Amended in Senate August 12, 2013

Amended in Senate June 13, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1280

Introduced by Assembly Member John A. Pérez

February 22, 2013

An act to add Section 1339.1 to the Unemployment Insurance Code, and to amend Section 11006.2 of the Welfare and Institutions Code, relating to health and human services.

LEGISLATIVE COUNSEL’S DIGEST

AB 1280, as amended, John A. Pérez. Public assistance payments and unemployment compensation benefits: electronic fund transfer: qualifying accounts.

Existing law provides for protection, care, and assistance for people of the state, and the promotion of the welfare and happiness of all people in the state by providing appropriate aid and services to the needy and distressed. Programs established for this purpose include the California Work Opportunity and Responsibility to Kids (CalWORKs) Program, which provides cash assistance and other social services to needy families, using federal Temporary Assistance for Needy Families (TANF) block grant program, state, and county funds, and CalFresh, whereby nutrition assistance benefits allocated to the state by the federal government are distributed to eligible individuals by each county. Counties administer the CalWORKs and CalFresh programs.

Existing law begin delete requires end delete begin insert authorizes end insert the State Department of Social Services to provide for the delivery of public assistance payments at any time during the month and authorizes any person entitled to the receipt of public assistance payments to authorize payment to be directly deposited by electronic fund transfer into the person’s account at a financial institution of his or her choice under a program of direct deposit by electronic transfer established by the county treasurer. Existing law requires each county treasurer to make an agreement with one or more financial institutions participating in the Automated Clearing House and to, by December 1, 2001, establish a program for the direct deposit by electronic fund transfer of payments to any person entitled to the receipt of public assistance benefits who authorizes the direct deposit of the benefits into the person’s account at the financial institution of his or her choice.

This bill would instead authorize a person entitled to receipt of public assistance payments to authorize payment to be directly deposited by electronic fund transfer to a qualifying account, as defined, at a financial institution of his or her choice under a program for direct deposit by electronic transfer, as established by the bill. The bill would require qualifying accounts to meet specified requirements. The bill would provide that each county treasurer has no obligation to determine whether the account at the financial institution of the person’s choice is a qualifying account, as specified.

Existing law also provides for unemployment compensation benefits to eligible persons who are unemployed through no fault of their own. These provisions are generally administered by the Employment Development Department.

This bill would, if unemployment compensation benefit payments are directly deposited to an account of the recipient’s choice, require that the payments only be deposited to a qualifying account, as defined. The bill would provide that the Employment Development Department has no obligation to determine whether an account at the financial institution of the recipient’s choice is a qualifying account, as specified.

This bill would prohibit a person or entity that issues a prepaid card or maintains or manages a prepaid card account, as defined, from accepting or facilitating the direct deposit of public assistance payments or unemployment compensation benefits to a prepaid card account that does not meet the requirements of a qualified account.

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

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

SECTION 1.  

Section 1339.1 is added to the Unemployment
Insurance Code, to read:

1339.1.  

(a)  begin insert (1) end insert begin insert   end insert Notwithstanding any other provisions of this
part, if unemployment compensation benefit payments are directly
deposited to an account of the recipient’s choice, as authorized
under the federal Electronic Fund Transfer Act begin insert (EFTA) end insert (15 U.S.C.
Sec. 1693 et seq.), the payments may only be deposited to an
account that meets the requirements of a qualifying account begin insert , as
defined in paragraph (2), end insert for deposit of public assistance begin delete payments
as set forth in Section 11006.2 of the Welfare and Institutions Code end delete
begin insert payments, including unemployment compensation benefits end insert .

begin delete

(b) A person or entity that issues a prepaid card or maintains or
manages a prepaid card account shall not accept or facilitate direct
deposit of unemployment compensation benefits to a prepaid card
account that is ineligible under this section.

end delete begin insert

(2) For purposes of this section, a “qualifying account” is one
of the following:

end insert begin insert

(A) A demand deposit or savings account at an insured financial
institution in the name of the person entitled to receipt of public
assistance payments.

end insert begin insert

(B) A prepaid card account that meets all of the following:

end insert begin insert

(i) The account is held at an insured financial institution.

end insert begin insert

(ii) The account is set up to meet the requirements for
passthrough deposit or share insurance so that the funds accessible
through the account are insured for the benefit of the person
entitled to the receipt of public assistance payments by the Federal
Deposit Insurance Corporation in accordance with Part 330 of
Title 12 of the Code of Federal Regulations, or the National Credit
Union Share Insurance Fund in accordance with Part 745 of Title
12 of the Code of Federal Regulations.

end insert begin insert

(iii) The account is not attached to any credit or overdraft
feature that is automatically repaid from the account after delivery
of the payment.

end insert begin insert

(iv) The issuer of the card complies with all of the requirements,
and provides the holder of the card with all of the consumer
protections, that apply to a payroll card account under the rules
implementing the EFTA or other rules subsequently adopted under
the EFTA that apply to prepaid card accounts.

