BILL ANALYSIS
AB 2188
Page 1
Date of Hearing: April 7, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2188 (Bradford) - As Introduced: February 18, 2010
SUBJECT : Unemployment compensation: disability benefits:
electronic payment
SUMMARY : Establishes criteria for any contract between the
Employment Development Department (EDD) and a vendor for the
electronic payment of unemployment insurance (UI) benefits or
state disability insurance (SDI) benefits. Specifically, this
bill :
1)Requires that any contract between the EDD and a vendor for
the electronic payment of unemployment insurance (UI) benefits
or state disability insurance (SDI) benefits shall include the
following criteria:
a) provide claimants with a process to resolve disputes in
a timely manner;
b) require that claimants have free and unlimited access to
customer service that meets or exceeds the services
provided by EDD prior to the implementation of electronic
payment of benefits;
c) prohibit the assessment of fees to claimants to access
the electronic payment of benefits under all of the
following circumstances:
i) a transaction with a teller at a bank, credit union,
or other similar financial institution;
ii) a point of sale transaction where an electronic
benefit card is utilized to purchase goods or services;
and
iii) a transaction at any automatic teller machine in the
vendor's financial network.
d) allow for inquiries on account balances from
"automotive" teller machines (sic);
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e) charge no fees wherever the vendor can exercise that
option;
f) require the vendor to meet or exceed federal and state
laws for financial privacy and language access;
g) meet the standards for use of personal service contracts
required by existing state law;
h) create a procedure to prevent overdraft fees; and
i) prohibit the deduction of any fees, charges, or debt
from future UI or SDI benefits.
2)Requires the State Auditor to complete an evaluation of the
implementation of the electronic payment of UI and SDI
benefits and report to the Joint Legislative Budget Committee,
the Assembly Insurance Committee, and the Senate Labor and
Industrial Relations Committee within 18 months of the
implementation of a contract for the electronic payment of UI
benefits pursuant to this bill.
3)Eliminates the requirement that SDI benefits be paid by check.
EXISTING LAW :
1)Requires claims for unemployment compensation benefits to be
made in accordance with regulations adopted by the Director of
EDD.
2)Requires EDD to promptly pay unemployment compensation
benefits if it finds the claimant is eligible or deny benefits
if it finds the claimant is ineligible.
3)Requires the payment of state disability insurance (SDI)
benefits to be paid by checks drawn on a disability benefit
payment account from a bank or public despository selected by
the director of EDD, with the approval of the Department of
Finance.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose . The purpose of this bill is to provide guidelines to
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EDD on the implementation of direct deposit and the use of
paycards for UI benefits and SDI benefits.
2)Background . According to the author, the US Department of
Labor (DOL) established guidelines on August 21, 2009 on the
issuance of paycards and authorizing direct deposit for
unemployment benefits. DOL recommends states, when
considering contracts for direct deposit and paycard services
from vendors, to negotiate for fee schedules that are more
favorable to individuals, such as more than one free ATM
withdrawal for paycards, fee-free point-of-sale transactions,
and unlimited balance inquiries at in-network ATMs. This bill
establishes these and additional requirements to be included
in a contract negotiated by EDD for paycards and direct
deposits.
3)Arguments in Support . According to the author and the
California Labor Federation, as many Californians face an
economic crisis, access to unemployment benefits is more
important than ever. Electronic pay cards can benefit
"unbanked" individuals who do not have access to a bank
account and resort to payday lenders and check cashers that
charge exorbitant fees.
The author and the California Labor Federation state what while
EDD is considering moving from paying UI benefits from paper
checks to direct deposit or electronic pay cards, pay cards
also come with hidden fees for checking account balances,
calling customer service, and any overdraft or denial. This
strikes hard at people who are unemployed and are struggling
to make ends meet. Over 1.4 million Californians presently
depend on their UI benefits to survive. This bill would
establish protections for payment of UI and DI benefits by
direct deposit and electronic pay card that prevent hidden
fees, guarantee access to benefits and provide adequate
customer service in appropriate languages.
4)Similar legislation . AB 2538 (Niello) of this Session
proposes to authorize EDD to serve notice in connection with
tax liens to an "address" for a bank or savings and loan
association by magnetic media, electronic transmission.
"Address" is defined by the bill includes telephone or modem
number, fax machine, or any other reference number designated
to receive data by electronic means. That bill has been
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referred to the Assembly Insurance Committee.
5)Technical corrections recommended : Generally, the bill refers
to automatic teller machines but in two places the bill refers
to "automotive teller machines" (see page 2, line 21, and page
3, line 21). It is recommended that these latter references
be corrected to read: "automatic teller machines."
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO (Sponsor)
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086