EDD extends contract with Bank of America
California’s unemployment department has extended its contract with Bank of America, despite protests from the bank which wanted out of the benefits payment system that has been plagued with fraud.
BofA last week said it wanted to end the exclusive contract it has held since 2010 with the Employment Development Department.
The news came about a month after a federal judge ordered Bank of America to stop using an automated fraud filter that blocked tens of thousands of legitimate claimants from accessing their benefits after they reported suspicious account activity. The bank said it received 230,000 claims of debit card fraud from October 2020 through March 2021.
Bank of America and the state have raked in millions of dollars in merchant fees whenever an unemployment debit card is swiped. The EDD made more than $47 million in fees from March 2020 through April 2021, even though the claims of more than 1.1 million jobless Californians remain in limbo.
However, Bank of America told state lawmakers it lost “hundreds of millions” of dollars on the contract last year as it scrambled to respond to the rampant fraud, which experts say could total upward of $31 billion.
State can hire staff to help with EDD jobless claims logjam
The state Legislature has authorized Assembly members to hire new staffers to handle a flood of requests from California workers struggling to receive unemployment benefits in the wake of coronavirus-linked business shutdowns.
The state Employment Development Department has struggled to keep up with a tsunami of initial and ongoing unemployment claims filed by workers ever since businesses began closing in March 2020.
“Each Assembly office can hire two temporary workers to work on EDD cases, for a maximum time of four months,” according to the office of state Assembly Speaker Toni Atkins, D-San Diego. “Their salaries are paid out of existing operating funds.”
State Assemblymember Jim Patterson, R-Fresno, a frequent critic of the EDD, pointed out in emailed comments that the authorization does offer some encouragement for California’s beleaguered workforce.
“The good news is legislative offices are going to get extra help so we can serve more people who have still not
been paid what they are owed,” Patterson said. “Many of these people have already gone back to work and are trying to recoup funds that EDD never paid them.”
“The bad news is, there are still thousands of people who can’t get through to the EDD and have no choice but to call a legislative office,” Patterson said.
EDD’s dashboard continues to document a backup of jobless claims that remains above 1 million. Since the EDD started to track claims on its newest dashboard, the number has never been below 1 million, which covers a period of well over four months starting on Feb. 13, 2021.
On June 26, the overall logjam totaled 1.12 million. That compares with the lowest number for this official EDD metric, a backlog of 1.02 million reported by the department on April 10.
Jobless claims rise slightly
California workers filed 59,200 initial claims for unemployment benefits in the week ending July 3, an increase of 3,000 from the previous week, when they filed roughly 56,200 first-time claims, the U.S. Labor Department reported Thursday.
Nationwide, initial unemployment claims also increased. Workers in the United States filed 373,000 jobless claims during the week ending July 3, up 2,000 from the 371,000 the week before. These numbers were adjusted for seasonal volatility.
Weekly applications, which generally track the pace of layoffs, have fallen steadily this year across the U.S. from more than 900,000 at the start of the year. The four-week average of applications, which smooths out week-to-week volatility, is now 394,500 — the lowest such level since the pandemic erupted in March of last year.