California Legislature—2013–14 Regular Session

Assembly BillNo. 152


Introduced by Assembly Member Yamada

January 18, 2013


An act to add Article 2.3 (commencing with Section 1301) to Chapter 5 of Division 1 of, and to repeal and add Section 1300 of, the Unemployment Insurance Code, relating to unemployment insurance, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 152, as introduced, Yamada. Unemployment: Self-Employment Assistance Program.

Existing law provides for the payment of unemployment compensation benefits during the period that a person is unemployed. Existing law imposes various requirements on the payments of benefits, including work search requirements. Existing law also establishes retraining programs for unemployed workers. Prior law, enacted in 1994 and repealed in 2005, established the Self-Employment Assistance Program for displaced workers.

This bill would establish a similar Self-Employment Assistance Program, to be administered by the Director of the Employment Development. The bill would provide for a weekly allowance for participants equal to regular unemployment benefits, subject to various limits, and would impose various eligibility requirements upon participants, and would waive requirements relating to job search and self-employment, as specified.

Since the benefits would be payable from the continuously appropriated Unemployment Fund, the bill would make an appropriation.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: 23. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 1300 of the Unemployment Insurance
2Code
is repealed.

begin delete
3

1300.  

The Legislature finds that the traditional system of
4unemployment compensation is primarily designed to provide
5income support for workers who are temporarily laid off or expect
6to be unemployed for only a short time. However, increasing
7numbers of workers are losing their jobs permanently due to rapid
8technological change, elimination of trade barriers, and similar
9causes. These workers need additional tools besides the basic
10income maintenance provided by the unemployment compensation
11system in order to reenter the workforce. For some of those
12workers, access to a self-employment program would be the best
13path for them to do so. Accordingly, it is the purpose of this article
14to authorize the payment of unemployment compensation benefits,
15and to provide appropriate training and support services, for eligible
16dislocated workers who wish to become self-employed in their
17transition back into the workforce.

end delete
18

SEC. 2.  

Section 1300 is added to the Unemployment Insurance
19Code
, to read:

20

1300.  

The Legislature finds and declares all of the following:

21(a) California and the national economy are recovering from
22the deepest recession since the Great Depression; recent data
23indicates that approximately 700,000 Californians are currently
24claiming unemployment insurance benefits.

25(b) The demand for unemployment insurance benefits remains
26unusually high because more people are staying unemployed
27longer. Global competition and rapidly evolving technologies have
28resulted in the dislocation of millions of workers from their jobs,
29and even with the creation of new jobs, layoffs have become
30permanent instead of a temporary experience during fluctuation
31in the business cycle.

32(c) As reported in the November 2012 California Labor Market
33Review, 45.7 percent, or approximately 8887,00 of those
P3    1unemployed have been so for 27 weeks or more and approximately
234.6 percent of all unemployed, or 671,000, have been so for one
3year or more.

4(d) Currently, 73 weeks of benefits, regular unemployment
5insurance combined with federal extensions, is the maximum
6number of weeks a claimant may collect. As of December 17,
72012, over 923,000 unemployed workers in California have run
8out of all benefits.

9(e) There remains a critical need for California policies that will
10create faster economic and job growth and support for those
11struggling to find a job.

12(f) In 1993, the federal government created the Self-Employment
13Assistance Program for a five-year period, based on positive results
14from experimental self-employment demonstration projects
15conducted by the United States Department of Labor, in
16collaboration with state employment agencies. Federal law made
17the program permanent in 1998.

18(g) Prior California law, enacted in 1994 and repealed in 2005,
19established the state Self-Employment Assistance Program as an
20alternative use of unemployment insurance. This program was an
21important component of a broader workforce system strategy to
22promote entrepreneurship and microbusiness development, both
23as a reemployment strategy and to support economic development
24through job creation.

25(h) State unemployment insurance programs in Delaware,
26Maine, New Jersey, New York, and Oregon actively offer
27unemployed workers the option of reemployment through
28self-employment assistance programs.

29(I) The Middle Class Tax Relief and Job Creation Act of 2012
30expanded Self-Employment Assistance Program eligibility,
31provided funding for states to implement or improve these
32programs, and directed the Department of Labor and the Small
33Business Administration to coordinate efforts to help more
34Americans start and grow small businesses.

35(j) The Middle Class Tax Relief and Job Creation Act of 2012
36provides thirty-five million dollars ($35,000,000) for
37Self-Employment Assistance Program grants. Of this amount,
38California could receive approximately five million three hundred
39thousand dollars ($5,300,000). Of this amount, four million six
40hundred thousand dollars ($4,600,000) is available for
P4    1implementation and administration of the Self-Employment
2Assistance Program. The remaining seven hundred sixty-nine
3thousand seven hundred ninety-six dollars ($769,796) is available
4for the promotion of the Self-Employment Assistance Program.

5(k) The Self-Employment Assistance Program is a voluntary
6state-run program that provides unemployed individuals financial
7support while they pursue full-time self-employment assistance
8activities that lead to establishing a business and becoming
9self-employed.

10(l) The California Employment Development Department (EDD)
11must identify an individual, through a worker profiling system, as
12likely to exhaust benefits to receive, in lieu of unemployment
13benefits, a weekly allowance equal to the individual’s weekly
14unemployment compensation benefit without having to search for
15full-time wage employment.

16(m) The EDD monitors self-employment assistance activities
17that include entrepreneurial training, business counseling, and
18business technical assistance. A network of more than 125
19 organizations throughout the state provides these services.

