BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Mark DeSaulnier, Chair
Date of Hearing: April 14, 2010 2009-2010 Regular
Session
Consultant: Alma Perez Fiscal:Yes
Urgency: No
Bill No: SB 1211
Author: Romero and Dutton
Version: As amended April 8, 2010
SUBJECT
Unemployment insurance: benefits: eligibility: overpayments:
elected officials.
KEY ISSUE
Should the Legislature prevent elected officials from collecting
unemployment insurance (UI) benefits after they lose or leave
their public seats?
Should the Legislature create a policy for the recovery of
unemployment compensation benefits if these were received by an
elected official who by law is prohibited from receiving UI
benefits based on his or her work as an elected official?
PURPOSE
To authorize the director of the Employment Development
Department to recover overpayments of unemployment compensation
benefits, unlawfully received by an elected official.
ANALYSIS
Existing law establishes the Unemployment Insurance (UI) program
administered by the Employment Development Department (EDD).
The UI program is a federal-state program that provides weekly
unemployment insurance payments to eligible workers who lose
their jobs through no fault of their own. The UI program is
financed by employers who pay unemployment taxes on the first
$7,000 in wages paid to each employee in a calendar year.
To be eligible for unemployment insurance benefits an applicant
must meet specific eligibility requirements that include:
Having received enough wages during the base period to
establish a claim;
Being totally or partially unemployed;
Being unemployed through no fault of his/her own;
Being physically able to work, be seeking work, and be
immediately available to accept work;
Meeting eligibility requirements for each week benefits
are claimed; and
Being approved for training before training benefits are
paid.
Under existing law, "employment" is defined for purposes of
funding and establishing eligibility under the Unemployment
Insurance program. With respect to certain public entities, the
definition of "employment" exempts service performed by an
individual in the exercise of his or her duties as:
An elected official;
An election official or election worker, if not expected
to earn at least $1,000 in a calendar year;
A member of a legislative body or the judiciary of a
state;
A member of the State National Guard or Air National
Guard;
An employee hired on a temporary basis in case of fire,
storm, snow, earthquake, flood, or other similar emergency;
An official in a major nontenured policymaking or
advisory position;
A policymaker or in an advisory position whose duties do
not require more than eight hours per week, as specified;
among others.
Under existing law, any person who receives an overpayment of
unemployment compensation benefits is liable for the amount
overpaid, unless a specified criterion applies. Existing law
also allows the director of EDD to take specified steps to
recover overpayment of unemployment compensation benefits,
including a civil action against the liable person within one
year after certain actions have been taken. EDD is required to
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send out a notice of overpayment to a UI claimant who received
benefits that he or she was not eligible to receive. The notice
of overpayments shows the amount of the overpayment and
penalties, if any, explains why the claimant was overpaid and
provides information on appeal rights. EDD classifies
overpayments into the following two categories:
Non-Fraud: When a claimant receives benefits to which he
or she was not entitled but he or she was not at fault. In
some cases, EDD can consider a waiver of the overpayment if
it was a result of a non-fraudulent action, and the
claimant would not be liable for the overpaid amount.
Fraud: Knowingly giving false information or withholding
information in order to receive benefits that the claimant
would not otherwise be eligible for. With a fraud
overpayment, the claimant is assessed a penalty in the
amount of 30 percent of the amount of the overpayment and a
false statement disqualification of 5 to 23 weeks. Fraud
overpayments and penalties must be repaid.
Existing law also permits the director of EDD to initiate
summary judgment proceedings against a liable person to recover
overpayment of unemployment compensation benefits due to fraud,
misrepresentation, or willful nondisclosure on the part of the
recipient. EDD is authorized to deduct the money owed from
future weekly unemployment or state insurance benefits, reduce
or totally withhold state income tax refunds, lottery winnings,
or any other money owed by the state. And lastly, existing law
also permits the director of EDD to file a claim against the
claimant in court, charge court costs and interest, and record a
lien on the claimant's property.
This Bill would require the director of EDD to find that an
individual has been overpaid unemployment insurance benefits if
the individual was an elected official and his or her UI claim
was based solely on income solely derived from his or her
employment as an elected official. Specifically, this bill
would:
Deem a UI claimant, who is found to have been overpaid
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Senate Committee on Labor and Industrial Relations
UI benefits based on his or her income as an elected
official, liable for the overpaid amount and ineligible for
any waiver of the amount due.
Authorize the director of EDD to initiate a civil action
against the claimant for the recovery of the overpayment,
within a specified time, and would authorize the director
to initiate summary judgment proceedings against such a
person to recover the overpayment amount due, including any
penalties assessed on the claimant's overdue amount.
Require that EDD, not later than July 1, 2011, adopt
regulations to clarify that the Unemployment Insurance Code
excludes elected officials from coverage under the
unemployment compensation system for purposes of benefit
eligibility.
Require that EDD revise current language in the
California Employment Guide to state that an elected
official is not eligible to collect UI benefits based on
income earned from his or her service as an elected
official.
COMMENTS
1. Need for this bill?
In 2009, a former city of Rosemead councilmember who did not
win re-election in the March 2009 election applied for, and
received, unemployment insurance benefits in direct violation
of the law which excludes elected officials from receiving
this benefit. There appears to be some confusion as to
whether this exclusion applies to elected city officials as
well as state officials. This bill would ensure that similar
misunderstandings are prevented in the future by authorizing
the director of EDD to find that an individual was overpaid UI
benefits if these were provided as a result of his or her work
as an elected official, and if so, allow EDD to begin actions
to recover the overpaid benefits. In addition, this bill
would require EDD to update its regulations and California's
Employment Guide in order to clearly specify that elected
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officials are not eligible to receive UI benefits based on
income earned from his or her service as an elected official.
2. Proponent Arguments :
According to the authors, the duties of an elected official
are to serve the public and prudently manage the public's
resources. The authors believe this bill is necessary to
ensure that elected officials at all levels of government in
California are not eligible to receive unemployment benefits
in relation to their service in public office. Furthermore,
proponents argue that elected officials have been placed in
office through the will of the voters and should not be
entitled to any unemployment related benefits should they be
removed from office either by voters or due to term limits.
In addition, proponents argue that as California struggles
toward economic recovery and millions remain unemployed, we
need to be certain that the limited resources of unemployment
insurance benefits will be held in reserve for the displaced
workers who truly need them. The authors believe this measure
empowers EDD to automatically take action to recover future
unemployment payments if they were incorrectly paid to elected
official. Lastly, the authors believe this bill is entirely
consistent with the spirit and the letter of the law, and is
geared toward preventing both inadvertent mistakes and
deliberate abuse of the system set up solely for the
protection of California's workers.
3. Opponent Arguments :
None received to date.
SUPPORT
California Special Districts Association (CSDA)
City of Rosemead
OPPOSITION
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Senate Committee on Labor and Industrial Relations
None received to date.
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Senate Committee on Labor and Industrial Relations