BILL ANALYSIS Ó
AB 944
Page 1
Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON INSURANCE
Tom Daly, Chair
AB 944
(Obernolte) - As Introduced February 26, 2015
SUBJECT: Unemployment compensation benefits: hearing
procedures
SUMMARY: Requires all hearings before the Unemployment
Insurance Appeals Board (board) to be conducted by telephone.
Specifically, this bill:
1)Requires all hearings to be conducted by telephone unless a
party to the hearing requests otherwise.
2)Requires the board to adopt regulations specifying the process
for considering a request for participating in-person.
EXISTING LAW:
1)Establishes the board to hear appeals of administrative
decisions made by the Employment Development Department (EDD),
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including decisions regarding unemployment insurance
eligibility and benefits.
2)Provides for first level appeals of unemployment insurance
(UI) determinations to be heard by an administrative law judge
(ALJ) employed by the board.
3)Permits a party in a UI appeal hearing to participate by
telephone if he or she can show "good cause."
4)Requires the board to adopt regulations defining "good cause."
The board's regulations require the ALJ to consider the
following factors when determining whether "good cause"
exists:
a. transportation barriers or travel distance required;
b. hardship caused by time away from current employment
or other responsibilities that would be required;
c. inability to secure care for children or other
family members;
d. other hardships or impediments as explained by the
party making the application for an electronic hearing.
FISCAL EFFECT: Undetermined
COMMENTS:
1)Purpose . According to the author, electronic hearings are
rarely used as a method for conducting appeals in California.
In a number of other states, however, hearings conducted by
telephone have become the standard practice and are viewed as
an effective way to increase efficiency while reducing costs.
In 2013, California had the nation's highest number of
first-level UI appeals with a caseload of 362,047 and the
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nation's highest number of second-level appeals with a
caseload of 27,821 within the 48 states and territories which
offer second-level appeals.
2)Board Background . The board was created in 1943 as an
independent administrative court system for workers and
employers seeking to challenge decisions made by the EDD.
Appeals are the first opportunity for all parties to present
evidence and tell their side of the story before an ALJ and
have that ALJ decide the case. The ALJ's decision may be
appealed to the board whose decision is final, unless
overturned by a Superior Court judge.
The board's services are free to the participants, and do not
require an attorney. The proceedings are funded almost
completely by federal dollars (93%), with state special funds
paying for costs related to disability and paid family leave
cases (6.6%), and the state General Fund paying for less than
one-half of one percent (0.4%) of the costs. In addition to
reviewing ALJs' decisions, the Board issues precedent
decisions and oversees board operations and its hearing
facilities in twelve field offices and 43 satellite facilities
around the state. In 2011 alone, CUIAB ALJs rendered
decisions in about 467,000 cases for over 250,000 employees
and employers.
3)Good Cause . California law was changed in 2009 to require the
board to permit telephone participation in appeals hearings
before the board if the party could demonstrate "good cause."
In accordance with that change, the board adopted regulations
implementing the "good cause" requirement. Those regulations
specifically require the ALJ to consider burdens caused by
travel to the hearing, time away from work, and family care
obligations when determining whether "good cause" exists.
Furthermore, board regulations require the ALJ to consider any
other "hardship or impediment" proffered by the party who
wishes to participate by telephone. These regulations provide
ample opportunity for any party to participate by telephone.
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In the current fiscal year 26% of hearings involve at least
one participant on the telephone.
Given the relatively low bar for telephone participation, the
timeliness of board appeals, and the inherent value of
in-person participation in a fact finding process, this bill
seems to be a solution in search of a problem.
4)Supporters . The supporters of this legislation contend that
the bill is required to lessen the time and travel burden of
participation on employers. As noted above, any party to a
hearing (including employers) can demonstrate "good cause" for
telephone participation because the hardship imposed by travel
time or time away from their business. Supporters also assert
that the bill would support the board's response to a finding
in a 2009 audit report issued by the U.S. Department of Labor
that suggests increasing the percentage of telephone hearings
to help increase the timeliness of their appeals. However,
since 2009 the board has greatly improved the timeliness of
its appeals and more than doubled the number of hearings with
a party participating by telephone. In 2009, the board was
resolving less than 10% of appeals within 45 days, but in 2014
the board was resolving 80-90% of appeals in less than 45
days. The board has dramatically improved its performance
through numerous administrative changes (including adopting
regulations establishing the "good cause" rule for telephone
hearings) which appears responsive to the audit finding cited
by the supporters of the bill.
5)Opponents . Among the opponents are numerous individual ALJs
employed at the CUIAB. ALJs working for the board
consistently cite the benefits attached in-person
participation in these hearings. These letters explicitly
note that the ALJs were speaking as individuals and not
representing the board. These letters make a range of
arguments in opposition to the bill.
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a. ALJs frequently have to weigh the credibility of the
parties and witnesses and telephone hearings deprive the
ALJs of the non-verbal information when assessing the
credibility of testimony.
b. Appeal hearings are the last part of the UI system
where claimants and employers can have a face to face
conversation with the government.
c. Telephone hearings when interpreters are required
are very difficult and become more lengthy than
necessary.
d. Appeal hearings frequently involve the exchange of
documents between the parties and the ALJ which is very
difficult to impossible in many telephone hearings which
slows the process.
e. It is much harder to maintain decorum and an orderly
hearing process when the parties are not present.
ALJs also note that requests for telephone participation are
routinely approved, and ALJs liberally construe the "good
cause" regulation. ALJs also report that most requests for
telephone participation are due to emergency situations (loss
of childcare, illness, transportation issues, etc.), but that
most participants appreciate the opportunity to speak to
someone face to face regarding their claim after struggling
through EDD's automated and telephone based UI systems.
REGISTERED SUPPORT / OPPOSITION:
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Support
Agricultural Council of California
Air Conditioning Trade Association
Associated Builders and Contractors of California
California Association for Health Services at Home
California Association of Bed and Breakfast Inns
California Association of Hospitals and Health Systems
California Business Properties Association
California Chamber of Commerce
California Farm Bureau Federation
California League of Food Processors
California Manufacturers and Technology Association
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California Restaurant Association
California Retailers Association
California Taxpayers Association
CAWA- Representing the Automotive Parts Industry
Chamber of Commerce Mountain View
El Centro Chamber of Commerce
Fresno Area Chamber of Commerce
Fullerton Chamber of Commerce
Greater Bakersfield Chamber of Commerce
Irvine Chamber of Commerce
Lake Tahoe South Shore Chamber of Commerce
National Federation of Independent Business
Palm Desert Area Chamber of Commerce
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Plumbing-Heating-Cooling Contractors Association of California
Redondo Beach Chamber of Commerce and Visitors Bureau
Sacramento Regional Builders Exchange
San Jose Silicon Valley Chamber of Commerce
Santa Clara Silicon Valley Central Chamber of Commerce and
Visitor Bureau
Santa Maria Valley Chamber of Commerce Visitors and Convention
Bureau
Simi Valley Chamber of Commerce
Small Business California
South Bay Association of Chamber of Commerce
The Greater Conejo Valley of Commerce
Western Electrical Contractors Association
Wine Institute
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Opposition
California Labor Federation
California School Employees Association (CSEA), AFL-CIO
Numerous individuals
Analysis Prepared by:Paul Riches / INS. / (916) 319-2086