Summary
SB 39 will strengthen protections against fraudulent claims filed with the Employment Development Department for unemployment benefits to ineligible recipients including prison inmates.
Existing Law
In direct response to COVID-19, the U.S. Congress passed the largest economic stimulus package in U.S. history in March 2020, known as the federal CARES Act law. This law included funding for additional unemployment benefits to states, which at the time had yet to see the full impact of policies and executive orders imposed on businesses and employees.
With the increase in funding, the Pandemic Unemployment Assistance program was established and California tasked the state’s Employment Development Department with processing claims and distributing benefits.
Eligible recipients include:
- Business owners.
- Self-employed workers.
- Independent contractors.
- People with a limited work history.
- People who have used all their regular UI benefits as well as any extended benefits.
Problem
Between March and August of this year, 35,000 Pandemic Unemployment Assistance claims were filed on behalf of inmates and more than half of those claims were paid despite these individuals being ineligible to receive these benefits under current law.
In May, the U.S. Department of Labor issued a memo to states urging vigilance to protect against fraudulent claims, stating, “During this time, there is a heightened need for states to maintain a steadfast focus on UI functions and activities that ensure program integrity and the prevention and detection of improper payments and fraud across all UI programs.”
Despite the warning, California was 1 of only 15 states that failed to cross match unemployment benefit claims with jail and prison rolls. This paved the way for a widely utilized fraud scheme to steal nearly $1 billion in taxpayer money.
The Solution
SB 39 will protect taxpayer funds while helping to ensure that Unemployment Insurance benefits only go to eligible unemployed individuals by mandating that the California Employment Development Department conduct regular cross matching of their records with prison rolls as a standard practice.