Q&A TWC Interview

Erica Proffer, KVUE Defenders: “So I guess first of all, tell me what you guys are seeing right
now.”

Ed Serna, TWC Executive Director “Sure. We are seeing declines in the number of
claimants and callers. We're seeing increases in the number of people that are finding jobs.
They are getting our assistance in our Workforce Solutions Board. Unfortunately, we are not
seeing a decline in fraud cases. We're seeing a little bit of a decline there, but not as much as
we would have expected. So we think that's something we're going to be living with from now
on, more so than before.

“We were actually seeing more folks getting jobs before we ended the federal assistance on
June 26. More folks are getting jobs. More jobs are being created. We're seeing that increase as
well. So it's very encouraging for us.”

Proffer: “As far as the volume that you guys are handling, how are the call centers?”

Serna: “Well, the call centers still struggle, but now the struggle is because our contract call
centers are experiencing high turnover. Those folks are finding other things to do other than
work in a call center during the pandemic. A lot of them had staff that were there longer-term
staff, but some of them had staff that were looking for something to do. They did. They did good.
But now they've gone off to do other things. It's not an easy job.”

“I'm very proud of our call center staff. We have not experienced a turnover. We didn't lose a
single employee because of stress or because of the volume of work in our four original call
centers. So, I'm very proud of our staff. They hung in there with us. They continue to hang in
there with us. They were working on things way before the governor even declared the disaster.
So they've been at it for more than a year now and they've done a great job.”

Proffer: “So is it because of this high turnover in the contract call centers? We're hearing stories
of people getting frustrated. They're calling in. They're not getting the answers. And it's the
same kind of story that we heard at the beginning. 'They don't they don't know how to fix my
claim. They're trying to send me to somebody else.' And it's very frustrating.”

Serna: “Yeah. You know, the challenge that we're facing now is early on the call center contract
call center staff didn't have the expertise. It normally takes our staff anywhere from three to six
months before they can handle all the basic stuff and then a full year before they can do
everything.

“We took the contract staff, gave them a week worth of intensive training and then put them on
the phone, so the best that they could do initially was take initial claims, [9.4s] that's when we
had the high volume back in March and April and May. The challenge we're facing now is kind of
twofold. One, the questions are more complicated. It's not somebody with just an initial claim, 'I
want to file for unemployment benefits.' It's someone saying, 'I'm running out of benefits, I'm
running out of time. I've gotten a job, but it's only part time. How do I handle that?' The
questions are much more complicated.

“Two, the turnover. Like I mentioned, the contract call centers are higher. So while they have a
large number of people to assist, there's a smaller number of people that have the expertise to
handle that. And then every now and then, not very often, but every now and then we get a
contract call center staff person that tries to be helpful and immediately transfer someone over
to one of our staff. That's not the protocol. What we've asked him to do is take the information,
complete a contact form, get that to us so we can put it in the queue because they're trying to
call in on the same line that the other callers are trying to call in. The caller gets frustrated
because they're talking to somebody and that person can't help them.”

Proffer: “But if you say, 'OK, well, let me take your info, we'll call you back.' What if I feel like
they never will get a call back.”

Serna: “Yeah, we are. We are calling folks back. As a matter of fact, we've taken the equivalent
of a call center and flipped it to outbound calls. And it's our more expert staff that are making
the more complicated outbound calls.”

Proffer: “And what do you mean by 'you've taken the equivalent of a call center?'”

Serna: “Well, we have eight call centers, on average, that would staff about 200 folks. Some of
the contract call centers have more folks, some have 600 people. We've taken the equivalent of
one of ours for about 200 folks and we've flipped it towards making outbound calls. The whole
idea is we've also implemented through Larry the Chatbot, our automated bot, or you can leave
a request for a callback. We're taking those contact request forms and those are the folks that
we're calling back. We're trying to get all of those folks.”

Proffer: “So how does the queue work? Let's say I go on there, I call somebody, they take my
information. Then I go online and try to put something in the Larry the Chatbot as well. My name
is there twice. Does it get sort of merged so you're not still having to filter through who you've
called?”

Serna: “Yes, ma'am. What'll happen is when our staff go to make the call, they'll enter 'Erica
Proffer' and they'll see that Erica has got this information. She's filed this kind of claim. Here's
one. She filed a claim, here's her balance, etc., etc., etc. and then also you have a contact
request form that came to us from one of our contract call centers. And look, here's another
contact request form. So let's look over both of these.' Because it could be that your second
contact request was for an entirely different subject, and we want to address everything at one
time. So, we'll match those up.

