Gov. Evers: Announces lawsuit suing Trump over obstructing investments to modernize Wisconsin’s unemployment insurance system and prevent fraud 

MADISON — Gov. Tony Evers today announced Wisconsin is leading a new lawsuit against the Trump Administration over its decision to unilaterally terminate—inexplicitly and without any notice—millions of dollars in funding to prevent fraud and implement improvements in Wisconsin’s and other states’ unemployment insurance (UI) systems. The governor has sent multiple letters to the Trump Administration, urging this critical funding be released, including in July, May, February, and August 2025. To date, the governor’s letters, including a letter sent directly to President Donald J. Trump, to restore this funding have largely gone unanswered.  

“Wisconsin’s working to bring state government into the 21st Century, including modernizing our systems to help streamline services and prevent fraud, and right now, President Trump and his administration are blocking us from continuing to do that important work. That’s unacceptable,” said Gov. Evers. “After decades of my predecessors kicked the can down the road, following the pandemic, we made modernizing our unemployment system a top priority, and while we’ve seen tremendous results, our work is not done. Projects of this scale require careful planning, and the Trump Administration’s sudden decision to terminate this funding is halting progress on work that’s been years in the making. 

“Since the modernization effort began, Wisconsin’s UI program was audited nine times over the course of three years at one point and had zero identified instances of previously undiscovered fraud. The Trump Administration’s decision to obstruct millions of dollars that Wisconsin was promised to continue our efforts defies logic. If the Trump Administration is serious about fighting fraud, they wouldn’t be withholding critical resources that should be helping states like Wisconsin do just that,” Gov. Evers concluded. 

After the coronavirus pandemic overwhelmed Wisconsin’s antiquated UI system infrastructure, Gov. Evers and the Evers Administration began undertaking sweeping modernization efforts. In addition to significantly improving the system’s outdated interface, the modernization effort included deploying cutting-edge technology in Wisconsin’s UI system to bolster efforts to detect and crack down on fraud, prevent benefit overpayments, and significantly improve efficiency and timeliness.    

“The project to modernize the unemployment insurance system is both an essential way to advance our efforts to combat fraud and to offer better service to our customers,” said Department of Workforce Development (DWD) Secretary Amy Pechacek. “Terminating funding for this project pulled the rug out from us and required us to cancel our vendor contract before the final product could be delivered, resulting in a serious setback for Wisconsin.”

Under the Evers Administration, Wisconsin has positioned itself to be one of the strongest-performing unemployment insurance programs in the nation. Since the modernization effort began, Wisconsin’s UI program was audited nine times over the course of three years at one point and had zero identified instances of previously undiscovered fraud. The Evers Administration was previously awarded federal investments from the U.S. Department of Labor (DOL) to complete modernization projects of its UI systems to help reduce fraud, reduce overpayments, and improve efficiency in processing benefits.

According to the Trump Administration, the U.S. DOL originally terminated the investments Wisconsin was using for modernization efforts to prevent fraud, waste, and abuse because it “does not effectuate agency priorities.” In his many letters to the U.S. DOL and President Trump, the governor reiterated that the U.S. DOL’s refusal to release investments for states to fight fraud, waste, and abuse is incongruous with the Trump Administration’s and Republicans’ own purported goals of addressing fraud nationwide. 

The lawsuit, filed in the U.S. Court of Federal Claims, challenges the U.S. Department of Labor’s (DOL) unlawful decision in May 2025 to terminate approximately $29 million of Wisconsin’s grant funding intended to assist in modernizing the state’s UI system technology and implementing measures to prevent fraud, leaving an unspent balance of approximately $10 million. Wisconsin’s portion is part of the more than $45 million total in terminated grant funds the coalition is challenging. Congress created the grants at issue as part of the American Rescue Plan Act (ARPA) of 2021, amid the pandemic-related surge in unemployment claims. The goal of the program is to improve the technology used to administer states’ UI programs to better detect and prevent fraud, promote equitable access, and pay benefits in a timely fashion.

Funding that was abruptly terminated by the U.S. DOL last May was intended to be used by the state to:  

• Create a state-of-the-art web-based and mobile employer portal, including a secure communications infrastructure to reduce improper payments and fraud; 
• Prevent and detect fraud, ensure program integrity, and improve cybersecurity and overpayment collections;   
• Modernize written communication with all UI customers through an agile and efficient systems interface, reducing costs and staff resources; and  
• Implement identity authentication and identity proofing tools, modernize the application process, enhance automation for case scheduling, and centrally document all interactions on a given claim. 

In its lawsuit, the coalition argues that the U.S. DOL’s grant terminations breached the express terms of each of the plaintiffs’ grant agreements. The terms of the grant agreements do not allow the U.S. DOL to unilaterally terminate the grant projects prior to the end of the performance period simply because the administration has changed its priorities. The coalition also argues the department breached the implied duty of good faith and fair dealing by wrongfully imposing new terms and conditions, relying on an erroneous and bad faith interpretation of relevant regulations, relying on an erroneous and bad faith interpretation of authorizing statutes, and by failing to provide plaintiffs with formal notice and an opportunity to object to their grant terminations.   

More information on DWD’s efforts to date to support UI modernization is available on DWD’s webpage on UI Modernization. A copy of the lawsuit filing is available here.