Sonderling defends grant shift, vows fraud crackdown to senators

By Andrew Rice
The Center Square

Keith Sonderling, President Donald Trump’s nominee for secretary of the U.S. Department of Labor, vowed Thursday to stamp out workforce fraud, more efficiently spend education dollars and improve the department’s use of artificial intelligence.

Sonderling testified before the Senate’s Health, Education, Labor and Pensions Committee as he seeks the secretary post after Lori Chavez-DeRemer stepped down following accusations of an improper relationship with a subordinate.

Sonderling said more than $135 billion in unemployment benefits were stolen during the COVID-19 pandemic. He said the department has urged states to invest in technologies that will detect fraud before federal dollars are spent.

“We’re telling the states to verify first and pay later,” Sonderling said. “Stop paying first and verifying later.”

Sonderling and Sen. Tommy Tuberville, R-Ala., highlighted an unemployment fraud database that the department is launching. They said the database will work to identify more fraud and create a comprehensive system to check up on the issues.

Sonderling also criticized states, including New York, for lacking enforcement measures that protect against fraud. He said New York pays out $2 million per day in fraudulent payments.

“When [Alabama] had improper payments the last two years, they got 100% of it back,” Sonderling said. “They have some of the lowest fraud and improper payment rates in the country because they’re verifying. They’re going and making sure that person is alive, that person lives in Alabama, that person works in Alabama, they’re going to the employer.”

Sonderling was confirmed as deputy secretary of Labor in 2025, and has served as acting secretary since April. Lawmakers pressed Sonderling on the Trump administration’s efforts to shift education grants from the U.S. Department of Education to the Labor Department.

The Labor Department has taken over education grants formerly administered by the federal department. Labor’s takeover of grants has been critical to shutting down the department of education, the Trump administration says.

Sen. Patty Murray, D-Wash., criticized the department’s grant takeover and said Sonderling was not prepared to handle education-related issues.

“Offices in your department are taking on a set of responsibilities they have no experience dealing with,” Murray said.

Sonderling pushed back on Murray’s criticism and said the Labor Department is more prepared to handle education grants. He said the Education Department’s grant management system was old and the Labor Department could make meaningful strides to fix problems.

Murray argued that the shift of money to the Department of Labor is wasteful and has caused unnecessary interruptions to the delivery of funds to states across the country. Sonderling pushed back and said the department received $1.5 billion in funds at midnight July 1 and disbursed those to state education programs within a matter of hours.

“It was out by one, two in the morning,” Sonderling said. “There was no lack. The money went out to the states in our updated system, and the Department of Labor will continue to provide those services.”

The Individuals with Disabilities Education Act program has also been moved to the Labor Department. Sen. Tim Kaine, D-Va., criticized the program’s move and called for it to remain with the Education Department.

“There’s a right way to do reform,” Kaine said. “The wrong way to do it is to treat the [Department of Education] like a furniture store and have a discount going out of business.”

Sen. Josh Hawley, R-Mo., also pressed Sonderling on the department’s implementation of artificial intelligence in the federal workforce.

Sonderling said more educational programs on AI are necessary to compete with other countries that have the most advanced technology in the world. He said students in China are learning about AI at an early age and developing capabilities to advance the workforce.

“If you teach somebody on AI right now, in two months it may be outdated,” Sonderling said. “We need to be talking to the employers and the tech companies who are buying this and who are designing this.”

Hawley urged Sonderling to implement studies on AI’s effect in the workforce and to what degree it is changing the job market across the country. Sonderling said he hopes the U.S. Bureau of Labor Statistics will soon be able to implement data points to accurately portray AI’s effect on the workforce.

“We need that data, we need it in order to make informed choices and I think we’ve got a lot of hard choices to make with regard to AI,” Hawley said.

Hawley also called on Sonderling to crack down on joint-employer rules. The rules decide how management of employees are determined and typically apply for franchise owners and employees.

Hawley called out Amazon, which acts as a franchise employer in each of its various facilities across the country. He said Amazon uses the rule to avoid providing employees with healthcare and competitive paychecks.

“They’re not a small business, they’re a monopolist,” Hawley said. “I urge you to write that rule in such a way that Amazon is treated as they should be treated and that local small businesses are protected.”

Sonderling agreed to work on the rule-making process and establish protections for small businesses. He also touted efforts to pursue unemployment benefits fraud.