Proffer: “Detecting fraud. I heard you tell lawmakers that when somebody gets flagged for
potential fraud, it may tie up their claim for a couple of weeks. Right? Is there anything that you
can do to make that faster?”
Serna: “We are trying to make that faster and we're trying to get through that faster. The
challenge that we face is the volume, just kind of like we had the volume issue with the initial
claims back in March, April, May, June of last year. It's verifying things. One of the tools that
we'll talk about and that everybody knows about is ID.me. People complain 'I get to ID.me and I
have trouble either with face recognition,' or 'I can't get what I need done with ID.me.' We have a
sort of failsafe that if you have trouble with the automated version of ID.me, you can request, I
think it's called a trusted associate. You can actually request a person to assist you. That
person will say, 'OK, well, send me this information and let's get into a live video situation so I
can verify that you're you.' Then they'll still complete the verification. But that takes time
because of the volume of people that we're trying to get through that process.

“Now, not very many people have to do that, but there are still several states using ID.me, not
just us. There are other tools that are not as effective or that are a little bit more experimental
than ID.me. We didn't want to kind of start branching off to start adding other tools that may not
work more effectively. Instead, [00:11:20]what we've done is we've created some internal
protocols that allow a person who can't get through to ID.me to send a request directly to us.
Then one of our fraud investigators will reach out to that individual and work with them to get the
issue taken care of. But that's about a two-week process.”

Proffer: “And how do they reach out directly to you?”

Serna: “When you submit your request to our portal, you say 'I'm Ed Serna, here's my contact
information, I'm having trouble doing this.' And then we use that contact information to reach out
to Ed Serna and get that issue taken care of. We've got both internal staff and contract staff
working those issues. But it still takes about two weeks to work through the workload to get to
Ed Serna to say, 'OK, now I can verify you and we'll put you back in the queue.'”

Proffer: “The TWC staff doesn't work for ID.me. That's a third party?”

Serna: “Third party contractor, and they're handling not only Texas but seven other states.”

Proffer: “So what about you guys? Could you just hire more folks?”

Serna: “The challenges that we face is in hiring more folks, again, there's a learning curve. Our
investigators are pretty good about what they do. It's not just ID.me. Occasionally, the ID.me
employee, that trusted resource, gets with our staff, the investigators.”

“When they're not doing this, they're doing other fraud investigations. When we go to hire
somebody, we hire somebody that has a particular level of expertise. The challenge that we
faced is in some cases, like everybody else, we were having trouble finding people to hire,
which is why we turned to contractors to be able to do that more quickly. And then second, if we
staff up when the volume goes down, we have to let people go. We didn't want to put anyone in
a position of 'congratulations, you have a job.' And then a year from now or a year and a half
from now, 'congratulations. We're letting you go right now. You're unemployed.'”
Proffer: “Do you still have a lot of openings available? Are you still having a hard time finding
people?”

Serna: “We don't have as many openings available. We have been successful recently. Plus
we've been very successful with the use of some of our contractors. So we're I think we're
addressing that. We're also going to be looking at just the resources that we have generally and
saying, 'OK, how can we better utilize both the technology and the staff resources that we have,
as well as the contractor resources we have, to address this thing?' We're using a lot of
technology in our fight against fraud. Unfortunately, I'm not going to share that with you because
the people that are trying to perpetrate fraud are trying to figure out how to get around us.
They've been trying to figure out how to get around ID.me. By the way, to demonstrate its
success, more than 50% of the cases that we suspect to be fraudulent, that we send ID.me, end
up just never hear back from them because it is a fraud case.”

Proffer: “So you guys send cases to me or ID.me?”

Serna: “We do that. ID.me doesn't do any of that assessment. Let's say that you filed an
unemployment insurance claim, but something looks suspicious about your claim. We'll say,
'Erica, we need you to go take this step. It's a standard step. We just need you to go take this
step to verify your identity.' Then you go to ID.me and then ID.me, comes back and goes, 'yep,
looks like Erica is Erica. Or Erica never showed up. Or Erica's picture didn't match Erica's ID.'”

Proffer: “Which it wouldn't.”

Serna: “That's the other challenge that we face is people don't maintain their ID photo and it
doesn't match. That's when you have to go to the trusted resource or the trusted source to go,
oK, 'now, Erica, let's get on a video chat and send me your documents so that I can actually see
you. And go, yeah, this is her. Just changed her hair or are a bit older.”

