Bill to Help Prevent Future Inmate Unemployment Fraud Passes Senate Committee

A bill to help prevent future inmate Employment Development Department (EDD) fraud by cross checking unemployment insurance claims with state and county prison rolls passed in the Senate Public Safety Committee Tuesday.

Senate Bill 39, authored by Senator Shannon Grove (R-Bakersfield), would specifically require the California Department of Corrections and Rehabilitation (CDCR), as well as counties, to provide the names and social security numbers of current inmates to the EDD to prevent fraudulent unemployment benefit payments. The bill would also set July 1, 2021 as the date that the Director of the EDD must verify with the CDCR and counties that, before unemployment benefits can be paid, that the claimant is not currently serving a sentence in either state prison or county jail.

Additionally, if the EDD determines that the claimant is currently serving a sentence in a state prison or county jail, then the CDCR or county law enforcement, as well as the Department of Justice, is to alerted to the attempt.

“Governor Newsom’s EDD is the most mismanaged department in the country,” stated Senator Grove in a press release on Tuesday. “District Attorneys raised the alarm five years ago, that the department had potential for inmate fraud, but the EDD deliberately ignored their warnings. With the COVID-19 surge in unemployment claims, the doors were open wide for inmates to exploit the department’s lax procedures.”

Grove also noted that SB 39, as well as the similar version in the Assembly, AB 110, would finally meet U.S. Department of Labor recommendations against fraudulent unemployment claims. Despite the Department of Labor first urging states to be vigilant to protect against fraudulent claims in May of 2020, California was one of 15 states that didn’t implement unemployment claim cross checking with prison and jail rolls. Without the cross checking in place, fraud persisted for months.

“The State Auditor has made it clear that EDD was both poorly managed and vulnerable to fraud especially when the COVID-19 pandemic hit. 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,” added Senator Grove.

Bipartisan support for SB 39

With mounting pressure from both parties to fight back on unemployment fraud, SB 39 has received bipartisan support, as seen on Tuesday when both Republicans and Democrats in the Senate Public Safety Committee unanimously passed the bill.

“It doesn’t surprise me that neither party is dragging their feet on this issue anymore,” said Linda Ballard, a Los Angeles-based accountant who has been helping people affected by the COVID-19 recession, in an interview with the Globe. “The state lost as much as $31 billion, a portion of that from prisoners scamming the system. How do you let that go on for so long?

“With the EDD in disarray early on from being swamped by millions of claims and being unable to keep up, they can be forgiven early on. But once it was sorted out and they had the manpower again, why didn’t they be more vigilant like the federal government wanted? Why didn’t the state say to start cross-checking? I’m glad it’s now in the process of being corrected through this bill, but it’s a big embarrassment on the state’s part. A Senator or member of the Assembly would have to be crazy to not be in favor of this after what has happened, and the Governor would have to be too to veto it.”

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