On April 25, 2025, U.S. Labor Secretary Lori Chavez-DeRemer issued a warning that states offering unemployment benefits for undocumented workers could face a loss of federal funding. In a letter to all 50 governors, she emphasized that unemployment programs are intended solely for lawful workers and reminded states that failing to uphold eligibility requirements would jeopardize critical federal support.
The warning is part of a broader enforcement initiative under President Donald Trump’s administration, aimed at restricting public benefits to only those lawfully present in the United States. Earlier this year, President Trump issued a memorandum titled “Preventing Illegal Aliens from Obtaining Social Security Act Benefits” and signed Executive Order 14218, “Ending Taxpayer Subsidization of Open Borders,” reinforcing that federal benefits, including unemployment insurance, must not be extended to undocumented individuals. Chavez-DeRemer’s letter aligns with these directives, clearly stating that any move to offer unemployment assistance to undocumented workers would constitute a violation of federal law.
At the state level, the issue gained attention after California’s legislature passed a bill in 2024 seeking to provide state-funded unemployment benefits to undocumented immigrants. Governor Gavin Newsom vetoed the bill, citing concerns about the program’s cost and the strain on the state’s heavily indebted unemployment fund. Despite the veto, the move demonstrated growing interest in several states, including New York and New Jersey, where initiatives have been launched to provide limited relief to undocumented workers during the COVID-19 pandemic.
The Labor Secretary’s letter marks a direct response to these state-level efforts, making it clear that expanding unemployment benefits to undocumented immigrants would have serious financial consequences. The federal government has also recently taken similar steps in other benefit areas. Agriculture Secretary Brooke Rollins announced new measures to prevent undocumented immigrants from accessing federal food assistance programs like SNAP. These actions highlight a coordinated federal strategy to enforce eligibility rules and prevent federal dollars from supporting undocumented populations.
The current environment reflects a broader pattern of federal-state clashes over immigration policy. Republican-led states like Texas and Florida, which have passed strict immigration laws in recent years, now find their policies aligned with the federal government. Conversely, Democratic-led states that have explored more inclusive approaches for undocumented residents face the possibility of federal retaliation.
California remains particularly at risk, given its past legislative efforts and existing programs that support undocumented residents, such as state-funded healthcare and tax credits. New York and other states like New Jersey, Illinois, and Massachusetts, which have previously implemented programs to assist undocumented individuals, may also come under scrutiny if they attempt to expand benefits.
Supporters of the Labor Department’s move argue that it protects taxpayer funds and ensures that benefits go to legally eligible workers. Critics, including immigrant advocacy groups and some Democratic lawmakers, argue that the policy is punitive and could harm state unemployment systems by withholding essential administrative funding. They also emphasize that many undocumented workers contribute to unemployment insurance systems through their labor and taxes, yet are barred from accessing benefits.
Historically, the federal government has used funding threats to influence state policies, though courts have sometimes limited this power. Legal precedent suggests that while targeted, proportional funding conditions tied to program requirements are typically upheld, broader or coercive cuts could be struck down as unconstitutional. Should any state proceed with expanding unemployment benefits to undocumented workers, legal challenges are likely.
For now, Chavez-DeRemer’s warning serves as a preemptive measure to discourage states from testing the limits of federal law. Whether states comply quietly or challenge the administration’s stance remains to be seen, but the stage is set for further conflicts over immigration policy and state sovereignty.