Proffer: “One of the articles that Human Rights Watch showed is that people were having
problems with their face not being recognized on their driver's license. How often are you getting
that kind of complaint?”

Serna: “Not that often. We do receive it and that's what we have, the trusted resource because
we know it's going to happen. But it's not it's not the dominant issue that we're having with
people going to ID.me.”

Proffer: “A lot of people are curious about these next few weeks. Are we going to see a drop in
unemployment specifically because gig workers are now not on that unemployment benefit, the
pandemic assistance?”

Serna: “Two different things, the unemployment numbers that are reported by the Department
of Labor that all the states report to the Department of Labor on. They are based on a lot of
factors, not just the unemployment benefits being paid. That's just one of the factors. So seeing
the drop in gig workers from receiving unemployment insurance benefits isn't going to move the
needle that much on the unemployed. What we will see and what we have seen is a decrease in
the number of people that were paying benefits to. So the two are separate in the sense that the
UI payments are a component of the number of individuals that are unemployed. There are a lot
of individuals that are unemployed that are not receiving unemployment insurance benefits.
Either they've already tapped out or they never applied. But there's other sources that we use to
get estimates of what those numbers are. And then that's how we come up with the state's
unemployment rate.”

Proffer: “I'm going to read something that I kept seeing posted repeatedly on your Facebook
page. It said, 'If too many people stop filing, it will appear the unemployment rate is low. It will
appear that all of us has found work making the unemployment rate lower than what it actually
is. Keep requesting your payments.' [sic] Is that true?”

Serna: “Again, the number of individuals that are receiving unemployment is one component of
the calculation of the unemployment rate for the state and then, therefore, for the nation.”

Proffer: “Should people keep requesting payments even if they were on this sort of pandemic
assistance? I know that they're not going to receive any benefit.”

Serna: “You know, I think this is just my own advice. It doesn't hurt to request the payments. If
you don't think that you're going to be getting anything or if you're already working, definitely
don't. If you're working part time, you probably should because you may be eligible for some
benefits. If you were only eligible because you were a gig worker and because of the federal
program, you probably shouldn't.. There was never a state program that paid gig workers,
self-employed or contract employees. If you apply a couple of times and you'll hear back from
us going, 'you're not you're not eligible because.' And that's 'because' you no longer have
benefits or you've run out of time on your benefits. Then you can stop. You can stop applying”

Proffer: “So why not just throw the gig workers on the regular unemployment?

Serna: “Because that's not allowed in either the federal or the state law. So that's why they
weren't there to start off with. That's why there had to be the CARES Act to bring them in.”

Proffer: “So let's talk about the collection notices. Some folks are saying that they're now
getting the last year's March—May where, 'We issued the payment now. We need that money
back.”

Serna: “We had suspended overpayment collections during the pandemic. We reinstated
overpayment collections late last year. So we started putting that process back in place.
Unfortunately, it goes back. The state doesn't forgive debt. Ever, ever, ever, never. I think we
talked about it before, and I even gave an example of someone who had come to us completely
unrelated. So now those notices are going out. The one thing that I would urge individuals to do
is to, if you think the notice is incorrect, reach out to us and say, 'OK, here's why it's incorrect.'
It's not an appeal thing. You don't have to submit an appeal to do it. You contact us, let us know.

“If you know that it's accurate and yes, I did get money that I really shouldn't have gotten
because, for example, I got a severance or I continue to receive payments from my employer
and I knew that I really shouldn't have but I did also collect unemployment. So you owe it. But if
you can't you can't make the $700 payment or the $5,000 payment, contact us. We'll take a
payment, any kind of payment. I think I mentioned to you before, we're the one of the best
places to owe money to. We don't charge interest unless it is direct fraud on the payment that
you owe us. Second, it'll sit there forever. So even if we say to you, 'look, you need to pay $100
a week,' and you say, 'there's no way I can pay $100 a week. I have two kids. I'm just getting
started again. I got to get them ready for school. I can maybe pay $20 a week.' Pay us $20 a
week. Pay $20 a week until you get back on your feet and you can start paying more than you
can. You can get it all paid off.

“The one thing I will say is there are some overpayment statements that went out that were not
accurate, that were mistakes. We're trying to catch all those and notify those individuals directly.
But if you get one and you think this isn't right, don't ignore it. Contact us. It'll help us resolve it
sooner. And it could be that we end up saying, 'look, it is wrong, we will back it all out. You don't
owe us anything.' I know of a situation where someone got, I think, four or five different notices
from us on overpayment for different things. Because remember, there were different programs
that were paying out and each one generated an overpayment. If you collected money from
those, the individual didn't tell us, but they were conscientious enough to say, 'look, I'm just
going to write you a check and then I'm going to try to get it all squared away.' So they wrote us
a check. We did reach out to him. We are getting it squared away. We'll cash the check and
then we'll turn around and write a check and return that they just returned the money.”

