RELEASE: California Lawmakers Announce EDD Reform Bills

Package of new legislation would alleviate the issues faced by millions of Californians in accessing unemployment benefits during the pandemic

For immediate release:

SACRAMENTO — A group of California lawmakers announced a package of legislation today to bring necessary reforms and oversight to the Employment Development Department’s (EDD) unemployment insurance (UI) program. The bills would enact crucial oversight and consumer protection measures, ensure claimants get timely access to benefits, and address fraud. 

Since the start of the pandemic, there have been widespread reports of the trouble at the EDD. Millions of Californians have struggled to access the unemployment benefits they are legally entitled to, leaving many vulnerable without income or recourse during a pandemic and recession. Despite mass fraud prevention account freezes that harmed thousands of legitimate UI claimants, EDD has still fallen prey to rampant unemployment fraud, most egregiously coming out of California prisons. 

Bureaucratic inefficiencies, antiquated technology, problematic contracts with EDD vendors, and poor planning going back decades brought the EDD to the place it finds itself in today. Multiple audits and reports have concluded that the problems facing the EDD have been present for decades with little effort on the part of the EDD to address these glaring issues.

“Many of the issues EDD is facing today have been known since the Great Recession,” said Assemblymember David Chiu (D-San Francisco). “Almost nothing was done over the years to plan for another economic downturn. Our most vulnerable Californians have struggled with this agency for decades, and I'm pleased we're coming together today to help move EDD towards the path of becoming a functioning agency.”

Governor Gavin Newsom has taken steps to improve the situation at EDD by establishing a strike team that produced dozens of actionable recommendations for the department, appointing new leadership at the EDD, and creating a task force focused on rooting out fraud.

“Like unemployment agencies in many other states, EDD was overwhelmed and unprepared for the crisis brought on by the pandemic – both in the volume of claims and the criminal attacks on the system,” said Governor Gavin Newsom. “Now, we must fix the problems EDD faces today and address the systemic challenges that have plagued EDD’s ability to efficiently provide benefits. We have made significant changes to improve our customer experience and stop fraud, including appointing new leadership at EDD. But there is more to do and a strong partnership with the Legislature is key to California’s success. I look forward to continued engagement with the Legislature and to evaluating these proposals as we aim to modernize EDD to better serve Californians.”

The problems at EDD run deep and have permeated nearly every part of the department. While it is impossible to solve all of these long-standing issues in one legislative cycle, the proposals announced today along with budgetary oversight, legislative audits, and Governor Gavin Newsom’s strike team recommendations put the EDD on a path towards reform, transparency, and accountability.

Assemblywoman Lorena Gonzalez’s (D-San Diego) Assembly Bill 74 will provide individual claimants with the option to choose to receive their unemployment benefits via direct deposit. The EDD has contracted with Bank of America to provide benefits to UI claimants through Bank of America debit cards. However, legitimate claimants caught up in the debit card freezes to prevent UI fraud have struggled to get their benefits reinstated as the EDD and Bank of America claim that only the other entity can restore the debit card accounts.

To fix this situation, AB 74 would require the EDD to make benefit payments available to the claimant through direct deposit for unemployment insurance and state disability and paid family leave programs. California is one of three states in the country not to currently offer a direct deposit option.

"Widespread problems with EDD’s debit cards have prevented countless working families from putting food on the table or paying bills during this difficult year. That’s why I’ve authored AB 74 to require a direct deposit option for critical unemployment, state disability and paid family leave benefits,” said Assemblywoman Gonzalez. “This is a commonsense solution to so many of the delays Californians have faced and will ensure families can more quickly receive the benefits they're owed.”

To build off the work of the Governor’s strike team report, ensure necessary reforms are implemented, and weaknesses identified and addressed, Assemblymember Cottie Petrie-Norris (D-Laguna Beach) introduced Assembly Bill 400. The bill would create the Unemployment Insurance Oversight Advisory Board under the Labor and Workforce Development Agency to regularly review the EDD’s UI operations and make recommendations to the EDD, the Governor, and the Legislature to achieve ongoing efficiency. 

After reports of unemployment insurance benefits being fraudulently sent to California prisons, Assemblymember Petrie-Norris introduced Assembly Bill 110, which requires the EDD to cross-check California Department of Corrections and Rehabilitation (CDCR) incarceration records in order to prevent paying fraudulent benefits to incarcerated people.

Assemblymembers Petrie-Norris and Chiu have also prioritized a $55 million budget proposal to fund a coordinated task force of local and state law enforcement agencies to address the staggering levels of fraud at the EDD. Law enforcement agencies investigating and prosecuting these cases have limited resources and can only focus on the most egregious examples.

“Since the onset of the pandemic, EDD has failed Californians time and again. We are introducing legislation to address this crisis and to ensure real and lasting change at the Department,” said Assemblywoman Petrie-Norris. “This package of bills gives real, commonsense solutions for the myriad of problems plaguing the system, including addressing rampant fraud, expediting delivery of benefits and establishing long-term accountability.”

