Sacramento – Senator Scott Wilk, representing the 21st Senate District took a solid swipe at eradicating the rampant fraud stemming from EDD’s mismanagement today with the passage of Senate Bill 58 (SB 58) by the Senate Committee on Labor, Public Employees and Retirement. This legislation would require the agency to stop including full social security numbers on its correspondence.
Senate Bill 58 (SB 58) introduced by Wilk and Melissa Hurtado (D-Sanger), stems from a 2019 State’s Auditor recommendation that the Employment Development Department (EDD) stop including full social security numbers on correspondence – an archaic and dangerous practice most government agencies and private companies no longer do because of issues with fraud.
“It was shocking to learn that EDD still included full Social Security Numbers on its correspondence, despite a being warned by the State’s Auditor in 2019 that this practice increases the risk of fraud. Now thousands of unemployed Californians find themselves victims of fraud when it all could have been avoided,” said Wilk. “EDD can’t put the worms back in the can for the latest crop of victims, but we can sure force the agency to make sure it doesn’t happen again.”
Last fall a group of California’s District Attorneys sounded the alarm on the extent of the fraud associated with unemployment scams at EDD, stating it could be “the most significant fraud on the taxpayers in California’s history. The federal government warned the Newsom administration in the spring that the dysfunction at EDD put it at high risk for fraud, yet the agency continued to include social security numbers on correspondence. In subsequent weeks, legislative offices began to receive calls from constituents about letters requesting personal information or unemployment debt cards arriving at incorrect address. In some instances as many as 40 letter addressed to different individuals would arrive at an address – a seemingly clear indicator of fraud.
“The Newsom administration’s mismanagement of EDD over the course of the pandemic is staggering. You’d think after putting millions of Californians out of work, the governor would have had prioritized fixing any problems with the agency that came to his attention, but he didn’t,” said Wilk. “It gives me zero confidence the agency will take the necessary steps to protect people’s identities without a push by the Legislature.”
SB 58 passed the Senate Committee on Labor, Public Employees and Retirement on a unanimous vote. Its next stop is Senate Judiciary Committee. The bill is jointly authored by Senator Melissa Hurtado (D-Sanger) and coauthored by Senator Anna Caballero, and local Assemblymembers Tom Lackey and Suzette Valladares.
BACKGROUND:
In April, 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 April EDD letter.
In June, 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, Senators Wilk and Melissa 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, a bipartisan coalition of legislators delivered another letter to the Governor demanding that he take action to improve EDD operations. Click here to read August EDD letter.
In August, San Mateo Sheriffs arrest 21 people on massive unemployment fraud scheme using inmates.
In September, members of JLAC approved an audit of the EDD. Click here to read JLAC approval letter.
In October, 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, 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 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