BILL ANALYSIS Ó
AB 1245
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CONCURRENCE IN SENATE AMENDMENTS
AB
1245 (Cooley)
As Amended July 7, 2015
Majority vote
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|ASSEMBLY: |76-1 |(May 18, 2015) |SENATE: |36-3 |(July 13, 2015) |
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Original Committee Reference: INS.
SUMMARY: Requires, subject to exceptions, all employers to file
their unemployment insurance (UI) related data and taxes
electronically.
The Senate amendments:
1)Extend, from six months to one year, the time period allowable
for a business to be granted a waiver for good cause of the
obligation to file electronically.
2)Make technical and conforming changes.
EXISTING LAW:
AB 1245
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1)Establishes a UI program designed to provide unemployment
insurance benefits to employees who lose their jobs through no
fault of their own. The UI program is a joint federal/state
mandatory program.
2)Requires employers to pay UI taxes based on a statutory
formula, and to provide detailed wage information on a
schedule specified in statute.
3)Allows "hard copy" filing and paper check tax remittance, but
authorizes on a permissive basis electronic filing of the
taxes and data.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
1)Purpose. According to the author, this bill would phase in
over a two-year period the required use of electronic filing
for all California employers to submit returns and remit
payments to the Employment Development Department (EDD).
Electronic filing for employers would increase efficiencies
for both EDD and the employer community. Once fully
implemented, this legislation would result in many millions in
savings to the state in paper, postage and staff time.
2)Background. The UI program is a long-standing state/federal
insurance program that predates any form of e-commerce. The
realities of paper filings have created outdated laws which
have been subject to modernization efforts over the years.
For example, benefits have been paid based on a "base period"
of earnings, which discounts the previous quarter of earning
in favor of the four quarters prior to the most recently
completed quarter. Because data has historically been filed
in hard copy format, it was impossible to use the most recent,
AB 1245
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relevant, data. In this respect, federally mandated "UI
Modernization" requirements have been established that
incentivized states (to the tune of nearly $850 million of
federal money for California) to find ways to look at the most
recent quarter of earnings - the so-called "alternative base
period" calculation. Many employers now use electronic filing
for both data and tax remittances, because it is cheaper and
more efficient. Moving forward to reflect the realities of
modern electronic commerce makes sense from both a
governmental and private sector efficiency perspective.
3)EDD Web site. The requirement that employers must file
electronically would not result in employers being forced to
purchase specialized software. All that will be necessary is
that the employers have internet access, because the EDD's Web
site will enable employers to file anything necessary merely
by logging on to www.edd.ca.gov .
Analysis Prepared by:
Mark Rakich / INS. / (916) 319-2086 FN: 0001234