SACRAMENTO (CBS SF) — In the wake of billions of dollars lost to fraud, a group of California lawmakers unveiled legislation Thursday designed to overhaul the state’s troubled Employee Development Department (EDD) unemployment payment program.

If passed, the bills would enact crucial oversight and consumer protection measures, ensure claimants get timely access to benefits and address fraud.

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“Our most vulnerable Californians have struggled with this agency for decades, and I’m pleased we’re coming together today to help move EDD towards the path of becoming a functioning agency,” said Assemblymember David Chiu (D-San Francisco).

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Since the pandemic’s earliest days when businesses began to shut down, the unemployment payment program has been a lifeline for millions of out-of-work Californians. But it also has been a target for organized gangs, other con artists even inmates in the California prison system who have stolen as much as $11 billion in fraudulent claims.

“What we had heard for many months, was that EDD was focused on fraud and getting benefits out in a timely way to honest Californians, and what we learned from audits is they were doing neither,” said Chiu.

Thousands have had bank accounts set up by the EDD raided and drained of funds. People like Martha Galvan.

“I was, like, what is this charge?” Galvan told KPIX. She noticed the unusual $53 dollar charge on her EDD debit card from Doordash in October. The delivery was in San Francisco and Galvan lives in Southern California.

“It was like, okay, this is definitely, obviously not me,” said Galvan.

Gov. Gavin Newsom has taken steps to improve the situation at EDD by establishing a strike team that produced dozens of actionable recommendations for the department, appointing new leadership at the EDD and creating a task force focused on rooting out fraud.

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“Like unemployment agencies in many other states, EDD was overwhelmed and unprepared for the crisis brought on by the pandemic – both in the volume of claims and the criminal attacks on the system,” Newsom said. “Now, we must fix the problems EDD faces today and address the systemic challenges that have plagued EDD’s ability to efficiently provide benefits.”

But the problems at EDD run deep and the the lawmakers hope their proposed legislation will help fix the problems. Among the bills proposed:

  • Assemblymember Chiu has introduced a bill to ensure that all Californians seeking services provided by the EDD have the timely language support necessary to access benefits.
  • Assemblymember Lorena Gonzalez’s (D-Chula Vista) Assembly Bill 74 is designed to provide individual claimants with the option to choose to receive their unemployment benefits via direct deposit. The EDD has contracted with Bank of America to provide benefits to claimants through Bank of America debit cards.
  • Assemblymember Cottie Petrie-Norris (D-Laguna Beach) has introduced a bill that would create an oversight board to regularly review the EDD’s operations and make recommendations to achieve ongoing efficiency. Petrie-Norris has also introduced a bill that would require the EDD to cross-check California Department of Corrections and Rehabilitation incarceration records in order to prevent paying fraudulent benefits to incarcerated people.
  • Assemblymember Buffy Wicks’ (D-Oakland) Assembly Bill 402 would establish the Office of the Claimant Advocate within the EDD. This office would be responsible for protecting Californians’ rights in seeking benefits administered by the department, including unemployment insurance, disability insurance, and paid family leave. Additionally, the bill would establish and enforce a Claimant’s Bill of Rights that allows claimants to report violations.
  • Assemblymember Chad Mayes (I-Rancho Mirage) has introduced Assembly Bill 397, which would ensure claimants who have accidentally answered a certification question incorrectly and received an overpayment are not locked out of their employment benefits.
  • Assemblymember Miguel Santiago (D-Los Angeles) has introduced a bill to ensure the state continues to provide unemployment insurance to people who may have exhausted their benefits, should the federal government fail to act, providing a much-needed safety net for millions of Californians.

The bills announced Thursday are expected to be heard in Assembly policy committees in the spring. Normally, bills with approval end up getting to the Governor’s desk by early fall, but lawmakers are trying to push this set of proposals as part of the budget process.

That would speed things up quite a bit and be ready for the Newsom to sign into law by late spring and into June.

Lawmakers are also pushing a $55 million budget proposal to help a law enforcement task force created last year to tackle fraud.

“The way that EDD and Bank of America have treated Californians who are relying on assistance and the government to work has been poor,” said Assemblymember Wendy Carrillo (D-Los Angeles).

Berkeley resident Laurel Carter is having sleepless nights. She had been working in medical practice consulting but is among the 1.4 million recently asked by EDD to re-verify their identities.

“I slept with my computer on for eight days,” said Carter. “Just to cast wide net and see what’s shake out, that’s their mistake.  What about us who are who we say we are.”

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Kenny Choi contributed to this report