end insert begin insert

(3) A person or entity that issues a prepaid card or maintains
or manages a prepaid card account that does not comply with
paragraph (2) shall not accept or facilitate the direct deposit of
public assistance payments, including unemployment compensation
benefits, to the prepaid card account.

end insert begin delete

(c)

end delete

begin insert (b) end insert  The department has no obligation to determine whether an
account at the financial institution of the recipient’s choice is a
qualifying account, as described in subdivision (a). For purposes
of this section, the department shall not be held liable for
authorizing a direct deposit of unemployment compensation benefit
payments into a prepaid card account designated by the recipient
that does not comply with paragraph begin delete (3) of subdivision (b) of
Section 11006.2 of the Welfare and Institutions Code end delete begin insert (2) of
subdivision (a) end insert .

begin insert

(c) For the purposes of this section, the following definitions
shall apply:

end insert begin insert

(1) “Financial institution” means a state or national bank, a
state or federal savings and loan association, a mutual savings
bank, or a state or federal credit union.

end insert begin insert

(2) “Issuer” means a person or entity that issues a prepaid
card.

end insert begin insert

(3) “Payroll card account” shall have the same meaning as
that term is defined in the regulations implementing the EFTA.

end insert begin insert

(4) “Prepaid card” or “prepaid card account” means either
of the following:

end insert begin insert

(A) A card, code, or other means of access to funds of a recipient
that is usable at multiple, unaffiliated merchants for goods or
services, or usable at automated teller machines.

end insert begin insert

(B) The same as those terms or related terms are defined in the
regulations adopted under the EFTA regarding general use
reloadable cards.

end insert

SEC. 2.  

Section 11006.2 of the Welfare and Institutions Code
is amended to read:

11006.2.  

(a) The department may provide for the delivery of
public assistance payments at any time during the month.

(b) (1) Notwithstanding any other law, any person entitled to
the receipt of public assistance payments may authorize payment
to be directly deposited by electronic fund transfer into the person’s
qualifying account at the financial institution of his or her choice
under a program for direct deposit by electronic transfer as
established in this section. The direct deposit to a qualifying
account shall discharge the department’s obligation with respect
to the payment.

(2) Each county treasurer shall make an agreement with one or
more financial institutions participating in the Automated Clearing
House pursuant to the local rules, and shall, by December 1, 2001,
establish a program for the direct deposit by electronic fund transfer
of payments to any person entitled to the receipt of public
assistance benefits who authorizes the direct deposit of the benefits
into the person’s qualifying account at the financial institution of
his or her choice. Each county treasurer has no obligation to
determine whether the account at the financial institution of the
person’s choice is a qualifying account, as defined in paragraph
(3).

(3) For purposes of this section, a “qualifying account” is one
of the following:

(A) A demand deposit or savings account at an insured financial
institution in the name of the person entitled to receipt of public
assistance payments.

(B) A prepaid card account that meets all of the following:

(i) The account is held at an insured financial institution.

(ii) The account is set up to meet the requirements for
passthrough deposit or share insurance so that the funds accessible
through the account are insured for the benefit of the person entitled
to the receipt of public assistance payments by the Federal Deposit
Insurance Corporation in accordance with Part 330 of Title 12 of
the Code of Federal Regulations, or the National Credit Union
Share Insurance Fund in accordance with Part 745 of Title 12 of
the Code of Federal Regulations.

(iii) The account is not attached to any credit or overdraft feature
that is automatically repaid from the account after delivery of the
payment.

(iv) The issuer of the card complies with all of the requirements,
and provides the holder of the card with all of the consumer
protections, that apply to a payroll card account under the rules
implementing the federal Electronic Fund Transfer Act (EFTA)
(15 U.S.C. Sec. 1693 et seq.) or other rules subsequently adopted
under the EFTA that apply to prepaid card accounts.

(4) A person or entity that issues a prepaid card or maintains or
manages a prepaid card account that does not comply with
paragraph (3) shall not accept or facilitate the direct deposit of
public assistance payments to the prepaid card account.

(5) For purposes of this section, each county treasurer and
county welfare department shall not be held liable for authorizing
a direct deposit of public assistance payments into a prepaid card
account, designated by the person entitled to receipt of public
assistance benefits, that does not comply with paragraph (3).

(6) This subdivision shall apply in each county that offers a
program for direct deposit by electronic funds transfer to some or
all of its employees.

(c) For the purposes of this section, the following definitions
shall apply:

(1) “Financial institution” means a state or national bank, a state
or federal savings and loan association, a mutual savings bank, or
a state or federal credit union.

(2) “Issuer” means a person or entity that issues a prepaid card.

(3) “Payroll card account” shall have the same meaning as that
term is defined in the regulations implementing the EFTA.

(4) “Prepaid card” or “prepaid card account” means either of
the following:

(A) A card, code, or other means of access to funds of a recipient
that is usable at multiple, unaffiliated merchants for goods or
services, or usable at automated teller machines.

(B) The same as those terms or related terms are defined in the
regulations adopted under the EFTA regarding general use
reloadable cards.