BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 1845|
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THIRD READING
Bill No: AB 1845
Author: Solorio (D)
Amended: 8/7/12 in Senate
Vote: 21
SENATE LABOR & INDUSTRIAL RELATIONS COMM. : 5-0, 6/27/12
AYES: Lieu, DeSaulnier, Leno, Padilla, Yee
NO VOTE RECORDED: Wyland, Runner
SENATE APPROPRIATIONS COMMITTEE : 6-0, 8/16/12
AYES: Kehoe, Alquist, Dutton, Lieu, Price, Steinberg
NO VOTE RECORDED: Walters
ASSEMBLY FLOOR : 77-0, 5/29/12 - See last page for vote
SUBJECT : Unemployment compensation benefits:
overpayment
assessments: termination: income tax
withholding
SOURCE : Employment Development Department
DIGEST : This bill conforms the states unemployment
insurance (UI) program administered by the Employment
Development Department (EDD) to changes in federal law.
ANALYSIS : Existing law provides that an unemployed
person is eligible for UI benefits if he or she becomes
unemployed through no fault of their own, has worked in
UI-covered employment, is able and available to work, and
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is totally or partially unemployed during the week for
which a claim is filed. (Unemployment Insurance Code (UIC)
Section 1251-1253)
Existing law provides that the EDD Director must keep
separate records of the amounts paid into the fund by each
employer in his/her own behalf, or chargeable to him/her as
benefits. Additionally, the Director must maintain a
separate reserve account for each employer, and shall
credit each reserve account with all the contributions paid
on his or her behalf. (UIC Section 1025 and 1026)
Existing law provides that EDD must give a notice of the
filing of a new or additional claim for UI benefits to the
employing unit that last employed the unemployed worker
immediately preceding the filing of the claim, unless
certain circumstances apply. (UIC Section1327)
Existing law allows any employer who is entitled to receive
notice of the filing of a new or additional claim may,
within 10 days after mailing of the notice, submit to the
department any facts within its possession disclosing
whether the claimant left the employer's employ voluntarily
and without good cause or left under one of the following
circumstances:
1. The claimant was discharged from the employment for
misconduct connected with his/her work.
2. The claimant's discharge or quitting from his or her
most recent employer was the result of an irresistible
compulsion to use or consume intoxicants including
alcoholic beverages.
3. The claimant was a student employed on a temporary basis
and whose employment began within, and ended with
his/her leaving to return to school at the close of,
his/her vacation period.
4. The claimant left the employer's employ to accompany his
or her spouse or domestic partner to a place or to join
him/her at a place from which it is impractical to
commute to the employment, and to which a transfer of
the claimant by the employer is not available.
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5. The claimant left the employer's employ to protect his
or her family or himself/herself from domestic violence
abuse.
(UIC Section 1030)
Existing law provides that if the EDD Director finds that
any employer or any employee, officer, or agent of any
employer, in submitting facts concerning the termination of
a claimant's employment, willfully makes a false statement
or representation or willfully fails to report a material
fact concerning that termination, the Director shall assess
a penalty against the employer in an amount not less than
two nor more than 10 times the weekly benefit amount of
that claimant.
(UIC Section 1142)
Existing law provides that if the Director finds that an
individual has been overpaid unemployment compensation
benefits because he/she willfully, for the purpose of
obtaining unemployment compensation benefits, either made a
false statement or representation, with actual knowledge of
the falsity thereof, or withheld a material fact, the
Director shall assess against the individual an amount
equal to 30% of the overpayment amount. Assessments
collected under this section shall be deposited in the
Benefit Audit Fund.
(UIC Section 1375.1)
This bill:
1. Provides that an employer's reserve account is not
relieved of charges relating to a benefit overpayment if
the EDD determines that the employer was at fault for
failing to respond to any request for information
relating to the individual claim for unemployment
compensation benefits, as provided.
