The D.C. Office of Unemployment Compensation for months has been paying benefits without checking the validity of claims, according to staff members who also say that top officials in the agency instructed them to make the payments during periods of heavy backlogs.

The staff members assert that payments have been going to people who had no proof of employment or salary; former claimants who informed the office that they had returned to work; people who had not filed claims for the payments; people who worked not in the District, but in Maryland and Virginia, where benefits are considerably lower, and claimants who had been disqualified.

"We were told by officials not even to bother seeing if the claims cards were signed or if claims had been made. Just pay," said David McLellan, an agency staff member for six years.

What these payments amount to in dollars may not be possible to determine. But estimates by several staff members indicate that it may have been more than half a million dollars by the end of last year.

The D.C. unemployment office paid $72 million in benefits in 1981. The money is supplied by employers, who pay it as state and federal taxes for each of their employes.

After a reporter asked questions about unemployment compensation procedures, the U.S. Labor Department began preparations for an investigation into these and other "chronic problems" in the local unemployment office, according to a Labor Department spokesman.

Of the 10 staff members who made the assertions--one of them a senior official and the rest middle-level personnel--all but McLellan declined to allow the use of their names, fearing reprisals.

The staff members said that Ivanhoe Donaldson, the department's acting director, and his deputy, Matthew F. Shannon, issued the pay instructions orally. At later meetings, Donaldson and Shannon instructed the staff not to make payments without verifying them first, but the practice continued, according to officials interviewed.

Donaldson, who ran Mayor Marion Barry's successful election campaign in 1978 and is one of the mayor's top advisers, said he had not given such orders. So did Shannon.

"It's valid to say we're pushing the staff to get people paid," Donaldson said in an interview. "But no staff member has been told orally or in writing to pay unverifiable claims. I don't know about it anyway. It's not our policy."

Donaldson said that he considered "timely and accurate payments" his top priorities. "As to whether 'timely' or 'accurate' is more important," he said, "you can't have one without the other. Maybe our people are feeling the pressure of timeliness, but they should be feeling the pressure of accuracy, too."

"The pressure of timeliness" is an allusion to Labor Department standards for prompt payment of claims. In an appraisal conducted last year, the D.C. office's performance was almost at the bottom of the nation's 53 unemployment jurisdictions, trailed only by Puerto Rico and the Virgin Islands.

The Labor Department's regional office in Philadelphia said it will begin its investigation about April 1. According to a regional office memorandum that contributed to the decision to investigate, the office has recommended that Labor Secretary Raymond Donovan consider decertifying the D.C. office and placing it under federal control.

The memorandum, a copy of which was obtained by The Washington Post, outlined six current problems, including "the agency's admitted practice of paying benefits in the absence of claims."

Because these were "symptomatic of the chronic problems which are characteristic of the D.C. agency," the memo recommended decertification and federal takeover or assignment of a team of federal workers to augment the D.C. staff for six months to a year.

Donaldson and associate director Jerry Blount wrote letters protesting to the regional office that they had never admitted any impropriety because there was none.

Making unverified or other kinds of overpayments because of error is a common problem in this and other unemployment offices, where thousands of claims are handled each day.

Some errors are considered inevitable, particularly when the local office's computer is outmoded, as it is here, leaving much of the tedious work to be done by hand.

The D.C. office's official figures for 1981 show $586,000 in improperly issued payments, of which $332,000 is shown as having been recovered.

A detailed study of six cities last year by the National Commission on Unemployment Compensation found that overpayments ran from two to 40 times higher than the local agencies had reported.

In recent months, the D.C. unemployment office has faced increasing pressure from claimants as both government and private employers have laid off personnel. The unemploymemt office itself lost 52 staff members in 1981 and this has contributed to its problems.

Last July and August, top officials in the city's Department of Employment Services allegedly started instructing staff members to pay benefits without going through required claim-confirming procedures, according to several of the staff members.

"Ivanhoe got us all together one day in August and said that claimants don't lie. Pay them," one staff member said.

Another staff member recalled a Thursday staff meeting in October with about 40 persons present. "Ivanhoe told us, 'I don't care what you do. Just get the people paid. Pay! Pay! Pay! The system is all fouled up anyway. We'll go back on the other end and worry about quality control then. We'll put the fraud squad on it,' " the second staff member said.

A third staff member said, "We used to check with employers to straighten out errors, but Ivanhoe told us to quit because it damaged our image with the employers."

The practice continued until late December, the staff members said, when the pace of overpayments slackened and when a reporter began interviewing personnel. During several staff meetings held at that time, Donaldson and Shannon told their employes that they had never instructed them to pay claims improperly.

But improper payments still have not ceased, according to staff members interviewed.

Blount, who has been in charge of unemployment since Sept. 14, on loan from the federal Unemployment Insurance Service, suggested that if staff members were making unconfirmed payments, it could be a result of "misinterpretation."

"The only sense I can make," Blount said, "is that people may have heard Ivanhoe say, 'Pay it! Pay it! Pay it!' because he wants them to clear backlogs and they've misinterpreted it to mean, 'Don't follow procedures.' But I don't know how anyone could think we would recommend that we break our own regulations."

Several staff members said that a certain amount of blind obedience on their part could be attributed to fear of what they considered Donaldson's short temper and abrasiveness.

