New laws aim to combat fraud in jobless benefits

SACRAMENTO » California Gov. Gavin Newsom signed new laws Tuesday to tighten security in the state’s unemployment system after his administration OK’d billions of dollars in fraudulent payments during the pandemic while legitimate claimants languished in a backlog awaiting approval.

In its rush to approve unemployment benefits during a pandemic shutdown that put millions of people out of work, state officials approved billions of dollars in the names of people in prison — including some on death row — who were ineligible to receive them.

Meanwhile, thousands of legitimate claimants waited months for benefits to be approved.

An audit earlier this year blamed the Employment Development Department for “significant missteps and inaction” that cost taxpayers billions of dollars. Newsom has laid the blame at the federal government for dramatically expanding unemployment benefits in such a way that put them at significant risk for fraud.

People in prison are ineligible for unemployment benefits. But the Employment Development Department did not know who was in prison. At least 35 other states have had a system to cross-check unemployment claims against a list of prison inmates. But California wasn’t one of them.

Newsom signed a law on Tuesday to fix that, requiring the California prison system to share the names and Social Security numbers of inmates with EDD.

Since March 2020, California has received 25.2 million unemployment claims and paid more than $176 billion in benefits. But the agency has admitted that at least $11 billion of those payments were fraudulent, with another $19 billion suspected of fraud.