BILL ANALYSIS �
AB 1845
Page 1
Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1845 (Solorio) - As Amended: April 11, 2012
Policy Committee: InsuranceVote:13
- 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill implements new federal requirements related to
Unemployment Compensation Insurance (UI) program integrity and
makes technical changes to UI and tax collection programs
administered by the Employment Development Department (EDD).
Specifically, this bill:
1)After October 21, 2013, prohibits crediting an employer's UI
reserve account for benefit overpayments resulting from the
employer's failure to respond in a timely manner to claim
notifications or requests for information from EDD.
2)Requires that an employer report an employee who returns to an
employer after more than 60 days as a new hire.
3)Permits a claimant to cancel a UI claim within one year of
submitting the claim.
4)After October 22, 2013, redirects one-half of the penalties
assessed for the fraudulent overpayment of UI benefits from
the Benefit Audit Fund to the UI Trust Fund.
FISCAL EFFECT
1)The UI integrity provisions contained in this bill are
mandatory and required by federal law. Failure to enact the
conforming requirements in AB 1845 could endanger California's
federal grant to administer the UI program (approximately $340
million), as well as federal tax credits for California
employers of approximately $6 billion.
AB 1845
Page 2
2)The provision requiring the shift of penalties from the
Benefit Audit Fund to the UI Trust Fund does not take place
until October 2013. However, assuming the current year
revenue of approximately $30 million in penalty assessments,
$15 million in overpayment penalties will be shifted from the
Benefit Audit Fund to the UI Trust Fund.
3)EDD would have minor and absorbable costs to implement the
provisions of this bill.
COMMENTS
Rationale . According to the author, this bill is intended to
implement new federal mandates for UI integrity and make a
number of technical changes to the Unemployment Insurance Code
requested by EDD.
One of the mandatory federal provisions is a penalty for
fraudulent UI benefit overpayments. Currently, all penalties
collected by EDD for fraudulent UI benefit overpayments are
deposited in the EDD Benefit Audit Fund. Federal law now
requires a certain amount of penalty revenue be deposited in a
state's UI Trust Fund. As a result, there will be less revenue
for the Benefit Audit Fund because half of the penalty revenue
must be deposited into the UI Trust Fund for payment of UI
benefits. The remaining half may be used by EDD for
administrative activities to detect and collect benefit
overpayments.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081