20(n) The Self-Employment Assistance Program is a limited
21program appropriate to just a small fraction of unemployment
22insurance benefit claimants. It can help some current
23unemployment insurance benefit recipients and those who have
24exhausted their unemployment insurance benefits, probably no
25more than one or 2 percent.

26(o) It is, therefore, the intent of the Legislature to enact
27legislation that would authorize the establishment of a
28Self-Employment Assistance Program administered by the Director
29of Employment Development for the state to become eligible to
30apply for federal funds by June 30, 2013, to establish, promote,
31and operate the program.

32

SEC. 3.  

Article 2.3 (commencing with Section 1301) is added
33to Chapter 5 of Part 1 of Division 1 of the Unemployment
34Insurance Code
, to read:

35 

36Article 2.3.  Self-Employment Assistance Program
37

 

38

1301.  

As used in this article:

39(a) “Full-time basis” shall have the same meaning as is contained
40in regulations prescribed by the director.

P5    1(b) “Regular benefits” means benefits payable to an individual
2under this part, including benefits payable to federal civilian
3employees and to ex-service members pursuant to Chapter 85
4(commencing with Section 8501) of Title 5 of the United States
5Code, other than additional and extended benefits.

6(c) “Self-employment assistance activities” means activities
7approved by the director in which an individual, identified through
8a worker profiling system as likely to exhaust regular benefits,
9participates for the purpose of establishing a business and becoming
10self-employed. These activities shall include, but are not limited
11to, entrepreneurial training, business counseling, and technical
12assistance.

13(d) “Self-employment assistance allowance” means an allowance
14payable in lieu of regular benefits and from the Unemployment
15Fund established under Section 1521 to an individual participating
16in self-employment assistance activities who meets the
17requirements of this article.

18(e) “Self-Employment Assistance Program” means the program
19that enables an unemployed individual approved under this article
20to engage in self-employment assistance activities on a full-time
21basis that will lead to establishing a business and becoming
22self-employed.

23

1302.  

The weekly allowance payable under this article to an
24individual shall be equal to the weekly benefit amount for regular
25benefits otherwise payable under Article 2 (commencing with
26Section 1275). The sum of the allowance payable under this article
27and the regular benefits paid under this part with respect to any
28benefit year shall not exceed the maximum benefit amount as
29established by Section 1281 with respect to that benefit year.

30

1303.  

The allowance described in Section 1302 shall be payable
31to an individual at the same interval, on the same terms, and subject
32to the same conditions as regular benefits under this part, except
33as follows:

34(a) The requirements relating to availability for work, active
35search for work, and refusal to accept work shall not apply to any
36week that the individual is in training or engaged in
37self-employment activities as approved by this article.

38(b) Income earned by an individual while engaged in
39self-employment activities as approved under this article shall not
40be construed to be wages or compensation for personal services
P6    1under this division, and benefits payable under this division shall
2not be denied or reduced because of those payments.

3(c) An individual who fails to participate in self-employment
4assistance activities or who fails to actively engage on a full-time
5basis in activities, which may include training, relating to the
6establishment of a business and becoming self-employed shall be
7disqualified for the week the failure occurs.

8

1304.  

An individual is eligible to be paid a self-employment
9assistance allowance if he or she meets all of the following
10conditions:

11(a) Is eligible to receive regular unemployment compensation
12under state law.

13(b) Has been identified pursuant to an automated profiling
14system as likely to exhaust regular unemployment compensation.

15(c) Has been approved for participation in the Self-Employment
16Assistance Program by the director.

17(d) Is engaged on a full-time basis in self-employment assistance
18activities, which may include, but not be limited to, entrepreneurial
19training, business counseling, and technical assistance related to
20establishing a business and becoming self-employed.

21

1305.  

The aggregate number of individuals receiving the
22allowance under this article at any time shall not exceed 5 percent
23of the number of individuals receiving regular benefits. The director
24shall, through regulations, prescribe those actions necessary to
25ensure the requirements of this section are met.

26

1306.  

(a) Self-employment assistance allowances paid under
27this article shall be charged to employers as provided under
28provisions of this part relating to the charging of regular benefits.
29Costs of administering the self-employment assistance allowances
30are payable from the Self-Employment Assistance Program grant
31received from the federal Department of Labor, which allocates
32approximately five million three hundred thousand dollars
33($5,300,000) to California for such purposes. Costs of providing
34self-employment assistance activities, such as business training,
35business counseling, and technical assistance are payable from
36federal Workforce Investment Act of 1998 funds and other
37government and private grants.

38(b) For purposes of this article, costs of administering the
39program include marketing, staff training, review of applications,
P7    1assessment of applicants, payment of allowances, and relating
2information technology costs.

3

1307.  

The provisions of this article shall become operative two
4weeks beginning after the effective date of this article or two weeks
5beginning after any plan required by the United State Department
6of Labor relating to a Self-Employment Assistance Program is
7approved by the United States Department of Labor, whichever
8date is later. Immediately upon enactment of this article, the
9director shall develop a Self-Employment Assistance Program
10plan and seek approval from the United States Department of
11Labor.

12

SEC. 4.  

This act is an urgency statute necessary for the
13immediate preservation of the public peace, health, or safety within
14the meaning of Article IV of the Constitution and shall go into
15immediate effect. The facts constituting the necessity are:

16In order to ensure that the Employment Development Department
17postmark a completed application on or before June 30, 2013, in
18order to receive grants from the United States Department of Labor
19to develop, enhance, and promote a Self-Employment Assistance
20Program, it is necessary that this act take effect immediately.



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