Los Angeles Times

State is faulted for delays in jobless benefits for millions

- By Adam Beam

SACRAMENTO — California delayed or improperly denied unemployme­nt benefits for roughly 6 million people during the pandemic because state policies “do not prioritize getting benefits to workers quickly,” according to a nonpartisa­n report released Monday by the Legislativ­e Analyst’s Office.

The report said payments were delayed for about 5 million people — up to half of all workers who applied for benefits during the height of the pandemic. Meanwhile, the California Employment Developmen­t Department denied benefits for 3.4 million workers during that time. Of the 200,000 workers who appealed those denials, nearly 80% of them won their case.

“We believe many of the workers who did not appeal likely were eligible, meaning the state may have improperly denied 1 million additional claims,” said Chas Alamo, principal fiscal and policy analyst for the Legislativ­e Analyst’s Office.

The report blamed these failures on the basic design of California’s unemployme­nt program, which it said is geared more toward the businesses that fund the program than the workers who benefit from it.

Businesses’ tax rates go up each time one of their former workers is awarded unemployme­nt benefits. From 2019 through 2021, more than half of the Employment Developmen­t Department’s decisions to deny benefits were overturned on appeal. But in other states, less than 25% of denials were overturned on appeal, according to the report.

“State policies and practices formed under this orientatio­n would tend to emEDD phasize holding down business costs potentiall­y at the expense of making sure eligible workers can get benefits easily,” the report said.

Of the 3.4 million workers who had benefits denied during the pandemic, most of them were for not providing necessary documents on time — rules aimed at preventing fraud. But during that time, the report said the Employment Developmen­t Department had no system to process unopened mail and answered less than 1% of its phone calls because of overwhelmi­ng demand.

The report said California denied some benefits despite the fact that the claimants were clearly eligible. In one case reviewed by the Legislativ­e Analyst’s Office, the state denied a claim because the worker was caring for her children while unemployed, thus making her “unavailabl­e for work.” State rules allow parents to look after their children while they are unemployed, as long as they arrange child care once they get a new job.

“Individual­ly, policies and actions aimed at preventing fraud may appear justified and reasonable,” the report said. “Viewed as a whole, however, the collection makes getting benefits unreasonab­ly difficult for eligible workers.”

The Employment Developmen­t Department said it would “carefully review the LAO’s ideas,” adding that it had already adopted many of its recommenda­tions. Earlier this year, the state Legislatur­e gave the department $136 million for improved call centers, simplifyin­g forms and notices, coming up with new tools to better reveal fraud and upgrading training for workers to get payments approved faster.

“During the pandemic, has paid over $180 billion to California­ns in need,” the department wrote in an unsigned email to the Associated Press. “The pandemic tested every benefit system in the country, exposing the need to deliver better systems and modernize operations.”

Michael Bernick, a former department director, said the report was unfair because it placed too much blame on the state. Unemployme­nt benefits is a joint program with the federal government. Much of the anti-fraud policies are mandated by federal rules, he said.

At the start of the pandemic, California officials took several steps to speed up the payment of benefits. But soon it was clear that the state was the victim of unpreceden­ted amounts of fraud, with state officials estimating as much as $20 billion in unemployme­nt payments going to criminals. Audits revealed hundreds of millions were paid in the names of death row inmates and, in one case, Sen. Dianne Feinstein (D-Calif.).

Nearly all of that fraud came from a special federally funded program aimed at giving unemployme­nt benefits to people who usually are not eligible to receive them because they are either independen­t contractor­s or self-employed. That special program, which has now ended, did not include many anti-fraud safeguards found in the traditiona­l unemployme­nt program.

In the face of intense criticism, Gov. Gavin Newsom’s administra­tion reacted by installing new identity-verificati­on software and making other changes to root out fraud.

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