Accessing unemployment benefits can be a frustrating months-long process for any Californian, but those difficulties are compounded for Californians with limited English proficiency. In fact, the challenges are so significant that the Governor’s strike team report concluded that UI claimants who do not speak English face “insurmountable barriers” to receiving benefits. While EDD provides some forms and services in Spanish, those services are not nearly comprehensive enough to be effective and there are virtually no resources for the 2.4 million Californians who speak a language other than Spanish or English. Assembly Bill 401 by Assemblymember David Chiu takes steps to ensure that all Californians seeking services provided by the EDD have the timely language support necessary to access benefits.

“The lack of language access at EDD is not only upsetting but it is also a matter of civil rights,” said Assemblymember Chiu. “It’s time EDD recognizes the seven million Californians who speak a language other than English and who are legally entitled to unemployment benefits.”

Assembly Bill 402 by Assemblymember Buffy Wicks (D-Oakland) brings a much-needed consumer voice to the EDD by establishing the Office of the Claimant Advocate within the EDD. This office would be responsible for protecting Californians’ rights in seeking benefits administered by the department, including unemployment insurance, disability insurance, and paid family leave. Additionally, the bill would establish and enforce a Claimant’s Bill of Rights that allows claimants to report violations.

“Navigating the financial burden of unemployment during a global pandemic is difficult enough without the stress of EDD’s operational issues – unanswered phone lines, failed technology, fraud, and overwhelmed staff,” said Assemblymember Wicks. “Claimants should never feel like they’re alone when they need support, or have no path forward for receiving benefits to which they’re entitled. My bill will create a much-needed lifeline for jobless Californians, one that ensures their grievances are heard, and their rights protected.”

In order to continue receiving benefits, UI claimants are required to complete biweekly certifications with EDD to confirm that they remain unemployed and able to work, but this certification process is convoluted and contains questions that can be misleading. A simple mistake answering one of these questions can put a stop on benefits and jeopardize a claimant’s ability to participate in unemployment insurance extension programs passed by Congress during the pandemic. 

To rectify this, Assemblymember Chad Mayes (I-Yucca Valley) introduced Assembly Bill 397, which would ensure claimants who have accidentally answered a certification question incorrectly and received an overpayment are not locked out of their employment benefits. It also requires the EDD to send a clear notice of the incorrect statement and allow the individual to cure the misstatement.  

“Applying for benefits through EDD is a confusing process and it shouldn’t be,” said Assemblymember Mayes. “This economic lifeline should not be taken away from those in need. My legislation helps ensure our constituents have the ability to cure any statements made in error.” 

Assemblymember Miguel Santiago (D-Los Angeles) introduced Assembly Bill 19 to ensure the state continues to provide unemployment insurance to people who may have exhausted their benefits, should the federal government fail to act, providing a much-needed safety net for millions of Californians.

“Every day my office receives hundreds of calls from constituents who are worried about paying rent, bills and putting food on the table,” said Assemblymember Santiago. “COVID-19 has widened income inequality and it’s been further worsened by EDD’s absolute failure to handle the crisis properly. Our constituents shouldn’t have to wait months and jump through endless hoops to receive their benefits, meanwhile EDD has sent billions to scammers. We could’ve paid rent for hundreds of thousands of Californians if EDD had its act straight. EDD cannot continue to operate so haphazardly. This package of bills will help reform EDD so that they can efficiently support Californians in times of crises.”

Much of the legislative oversight of EDD occurs through the budget process, specifically in the Assembly Budget Subcommittee No. 4 on State Administration. The Chair of the Subcommittee, Assemblymember Wendy Carrillo (D-Los Angeles), and members of the subcommittee have conducted EDD oversight hearings and will continue to shape legislative policy on the EDD through the budget process this year. 

“EDD’s mission is to help people. It is not wrong, to be indignant with the institution’s flaws. Outrage is warranted but solutions are paramount,” said Assemblymember Carrillo. “What is right, is to treat Californians impacted by COVID-19 and the economic downturn humanely. Californians who receive 1099G forms with incorrect information need assistance, and so do those who are labeled as recipients of ‘overpayments.’ EDD charges these Californians double digit interest rates and hounds them for repayment. This deviates from the treatment they would receive from any other department operating a safety-net. This, like so many other EDD policies and practices, needs to change.”

“I am proud to stand with my colleagues and demand legislative fixes for the broken unemployment system that has left millions of Californians without the benefits that they deserve throughout this pandemic,” said Assemblymember Adrin Nazarian (D-Van Nuys). 

Recent legislative audits have found an overwhelming number of issues that need to be corrected at the EDD. Assemblymember Rudy Salas (D-Bakersfield), Chair of the Joint Legislative Audit Committee, has introduced Assembly Bill 56 that addresses a number of the findings in recent audits.

“Yesterday’s hearings confirmed our worst fears and validated the frustrations of millions of Californians,” said Assemblymember Salas. “It is clear that EDD did not prepare to meet this crisis and their dysfunction kept families from receiving desperately needed relief. We will make sure that EDD is reformed so that working families are never denied the relief they need during a crisis again. That is why I have introduced AB 56, which will force the EDD to accept and implement these reforms.”

These bills announced today are expected to be heard in Assembly policy committees in the spring.