A partial explanation for the increase in improper payments appears to be that the city's unemployment system went through stress and confusion last summer.

On Aug. 3, it was dispersed from a central office at 500 C St. NW to five neighborhood centers. And, at the same time, the traditional process of having people report to the unemployment office to sign weekly claim cards was changed so that they could mail in their claims, as a convenience. And the staff was reduced from 220 to 168 by the Labor Department.

Simultaneously, more and more area workers were being laid off. Payments became increasingly overdue, bringing pressure from disgruntled claimants, members of Congress and the mayor's office.

At the same time, the agency's top officials were striving to meet federal promptness targets. But staff members said actual payments were falling further behind these goals than ever before.

Then, according to several staff members, Donaldson began to demand heatedly at staff meetings beginning last summer and continuing into the fall that they bypass time-consuming checking and, as one of them put it, "just pay, pay, pay."

One of the staff members interviewed said that one day in October he went through 3,800 pay order cards that had been sent to the main office from the neighborhood centers and that were cleared for payment.

Among them he found 223 cards without claimants' signatures--indicating that the people hadn't claimed benefits for that week. A few days later, he said, he repeated the process. Of 4,300 cards, he found a similar number unsigned but cleared.

Jeanne O'Gorman, who works for a women's rights organization, received a payment she wasn't entitled to, a payment she hadn't asked for.

After being laid off last June and collecting benefits for six weeks, O'Gorman returned to work and said she notified the unemployment office in writing that she was no longer entitled to benefits. She then received claim cards for the first two weeks of October.

"I signed and dated them, marked that I wasn't available for work--therefore disqualifying myself for benefits--and then put a slash through them and stapled on a note saying I'd gone back to work and wasn't entitled to any benefits and you don't owe me anything. One week later I got a check for $133, which is what I'd been getting each week before."

After more than a month of telephoning officials, she sent back the check by return-receipt-requested registered mail. "It cost me $5," O'Gorman said.

McLellan related the case of a man whose $100-a-week retirement pension, which had been deducted from his unemployment checks as required by law, was inexplicably restored and continued for 10 weeks.

His efforts to return the $1,000 failed because no one seemed to know how to handle the matter. "Finally," McLellan said, "he put the money in a special bank account until he got some kind of decision. He's still waiting."

Asked about this and the O'Gorman case, Blount, a veteran of 22 years in unemployment said, "That is unheard of in my experience."

Another case is that of a former employe of the Washington Gas Light Co. who worked at one of the company's facilities in Maryland. The company paid his unemployment compensation tax to Maryland. But, when he was let go in August, he applied for benefits in the District, signing an affidavit to the effect that he had worked in the city.

The D.C unemployment office made no attempt to verify the affidavit with the company and simply paid the claimant a total of $1,440, over $400 more than he would have received in Maryland. The company only learned of it five months later, and just as a matter of coincidence.

An additional case involved a Providence Hospital employe who had been laid off over the summer. After she informed the unemployment office that she'd been rehired, she received $1,100 more in benefits. She then notified the hospital.

"When we checked into it, we found that the central office had put a stop order on her file, but apparently the neighborhood center just ignored it," said Betty Kay of Reed, Roberts Associates Inc.

The firm represents employers in their dealings with unemployment agencies throughout the country. A staff member in the D.C. office confirmed Kay's reading of events.

In separate interviews, several staff members said the first instance of payments being made in circumstances like these occurred last July, under the direction of Shannon.

Nearly 2,000 school cafeteria workers and crossing guards, laid off on June 17 for the summer, had filed for benefits and a month later most had still not been sent their first checks.

According to a staff member who dealt with these claims, many computerized cards were missing and many more lacked signatures and contained errors. He and other personnel worked with claimants to complete the cards, but couldn't keep up with demand. A logjam developed.

"Then suddenly, one day in July, a group of half-a-dozen people from employment services came down and began removing the top cards and releasing them for payment, whether they were signed or not," he said.

Employment services personnel do not normally work in unemployment compensation. The "top cards" release initial paymnents and set in motion a series of weekly checks that may continue for up to 34 weeks--but, supposedly, only as long as claimants sign and mail back subsequent cards.

What staff members allege is that they were instructed to make payments regardless of whether or not the top cards or the subsequent weekly cards were completed or even mailed back in.

The unverified payments made initially were supposed to be only for school workers. But, one staff member said, "they tossed in everyone." Shannon said in an interview that some problems had arisen over dormant claims but that only 42 school employes were involved and he settled the matter properly.

Then, in August, unemployment services moved to the neighborhood centers. The shift produced what Donaldson termed "chaos" among claimants and staff. This led to the creation of a so-called "SWAT team"--including Shannon's aide, Ron Lester.

Staff members said this team went to various satellite offices and, in an effort to clear backlogs, made numerous unverified payments.

Lester concurred in an interview that he worked with the "SWAT team," but denied that it participated in improper payments. "All of this is absolutely untrue," he said.

Shannon insisted that the unverified payments were not being made under instructions, as alleged, but blamed personnel in the neighborhood centers for any problems. "Unsigned cards should not get into the system," he said. "If they do, it's because supervisors are doing a poor job."

He also said that protective measures were built into the system, with the central office charged with checking all claim cards each day.