BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 2538|
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THIRD READING
Bill No: AB 2538
Author: Niello (R)
Amended: 6/30/10 in Senate
Vote: 21
SENATE LABOR & INDUS. RELATIONS COMMITTEE : 5-0, 6/23/10
AYES: DeSaulnier, Ducheny, Hollingsworth, Leno, Yee
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 63-0, 5/28/10 - See last page for vote
SUBJECT : Unemployment insurance: eligibility for
benefits:
notification
SOURCE : The Employment Development Department
DIGEST : This bill allows the Employment Development
Department (EDD) to serve Notices of Levy either
electronically or via first class mail, authorizes
prosecution of criminal acts involving EDD to occur in the
county where the offense occurs, and deletes references to
Labor Code Sections that no longer exists.
ANALYSIS :
Existing law
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1. Requires the EDD to implement and administer the
unemployment insurance program in this state, and
provides for the payment of unemployment compensation
benefits to eligible individuals who are unemployed
through no fault of their own.
2. Provides for penalties and interest if any person or
employing unit is delinquent in the payment of any
contributions for unemployment insurance, and authorizes
the Director of Employment Development to collect the
delinquency or enforce any state tax liens by levy
served personally or by certified mail.
3. Requires that, if the levy is made on a deposit or
credits or personal property in the possession or under
the control of a bank or savings and loan association,
the notice of levy shall be delivered or mailed to the
branch or office of the bank or savings and loan
association at which the deposit is carried or at which
credits or personal property is held.
4. Requires that the place of trial for specified
violations of unemployment insurance laws be in the
county of residence or principal place of business of
the defendant or defendants, except as provided.
5. Provides for the payment of disability benefits to
eligible individuals who are not able to work due to a
disability, injury, or illness.
6. Requires that an individual be eligible to receive, for
any day, if otherwise eligible, disability benefits
reduced by the amount of the maintenance allowance and
permanent disability indemnity, if specified conditions
are met.
7. Makes an individual ineligible for disability benefits
for any day of unemployment and disability for which he
or she has received, other benefits, as defined, in the
form of cash payments, receive, or is entitled to
including a specified maintenance allowance paid for
vocational rehabilitation.
This bill allows the EDD to serve Notices of Levy either
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electronically or via first class mail, authorizes
prosecution of criminal acts involving EDD to occur in the
county where the offense occurs, and deletes references to
Labor Code Sections that no longer exists.
Comments
EDD the sponsor of the bill states, "AB 2538 will clean up
the Unemployment Insurance Code and ensure the proper
operation of the Unemployment Insurance Program. EDD
reports that the current process of serving the Notice of
Levy (NOL) personally or by certified mail is time
consuming and expensive. Certified mail costs $3.24 per
NOL compared with 44 cents for first-class mail, or minimal
cost if sent electronically."
Current law only allows for the prosecution of violations
of the California Unemployment Insurance Code to take place
in the county where the defendant resides or conducts
business. According to EDD, in 2007 and 2008 prosecutors
cited limitations in current law as the cause for rejecting
several EDD criminal investigative cases. The suspects in
these cases were owners of construction and other
businesses who were suspected of payroll tax fraud.
However, their actions took place in counties other than
the place of their business. EDD states that clarifying
where prosecutions can take place will aid enforcement
action.
The Unemployment Insurance Code contains outdated
references to sections of the Labor Code that formerly
determined eligibility for, and the amount of, DI benefits
to claimants that had been eligible for benefits under the
workers' compensation system. Removal of these sections
will clean-up the Unemployment Insurance Code.
Finally, EDD currently issues Unemployment Insurance (UI)
and Disability Insurance (DI) benefits to eligible
claimants by check. However, it is more expensive to issue
individual checks to claimants than the use of electronic
payments such as direct deposit. Current law already
provides the flexibility to modernize UI benefit delivery,
but requires checks for DI benefit delivery. This bill
allows electronic benefit delivery for DI benefits.
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Similar Legislation
AB 2188 (Bradford), 2009-10 Session, removes the
requirement that the EDD pays all DI benefits with a check.
This bill is on Senate Third Reading File.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/4/10)
The Employment Development Department (source)
ARGUMENTS IN SUPPORT : EDD notes that this bill aligns
the NOL with other state tax agencies such as the Franchise
Tax Board and the Board of Equalization which are
authorized to send NOL's to financial institutions by
first-class mail, or electronic transmission, instead of
certified mail. This bill would enhance EDD's ability to
increase collections and decrease costs. Each year, EDD
collects more than $42 billion in payroll taxes, including
nearly $35 billion in Personal Income Taxes.
EDD also argues that amending current law to allow for
greater flexibility in the location for prosecuting cases
would enhance EDD's ability to help law enforcement
agencies prosecute cases and recover tax payments due the
state. This bill would assist local district attorneys as
cases could be prosecuted in locations where the crime
occurred.
Finally, EDD has negotiated a contract for direct deposit
and debit card services in connection with the Unemployment
Insurance (UI) Program. This bill would give EDD the legal
authority to also issue DI payments by direct deposit or
debit cards. These would provide eligible claimants with a
faster and more convenient way to receive payments, and a
more secure and less costly means for EDD to disburse these
payments.
ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Block,
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Blumenfield, Bradford, Brownley, Buchanan, Caballero,
Charles Calderon, Conway, Cook, Coto, Davis, DeVore, Eng,
Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Gaines,
Galgiani, Garrick, Gilmore, Hagman, Harkey, Hayashi,
Hernandez, Hill, Huber, Huffman, Jones, Knight, Lieu,
Logue, Bonnie Lowenthal, Ma, Mendoza, Miller, Monning,
Nava, Nestande, Niello, Nielsen, Norby, V. Manuel Perez,
Portantino, Ruskin, Saldana, Skinner, Solorio, Swanson,
Torlakson, Torres, Torrico, Tran, Villines, Yamada, John
A. Perez
NO VOTE RECORDED: Bass, Bill Berryhill, Tom Berryhill,
Blakeslee, Carter, Chesbro, De La Torre, De Leon,
Emmerson, Furutani, Hall, Jeffries, Salas, Silva, Smyth,
Audra Strickland, Vacancy
PQ:do 8/4/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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