BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: June 23, 2010 2009-2010 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 2188
Author: Bradford
Version: As Amended June 17, 2010
SUBJECT
Unemployment compensation: disability benefits: electronic
payments.
KEY ISSUE
Should the Legislature remove the requirement that the
Employment Development Department pay all Disability Insurance
benefits by check?
PURPOSE
To allow the Employment Development Department to contract with
a vendor to deliver Disability Insurance benefits through direct
deposit and debit card.
ANALYSIS
Existing law requires claims for unemployment compensation
benefits to be made in accordance with regulations adopted by
the Director of EDD.
Existing law also requires EDD to promptly pay unemployment
compensation benefits if it finds the claimant is eligible or
deny benefits if it finds the claimant is ineligible.
Existing law requires the payment of Disability Insurance (DI)
benefits to be paid by checks drawn on a disability benefit
payment account from a bank or public depository selected by the
director of EDD, with the approval of the Department of Finance.
This bill would remove the requirement that Disability Insurance
(DI) benefits be paid by check, thereby allowing for electronic
or other forms of DI benefit delivery.
COMMENTS
1. Electronic Benefit Delivery and the Bank of America Contract:
Earlier this year, when the Employment Development Department
sought a vendor for the electronic delivery of Unemployment
Insurance (UI) benefits, Disability Insurance (DI) benefits,
and Paid Family Leave (PFL) benefits with a vendor, the author
and sponsor introduced a legislative vehicle in order to
promote and provide legislative guidance. One of the key
goals of the measure was to ensure that individuals who
receive UI, DI, and PFL benefits are appropriately protected
from fees from the vendor.
Earlier this month, EDD selected Bank of America (BOA) as its
vendor for the electronic delivery of Unemployment Insurance
(UI), Disability Insurance (DI), and Paid Family Leave (PFL)
benefits, which met or exceeded all of the standards included
in AB 2188. This included BOA charging virtually no fees for
use of the debit cards, allowing unlimited ATM withdrawals
within the BOA network, cash access at point-of-sale
terminals, and use of the debit card wherever Visa is
accepted. Moreover, Bank of America will not charge a fee for
providing this service, but rather make their money through
fees paid by businesses that utilize debit cards.
As such, AB 2188 has now been amended to allow EDD to pay DI
benefits without a check without statutory conditions,
ensuring that the implementation of this bill would not
interfere with the BOA contract.
Hearing Date: June 23, 2010 AB 2188
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
Noting that this measure and AB 2538 are virtually identical
and share the same goal, the Committee may wish to consider,
if it makes sense, to pass out both measures and risk possible
chaptering-out issues which could endanger the Bank of
American contract.
2. Proponent Arguments :
According to the author and the California Labor Federation,
as many Californians face an economic crisis, access to
unemployment benefits is more important than ever. Electronic
pay cards can benefit "unbanked" individuals who do not have
access to a bank account and resort to payday lenders and
check cashers that charge exorbitant fees. The author and the
California Federation of Labor believe that this measure will
allow EDD to consummate its relationship and contract with
vendor Bank of America, and that this contract will protect
California's unemployed and disabled workers.
3. Opponent Arguments :
The California Bankers Association opposed AB 2188 prior to
the Amendments of June 17th, as the bill included language
that would have placed restrictions on unemployment insurance
and disability insurance benefits that were paid by debit
card. As this language has been removed, it is unknown if the
California Bakers Association is still in opposition to the
current version of AB 2188.
4. Similar Legislation :
AB 2538 (Niello), which will also be heard today, also removes
the requirement that the Employment Development Department
pays all Disability Insurance benefits with a check.
SUPPORT
(Prior to Amendments of June 17)
Hearing Date: June 23, 2010 AB 2188
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
California Labor Federation - Sponsor
American Federation of State, County and Municipal Employees,
AFL-CIO
California Alliance for Retired Americans
California Nurses Association/National Nurses Organizing
Committee
California State Pipe Trades Council
Service Employees International Union - California State Council
State Association of Electrical Workers
State Building and Construction Trades Council, AFL-CIO
Western State Council of Sheet Metal Workers
OPPOSITION
(Prior to Amendments of June 17)
California Bankers Association
* * *
Hearing Date: June 23, 2010 AB 2188
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations