of first payments in a timely manner. According to the auditor’s office, 31,366 of 111,413 first unemployment benefit payments were not made within the federally required 14-day standard, resulting in late payments totaling approximately $12.2 million.
The auditor’s office said the 28% untimely rate is an improvement from a 2024 audit, which found that 43% of first payments were late. However, auditors said the division has not met the federal timeliness standard for first unemployment benefit payments since 2011.
A second audit reviewed improper unemployment benefit payments. Improper payments include payments that should not have been made or payments made in the wrong amount, including underpayments and overpayments. The U.S. Department of Labor holds state programs to a 10% improper payment rate.
Auditors found that from April 1, 2021, through March 31, 2025, North Carolina had an estimated improper payment rate of 22%. That was higher than the 18% rate reported by the auditor’s office in 2022. The office said North Carolina’s improper payment rate has exceeded the federal 10% limit and the national average for the past nine years.
The audit also reviewed established overpayments made by the Division of Employment Security. Auditors found $168.8 million in established overpayments from April 1, 2021, through March 31, 2025, including $47.2 million categorized as fraudulent. The division recovered $12.2 million in fraud overpayments during that period.
The auditor’s office said historical causes of overpayments in North Carolina have included work search requirement errors, benefit year earnings errors and separation determination errors.
Editor’s note: This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.
