BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted W. Lieu, Chair Date of Hearing: May 8, 2013 2013-2014 Regular Session Consultant: Gideon L. Baum Fiscal:No Urgency: No Bill No: SB 558 Author: Lieu As Introduced/Amended: May 1, 2013 SUBJECT Unemployment insurance: Employment Development Department. KEY ISSUE Should the Legislature permit the Employment Development Department to accept electronic request from an employee for the employee's wage information? ANALYSIS Existing law vests the Employment Development Department (EDD) with the responsibility of ensuring employers remit appropriate Unemployment Insurance (UI) contributions and to collect the employee wage deductions to the Disability Fund. EDD uses these funds to finance the Unemployment Insurance and Disability Insurance (DI) Programs. (Unemployment Insurance Code §§ 301, 976, 984, 1025-1037, 1555-1562, & 3001-3015) Existing law also authorizes EDD to collect personal income taxes required to be withheld by employers. (Unemployment Insurance Code §§ 13000 &13020) Existing law requires that EDD collects appropriate data in order to carry out the responsibilities listed above. This information includes the employer's name and address, the number and contact information of employees employed by an employer, the wages paid to those employees, and any independent contractors that have performed services for an employer. (Unemployment Insurance Code §§ 1085-1093) Existing law requires that, unless specifically provided, the information obtained in the administration of the UI Program and DI program are confidential and must be used for the exclusive use and information of the director of Employment Development Department (EDD) in discharge of his or her duties. Any person violating the confidentiality of this information is guilty of a misdemeanor. (Unemployment Insurance Code §1094) Existing law provides that any employee or his or her representative may receive his or her wage information upon written request by the employee. The information shall be provided without charge. (Unemployment Insurance Code §1094) This bill would allow the Employment Development Department to permit employees to request their wage information in a form other than in writing. This bill would make additional conforming changes. COMMENTS 1. Need for this bill? Due to the responsibilities of the Employment Development Department (EDD) in receiving the state payroll tax remittances, EDD has a complete record of every employee's wage information. Current law allows for an employee or his or her representative to request the employee's wage information from the Employment Development Department. However, according to the Employment Development Department, a little less than 6,400 employees requested their wage data in 2012. In the past three years, the average is a bit under 6,000 employee requests per year. The author and the proponents of this measure feel that this low level of requests is a sign that the program is underutilized and needs to be modernized. SB 558 seeks to do this by allowing EDD to accept non-written requests from the Hearing Date: May 8, 2013 SB 558 Consultant: Gideon L. Baum Page 2 Senate Committee on Labor and Industrial Relations employee, but NOT the employee's representative. This allows EDD to explore the possibility of the request being electronic while continuing to accept written requests and also protect the confidentiality of the employee's wage information. 2. A Brief Discussion on the Prior Version of SB 558: SB 558 was originally heard in Senate Labor Committee on April 10th. At that hearing, the author put the bill over to address the concerns raised by the opposition. The bill was then amended on May 1, 2013, and this analysis reflects those amendments. At the April 10th hearing, the opponents noted the U.S. Department of Labor's Unemployment Insurance Program Letter No. 19-12, which dealt with the disclosure of confidential unemployment insurance information to third party entities. The letter only dealt with third parties ; it did not deal with the employee or the employee's representative/agent. SB 558 did not, nor does it currently, allow a third party to access an employee's wage data. As noted above, existing law prohibits third party access to EDD's data, and SB 558 would not impact or alter that prohibition. As stated in UI Program Letter 19-12, state statute would need to specifically allow a third party access to UI data - it could not be done by inference or accident. 3. A Brief Discussion of the Uniform Electronic Transactions Act (UETA): Under current law, an employee would only be able to request his or her information by submitting a signed letter from the employee with his or her name, address, telephone number, social security number, and years for which the employee wants wage information. EDD can also take this information by fax. Currently, however, EDD does not accept any electronic request for wage information. Under the Uniform Electronic Transactions Act (Civil Code §§1633.1-1631.17), a contract is considered a valid contract if signed with an electronic signature if both parties have agreed to conduct business electronically. As a governmental Hearing Date: May 8, 2013 SB 558 Consultant: Gideon L. Baum Page 3 Senate Committee on Labor and Industrial Relations agency, UETA would apply to the Employment Development Department. If EDD were to develop an online form with the relevant information, it would be possible for EDD to take an individual employee's request for wage information in an electronic format under the UETA. Therefore, SB 558 follows a similar path to the UETA, allowing for an electronic signature in the provision of a governmental service. 4. Proponent Arguments : None on file. 5. Prior Legislation : SB 1284 (Lieu) of 2012 would have allowed the Director of Employment Development to electronically transmit wage information of an employee to a creditor, upon the execution of a release by an employee. SB 1284 was set for a hearing before this Committee, but the hearing was cancelled at the request of the author. SB 820 (Sher and Bowen), Statutes of 1999, Chapter 428, creates the Uniform Electronic Transactions Act. SUPPORT None on file. OPPOSITION None on file. Hearing Date: May 8, 2013 SB 558 Consultant: Gideon L. Baum Page 4 Senate Committee on Labor and Industrial Relations