BILL ANALYSIS Ó
AB 1631
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
AB 1631 (Chavez) - As Amended: April 10, 2014
SUBJECT : Unemployment Insurance
SUMMARY : Requires the Employment Development Department (EDD)
to provide unemployment insurance (UI) information it gathers to
the Department of Justice (DOJ) to combat identity theft.
Specifically, this bill :
1)Requires EDD to annually search the UI wage data to identify
instances where more than one name is associated with a single
social security number (SSN).
2)Requires EDD to contact and forward information to DOJ when
EDD discovers five or more names are associated with a single
SSN.
EXISTING LAW :
1)Prohibits generally, as a matter of federal and state law, the
disclosure of confidential UI program information for non-UI
program purposes.
2)Establishes, as a matter of federal law, a number of
exceptions to the prohibition on sharing confidential UI
program information for non-UI program purposes, including
disclosure to a public official if:
a) The information is used by a public official in the
course of his or her official duties.
b) Disclosing the information does not interfere with
the efficient administration of the UI program.
c) There is a state law authorizing the disclosure.
d) The requesting agency reimburses EDD for the cost of
providing the information.
e) There is a written agreement with the agency
receiving the information governing the use and
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protection of the information.
3)Permits the disclosure and use of confidential UI program
information for wide range of non-UI purposes consistent with
federal regulations.
FISCAL EFFECT : Undetermined
COMMENTS :
1)Purpose . According to the author, EDD has stated they are
prohibited by law from investigating suspected identity fraud
in their Unemployment Insurance division. Individuals whose
personal information is being used for fraudulent UI benefits
are unaware their social security number has been used and
therefore have no recourse or ability to correct the identity
theft. This could result in a denial of their UI claims should
they ever find themselves unemployed, or having to pay taxes
on UI income that was paid to another person. AB 1631 will
require the EDD to send information relating to suspected
identity theft and fraud to the Attorney General's Office for
investigation if a single social security number is used or
associated with 5 or more different names.
2)Auditor Recommendation . In October 2013, the State Auditor
released an audit of veterans employment services at EDD. The
report included the following recommendation:
"To help protect the State's citizens from identity theft,
the Legislature should expressly authorize the department,
on its own initiative, to share information from the Base
Wage File with appropriate law enforcement officials when
evidence exists of the potential misuse of Social Security
numbers. If the department receives such legal authority,
it should, at least annually, review the Base Wage File for
associations of multiple names with a single Social
Security number. The department should also establish a
reasonable threshold for the number of associated names
that will trigger further scrutiny from the department or
referral to law enforcement."
3)EDD Response . EDD included the following in its letter
responding to the audit recommendation:
"The EDD gathers and maintains information in the Base Wage
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File (BWF), which is the repository for the wage data
submitted to EDD by employers for use in the administration
of the Unemployment Insurance (UI) Program. The wage data
are comprised of the Social Security Numbers (SSN) and
names, which employers receive from their employees, and
the quarterly earnings attributed to those SSNs.
The BWF currently contains information from 1.3 million
employers who reported over 22 million wage lines. The
audit identified more than 1,400 instances where a single
SSN was associated with 10 or more different names in a
single quarter. These instances represent a statistically
insignificant potential discrepancy rate of 0.006364
percent."
4)Federal Regulations . UI operates under a combination of state
and federal rules. The federal rules establish minimum
standards and requirements that all states must follow. As
noted above, federal regulations that govern the sharing of
confidential UI program information prohibit disclosure for
non-UI program purposes unless a number of specific
requirements are met. The bill currently requires EDD and the
Department of Justice to violate federal regulations on a
routine basis and subject the state to potential federal
sanctions for those violations.
5)Related Legislation . Two other bills have been introduced in
the Assembly (AB 1663 (Hagman) and AB 2689 (Quirk-Silva) and
one has been introduced in the Senate (SB 1435 (Nielsen) that
are nearly identical to this bill.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
AB 1631
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Analysis Prepared by : Paul Riches / INS. / (916) 319-2086