SACRAMENTO – Senator Scott Wilk, representing the 21st Senate District, announced Senate Bill 58 (SB 58), which would put the state’s Employment Development Department on a path to tackling fraud in benefit claims, has passed the Senate Committee on Judiciary. This legislation would require the agency to stop including full social security numbers on its correspondence among other fraud prevention improvements.

Introduced by Senators Wilk (R-Santa Clarita) and Melissa Hurtado (D-Sanger), SB 58 is coauthored by a bipartisan group of legislators, including the entire Senate Republican Caucus.

It stems from a 2019 State’s Auditor recommendation to exclude full social security numbers from correspondence as well as recommendations from a 2021 State Audit Report, which found that EDD’s fraud prevention efforts are disjointed and the agency has no dedicated unit to mitigate the risk of fraud or manage fraud detection efforts.

“EDD sent at least 38 million pieces of mail with claimants’ full social security numbers in the first 8 months of the pandemic,” said Wilk. “It is no coincidence that this coincided with over $10.4 billion in fraudulent claims being paid out in the same time period. The fact that the agency had not fully implemented the auditor’s 2019 recommendations on using these social security numbers is appalling especially since the agency was warned of the risks associated with that practice in 2019.”

Republican legislators have been working to address fraud at EDD. Last week, Senator Shannon Grove’s (R-Bakersfield) Senate Bill 39 (SB 39) passed out of the Senate Public Safety Committee with a 4-0 vote.

The bill would require the California Department of Corrections and Rehabilitation (CDCR) to share information regarding current inmates to the EDD in order to prevent payment on fraudulent claims for unemployment benefits.

“Senate Republicans are leading where the Newsom Administration has failed. We have seen no action by this Administration to address the fraud at EDD, so it is heartening to see bipartisan support for these measures,” said Wilk.

In addition to prohibiting the inclusion of full social security numbers, SB 58 would also require EDD to identify areas where it can improve fraud prevention efforts during periods of high demand, to designate a single unit responsible for coordinating fraud prevention, and to align the unit’s duties with best practices for detecting and preventing fraud.

SB 58 is scheduled to be heard in the Senate Appropriations Committee next month.

BACKGROUND:

– In March 2019, the California State Auditor issued audit report 2018‑129, which recommended that EDD stop mailing out correspondence containing claimants’ full social security numbers.

– In April 2020, Wilk and other legislators warned Governor Newsom about the failures of the EDD after hundreds of thousands of jobless Californians reached out to legislative offices seeking help with their unemployment claims. Click here to read the April EDD letter.

– In June 2020, Wilk and colleagues asked for an independent audit of the EDD through the Joint Legislative Audit Committee (JLAC). Democratic members of JLAC canceled a crucial hearing in August, which would have been an opportunity to review the EDD audit request. Signed by Republican members from both the Assembly and Senate, the letter to JLAC is a bicameral effort to demand answers from EDD. Click here to read the JLAC letter.

– In July 2020, Senators Wilk and Hurtado (D-Sanger) sent a letter to Governor Newsom asking that he staff EDD 24/7 to help clear the backlog. Click here to read the Wilk/Hurtado letter.

– In August 2020, a bipartisan coalition of legislators delivered another letter to the Governor demanding that he take action to improve EDD operations. Click here to read the August EDD letter.

– In August 2020, San Mateo Sheriffs arrested 21 people in a massive unemployment fraud scheme using inmates.

– In September 2020, members of JLAC approved an audit of the EDD. Click here for the approval letter.

– In October 2020, EDD unilaterally freezes 350,000 debit cards because of a variety of fraud indicators, including a high number of claims at a single address. It wasn’t clear how much the debit cards were worth, but law enforcement officials say they’ve uncovered fake cards amounting to $20,000 each.

– In late November 2020, District Attorneys announced a major fraud scheme operating in and around California’s prisons projecting at least $140 million dollars has been paid out to some inmates and their accomplices, so far. In December that estimate jumped to $1 billion.

– In mid-November 2020, the State Auditor issued the follow-up audit report 2020-502, which concluded that EDD has continued to place Californians at risk of identity theft by not complying with the original audit’s recommendation to stop mailing out correspondence with claimants’ full social security numbers

– In early December 2020, on the first day of the new legislative session, Senators Scott Wilk and Shannon Grove introduced SB 58 and SB 39, respectively.

– In January 2021, the State’s Auditor released two additional and highly critical reports on the Employment Development Department: Significant Weaknesses in EDD’s Approach to Fraud Prevention Have Led to Billions of Dollars in Improper Benefit Payments and EDD’s Poor Planning and Ineffective Management Left It Unprepared to Assist Californians Unemployed by COVID‑19 Shutdowns.

– In mid-February 2021, Senator Wilk and all members of the Senate Republican Caucus sent a letter to Governor Newsom requesting that he ensure that EDD helps victims of unemployment insurance identity fraud avoid tax liabilities for benefits that they never received or applied for. Click here to read the letter.