BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: June 9, 2010 2009-2010 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 2433
Author: Ruskin
Version: As Introduced February 19, 2010
SUBJECT
Unemployment insurance: use of information for tax purposes.
KEY ISSUE
Should the Legislature give the Board of Equalization access to
employer and payroll information held by the Employment
Development Department?
PURPOSE
To give the Board of Equalization access to Employment
Development Department payroll and employer information in order
to appropriately assess and refund certain fees and combat the
underground economy.
ANALYSIS
Existing law authorizes the Employment Development Department
(EDD) to collect personal income taxes required to be withheld
by employers.
Existing law requires employers to remit 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.
Existing law requires that, unless specifically provided in this
code, 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 EDD in
discharge of his or her duties. Any person violating the
confidentiality of this information is guilty of a misdemeanor.
Existing law permits the director of EDD to provide unemployment
insurance tax and benefit information to certain governmental
entities specified in law.
This bill would authorize the Director of EDD to provide the
State Board of Equalization (BOE) with employment tax
information that will assist in the administration of tax
programs.
This bill also specifies that the information provided must be
limited to the exchange of employment tax information essential
for tax administration purposes to the extent permitted by
federal law and regulations.
COMMENTS
1. Need for this bill?
AB 2433 is sponsored by the Board of Equalization (BOE) and
was approved by the Board on a unanimous 5-0 vote.
Under current law, all information gathered by EDD in the
administration of the Unemployment Insurance and Disability
Insurance programs is confidential, unless explicitly listed
in statute. Currently, while governmental entities as
disparate as Bureau for Private Postsecondary and Vocational
Education, the Division of Labor Standards Enforcement, and
tax officials in Mexico have access to this information, the
BOE does not.
In the past, BOE has an interagency agreement with the EDD
that allows the Board to look at employer data, but prohibits
the use of that data in court proceedings in order to maintain
confidentiality as required by existing law. BOE requires
employer and payroll data from EDD in order to appropriately
Hearing Date: June 9, 2010 AB 2433
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
assess and refund the environmental fee and the occupational
lead prevention fee, as well as uncover employers illegally
avoiding the payment of taxes and fees. BOE also requires
access to EDD data as a basis for claims in bankruptcy court.
However, without access to this information for use in court
proceedings, BOE is required to audit employer payroll records
for data that EDD already has. These payroll audits are also
disruptive for the employer. This bill would allow BOE to
access the EDD's employment records and utilize those records
for the necessary administration of the environmental fee and
occupational lead prevention fee, as well as the ability to
utilize those records in court proceedings, when necessary.
2. Proponent Arguments :
The author and the Board of Equalization (BOE) state that in
the past BOE relied upon interagency agreements with the
Employment Development Department (EDD) in which BOE believed
the EDD information could be used in "any action or special
proceeding," as long as it was presented in summary form.
Recently, the EDD reiterated to Board staff that statute
specifies that the confidential information released to
authorized entities cannot be admitted as evidence in "any
action or special proceeding" unless specifically authorized
by law.
The author and BOE state that EDD's information is necessary
to arriving at the correct resolution of a fee dispute heard
by BOE in an administrative hearing or litigated in a court
proceeding. Also, this bill will ease the compliance burden
on employers, as the use of EDD information is less burdensome
than providing access to their payroll records.
3. Opponent Arguments :
None on file.
4. Prior Legislation :
AB 604 (Kuykendall), Statutes of 1998, Chapter 766, required
that the information obtained in the administration of the UI
Hearing Date: June 9, 2010 AB 2433
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
Program and DI program is confidential and must be used for
the exclusive use and information of the director of EDD in
discharge of his or her duties.
SUPPORT
State Board of Equalization - Sponsor
OPPOSITION
None on File.
* * *
Hearing Date: June 9, 2010 AB 2433
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations