Senator Grove’s EDD fraud bill passes through committee

SB 39 passes through state senate public safety committee on it’s way to state congress

SACRAMENTO – Republican legislators in California have been racing to address the rampant fraud under the state’s Employment Development Department (EDD) watch during the pandemic. Having passed through the Senate Public Safety Committee Senator Shannon Grove’s (R – Bakersfield) SB 39 is now one step closer to the state senate floor .

“The State Auditor has made it clear that EDD was both poorly managed and vulnerable to fraud especially when the COVID-19 pandemic hit,” Grove said. “Given the department’s historic failure and continued unwillingness to implement audit recommendations, it is critical that the Legislature hold EDD’s feet to the fire to better serve unemployed Californians.”

SB 39 would require EDD to cross check unemployment insurance claims with state prison rolls, a demographic thought to be responsible for a significant portion of at least $10.4 billion paid out in fraudulent claims by EDD according to a report by the Auditor of the State of California.

In November 2020, nine county district attorneys signed a letter announcing unemployment insurance (UI) fraud involving tens of thousands of inmates and hundreds of millions of dollars. In December, EDD and the California Department of Corrections and Rehabilitation signed a data sharing agreement for CDCR to provide EDD with data on individuals incarcerated in state prisons, revealing about $810 million in claims associated with incarcerated individuals.

The State Auditor cites EDD’s failure to institute this type of cross-match is of “special concern” given the wide use of this approach throughout the rest of the country. Grove’s proposed SB 39 would essentially make the cross-matching process a legal requirement in California, which would require CDCR to share names and social security numbers of current inmates to EDD. The bill would require the Director of Employment Development to cross-check CDCR data to verify that a UI benefits applicant is not an inmate currently incarcerated in state prison before making any payments.

SB 39 will next be heard by the Senate Committee on Labor, Public Employment and Retirement.

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