Proffer: “Each program? So, let's say I was unemployed, I'll get my regular unemployment
benefits, but then it was during the time that they would have the $600 on top of that. Right. So
if I wasn't qualified for unemployment then I didn't qualify for that $600. So, I would get two
separate collection notices?

Serna: “You may get two. A lot of times people filed for state benefits and we moved them to the
federal benefits. They started with state or they were already on state and we moved them to
the federal or they started on the federal. They ran out, we moved them to the state and then
the extra $600, or the extra $300 under the Lost Wages Act. So you may get multiple
statements from us saying, 'For this period, the overpayment is for these funds. For this period,
the overpayment is for these funds,' as opposed to a single single statement.”

Proffer: “You said there were some that were sent out by mistake, how many are we talking
about?”

Serna: “Not very many. It's a small number. And the mistake had to do with that brief gap where
the CARES Act had ended but the continuing assistance hadn't quite kicked off yet at the very
beginning of the year.

“Early on in the pandemic, our goal was to get money out as quickly as possible to individuals
they needed if they had lost their jobs suddenly. So if an employer didn't respond to us in a
timely fashion in the two weeks, then we started issuing the payments. Then the employer came
back—because the employers were closed—then the employers came back and said, 'yeah,
no, Ed didn't lose a job because of COVID. He lost his job because he slapped a customer or
something.'

“So then we'll go back and say, 'Well, you shouldn't receive those benefits. You owe them to us.'
That individual's going to go, 'Wait a minute, you gave them to me. How can I owe them when
you never should have gotten them?' You knew that you didn't lose your job because of COVID.

Proffer: “WFAA reported that employment was ending the federal pandemic part and that
Texas, though, is getting billions for pandemic related economic losses. So why not just take
that money and put it towards these programs to keep people paid if they're on unemployment?”

Serna: “It's about $16 billion plus or minus. First, that money's not coming to us into the
program. The moneys that were allocated from the federal government from completely different
part. And then second, those moneys are managed by the legislature and the Governor. It's
their choice to use those funds however they deem appropriate.”

Proffer: “So you guys can't do it even if you wanted to?”

Serna: “Right. It's not our money. It didn't come to us. We have no control over that money. Uh,
now if the legislature or the Governor said, 'we're going to do this with the money.' Then it's
available to us. But that's not an option for us.”

Proffer: “So I got some of the misclassified worker data and it showed that the amount of
misclassified workers dropped significantly. We talked about half of last year. What happened
there? Is it because people were able to get something? Because normally if you're classified as
a gig worker but you're really an employee, you wouldn't get money.”

Serna: “It's kind of two things, one is us and one is what you've described. The US part is we
took all of our resources and put them on getting unemployment payments out. Those include a
lot of our tax auditors and a lot of our investigators. So our efforts to investigate and to identify
that misclassification kind of was suspended for a period of time while we focused on the bigger
fire. The second part of it has to do with people that are simply not understanding the situation
that they're in or employers reporting them differently. Early on, employers—and it would have
been wrong for them to do it—were thinking, 'Look, that I'm going to get hit with this big
unemployment insurance bill. You know, these people are not my employees. So they don't
qualify for unemployment insurance, you can put them on the gig worker unemployment
insurance.' That kicked a lot of that as well. We do have a few small cases where individuals,
the amount that we were paying for the gig worker, the base amount was higher than or was
about equal to the midpoint of regular unemployment insurance. So, if you were below that
midpoint, you might end up saying, 'You know, if I say I'm a gig worker, then I'm going to get
more for the base.”

Proffer: “So are we going to see a jump in the 2021 numbers?”

Serna: “We might see a jump in the 2021 numbers because we're going back now. It's like a big
fire after the fire. You're going to clean up and you find out what you can salvage, find out what's
still good, but then you're cleaning up a bunch of stuff. We're going back and cleaning up a
bunch of stuff.

“So we expect to clean up some stuff on there, on the misclassification, also on the fraud. Our
fraud numbers, in my opinion relative to other states, are pretty good. But we're going to see
that number go up. And I don't want you or the legislature or anybody else to be surprised, the
public to be surprised, by suddenly Texas' numbers going up. It's because we're going back in
time now.”

