The federal indictments of key executives at technology company Sagitec Solutions could delay or derail state efforts to modernize unemployment insurance systems, including in Kentucky, Ohio, and Texas.
Two Sagitec executives—David Gerald Minkkinen and Sivaraman Sambasivam—face federal charges alleging they took trade secrets from the UI processing system at Deloitte LLP, where they previously worked, used them to build Sagitec’s UI products, and lied to federal investigators about it.
The legal woes complicate modernization efforts after many state UI systems struggled to meet the challenges of the Covid-19 pandemic and the huge wave of unemployment claims that began in March 2020. State agencies and the laid-off workers seeking benefits faced claims-processing delays, problems with implementing newly created federal benefits, and an onslaught of fraudulent claims.
Even before this latest cause for delay, state UI systems weren’t upgrading fast enough to be ready if another recession hits in the near future.
“There really are just a handful of vendors. Deloitte and Sagitec are the top two,” said Alexa Tapia, unemployment insurance campaign coordinator with the National Employment Law Project and a former state official with the Kansas Department of Labor. “This is a significant impact on states. The process to modernize their systems is arduous, expensive and quite...
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