2. Provides that the cost of benefits charged to an
employer electing to pay the cost of benefits into the
Unemployment Fund in lieu of paying contributions
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required of employers include credits of benefit
overpayments actually collected by the department,
unless the EDD determines that the payment was made
because the entity was at fault for failing to respond
to any request of the EDD for information relating to
the individual claim for unemployment compensation
benefits. This provision would apply to overpayments
after October 22, 2013.
3. Requires employers to report the hiring of any employee
who previously worked for the employer, but had been
separated from such prior employment for at least 60
days.
4. Expands the reasons on notification of termination lists
to include the claimant leaving the employer for reason
of a substantially better job or to protect his/her
family or himself/herself from domestic violence abuse.
5. Requires in order to cancel a claim for unemployment
compensation benefits, that the person requests to
cancel the claim during the benefit year of that claim
or the extended duration period of that claim.
6. Provides that the penalty assessments be assessed on an
employer or agent of the employer, depending on who the
Director finds was at fault for willfully making a false
statement or representation or for willfully failing to
report a material fact concerning that termination or
the reasonable assurance of that reemployment.
7. Provides that if both the employer and the agent of the
employer were at fault, this penalty would be assessed
against the employer and another penalty would be
assessed against the agent of the employer.
8. Provides that the additional penalties that are assessed
against an agent of the employer be available for the
specified purposes upon appropriation by the Legislature
for those purposes.
Comments
The Trade Adjustment Assistance Extension Act of 2011 and
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the Unemployment Insurance System . The Trade Adjustment
Assistance Extension Act of 2011 (PL 112-40) included three
new federal requirements for UI program integrity efforts:
1. States must impose a minimum 15% penalty on individuals
whose fraudulent acts resulted in overpayment of UI
benefits and that those penalty funds are to be
deposited in the state's UI fund.
2. States are prohibited from providing relief from charges
to an employer's UI reserve account when the
action/inaction of the employer led to the UI
overpayment.
3. States are required to include employees rehired after
60 days in the National Directory of New Hires.
Under the federal legislation, states must implement these
provisions by October 1, 2013. Failure to implement these
requirements could result in the state losing its
administrative grant funds to operate the UI program ($340
million in the 2012 federal fiscal year) and California
employers could also lose a federal tax credit resulting in
approximately $6 billion of additional taxes.
Benefit Audit Fund . The Benefit Audit Fund provides
financial support for the EDD's UI fraud investigation
program. In recent years, the Fund has generated between
$25 and $30 million per year through the collection of
assessments on fraudulent UI claims. In response to
ongoing fiscal shortfalls, annual budget acts have provided
approximately $15 million annually to support the UI fraud
investigation program and used the remaining revenue to
support the General Fund. The new federal requirements
have the effect of reducing Benefit Audit Fund revenue by
50% which will result in reduced support for either (or
both) the department's UI fraud investigation program or
the General Fund. Consistent with the federal
requirements, the bill delays implementation of this change
until October 21, 2013, which defers any budgetary impact
until the 2013-14 fiscal year.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
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SUPPORT : (Verified 8/16/12)
Employment Development Department (source)
ARGUMENTS IN SUPPORT : The bill's sponsor, the Employment
Development Department (EDD), states that this bill will
ensure that the state conforms with federal law on
California's unemployment insurance program. EDD states
that recent federal legislation requires penalties on
individuals that commit fraudulent acts, provides relief
for an employer's reserve account, and requires the
reporting of rehired employees to the National Directory of
New Hires. Finally, EDD notes that this bill contains
minor, nonsubstantive amendments to the Unemployment
Insurance Code to ensure consistency and accuracy
throughout the Code.
ASSEMBLY FLOOR : 77-0, 5/29/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Harkey, Hayashi, Roger Hernández,
Hill, Huber, Hueso, Huffman, Jeffries, Jones, Knight,
Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza,
Miller, Mitchell, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Cedillo, Fletcher, Hall
PQ:m 8/20/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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