Proffer: “You're not just catching them now as they're applying, you're going back.”

Serna: “All the way to March and we're identifying individuals that shouldn't have ever gotten
benefits, whether it's a real individual who should have gotten a benefit or whether it's a fraud
ring that was applying for benefits. We're going back and we're identifying them. Then we're
taking steps to recoup those funds, whether it's that individual in the overpayment or whether it's
an organized fraud ring.”

Proffer: “What do you see more of? I mean, are we talking that there's a lot of these organized
fraud rings or is it individuals?”

Serna: “No, it's more the organized fraud rings.”

Proffer: “Really?”

Serna: “Yeah. We have seen significant increases in identity theft. These are IDs that were
stolen years ago that have been sitting and really not used. Think of the Equifax breach, Home
Depot, Target. I think the IRS had a breach, the Office of Personnel Management. The federal
government had a breach years ago. All of these ID's have been sitting out there. When all the
money got pumped into the system nationwide, well then on the Dark Web, they started selling
these like crazy and using them.

“Once they've used it in Texas and we stopped it, then they'll go to another state and another
state and another state. So that was probably going on, maybe not as far back as March, April
and May. But the fraudsters are determined when there's money to be had there. Like any other
businessman, I'll say in a negative sense. Then they started getting more active. We started
stopping them through the steps that we were taking. But we're still going back in time now.
We're going back to all those claims and we're running them through all of our protocols.

“We're working with the Department of Labor's Office of Inspector General. We're going to the
Department of Justice. We're working with the Treasury, the Secret Service. We're working with
the State DPS to try to get all that done. We're working with banks. Anything we can do to
recoup our money.”

Proffer: “What else am I missing? What are you seeing that we really need to put out to our
viewers right now?”
Serna: “I think one of the things that we're seeing that we have available both here at TWC and
through our 28 boards, is assistance for people who are just out of practice looking for a job.
You know, there are a lot of people that were working, suddenly lost their job and then their
employer just didn't come back. But they haven't needed a job because they've been working
the past five years, 10 years, whatever. We have resources that can assist them in that job
search and maybe updating their skills and it's free. We'd like to let your viewers know that all of
our services are free if someone ever tries to say, 'Hey, look, I'm with TWC and I can help you
find a job. I just need all this information from you.' Don't give it to him because we don't charge.
It's all free.”

Proffer: “Anything else? Really most of our calls have been centered around the call centers. I
know I've asked you this already, but again, it's been a year and we're still having call center
complaints sent to us. So what's going on there?”

Serna: “Well, like I mentioned earlier with the call centers, some of the challenges we face is
one, while the volume has dropped, we are still not at pre-pandemic levels at all. So we are still
higher than we ever were before the pandemic. If you couple that with the individuals that are
calling in now, are not calling in for just basic claims. The majority of them are calling in with
more complicated questions that need to get to a more experienced call center operator, one of
our call center operators. We have that challenge. Then third, a lot of our contract call centers
you're seeing high turnover

Proffer: “You guys have been working on getting updates and doing updates. How's that?
How's that coming along?

Serna: “Well, I think the old system kind of held up well. We are now in the beginning stages of
completely replacing it. Our staff now has shifted from dealing with the pandemic to dealing with
developing and working with a contractor to bring us a new cloud based system.

Proffer: “Anything else?”

Serna: “I would continue to encourage viewers to be protective of their information if they get a
notice from us, you know, 'congratulations on the claim' or whatever, and they never filed it. Let
us know. Individuals who let us know is one of the best ways that we can identify potential fraud.
I also want to assure people that we're putting all kinds of protocols, both automated protocols
as well as outside tools, in place to help detect and prevent fraud. I think the fraudsters have
now woken up nationwide to the fact that the unemployment insurance system is a source of
funds. When we are not in a pandemic, on average, we pay out $2 billion a year..

Proffer: “Any lessons learned?”

Serna: “We have taken over 20 million unique calls. So that's one person, one call, if you
compound that by the number of people they call five, 10, 15 times or more, then we've taken
hundreds of millions of calls. You know, the phone is ringing. I think one of the things that we've
learned is if we can build our system to manage even half of that kind of volume, then we can
have stellar customer service in normal times and we're going to strive to do that.
“The other thing is we really do care about serving our customers, unemployment insurance
customers, the individuals that are looking for a job, the families that just need some assistance
with childcare. We'll continue to continue to be there to assist them all for free.”