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