BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    AB 1245


                                                                    Page  1


          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          1245 (Cooley)


          As Amended  July 7, 2015


          Majority vote


           -------------------------------------------------------------------- 
          |ASSEMBLY:  |76-1  |(May 18, 2015) |SENATE: |36-3  |(July 13, 2015)  |
          |           |      |               |        |      |                 |
          |           |      |               |        |      |                 |
           -------------------------------------------------------------------- 


          Original Committee Reference:  INS.


          SUMMARY:  Requires, subject to exceptions, all employers to file  
          their unemployment insurance (UI) related data and taxes  
          electronically.  


          The Senate amendments:


          1)Extend, from six months to one year, the time period allowable  
            for a business to be granted a waiver for good cause of the  
            obligation to file electronically.


          2)Make technical and conforming changes.


          EXISTING LAW:  










                                                                    AB 1245


                                                                    Page  2


          1)Establishes a UI program designed to provide unemployment  
            insurance benefits to employees who lose their jobs through no  
            fault of their own.  The UI program is a joint federal/state  
            mandatory program.


          2)Requires employers to pay UI taxes based on a statutory  
            formula, and to provide detailed wage information on a  
            schedule specified in statute.


          3)Allows "hard copy" filing and paper check tax remittance, but  
            authorizes on a permissive basis electronic filing of the  
            taxes and data.


          FISCAL EFFECT:  According to the Senate Appropriations  
          Committee, pursuant to Senate Rule 28.8, negligible state costs.


          COMMENTS:  


          1)Purpose.  According to the author, this bill would phase in  
            over a two-year period the required use of electronic filing  
            for all California employers to submit returns and remit  
            payments to the Employment Development Department (EDD).   
            Electronic filing for employers would increase efficiencies  
            for both EDD and the employer community.  Once fully  
            implemented, this legislation would result in many millions in  
            savings to the state in paper, postage and staff time.


          2)Background.  The UI program is a long-standing state/federal  
            insurance program that predates any form of e-commerce.  The  
            realities of paper filings have created outdated laws which  
            have been subject to modernization efforts over the years.   
            For example, benefits have been paid based on a "base period"  
            of earnings, which discounts the previous quarter of earning  
            in favor of the four quarters prior to the most recently  
            completed quarter.  Because data has historically been filed  
            in hard copy format, it was impossible to use the most recent,  








                                                                    AB 1245


                                                                    Page  3


            relevant, data.  In this respect, federally mandated "UI  
            Modernization" requirements have been established that  
            incentivized states (to the tune of nearly $850 million of  
            federal money for California) to find ways to look at the most  
            recent quarter of earnings - the so-called "alternative base  
            period" calculation.  Many employers now use electronic filing  
            for both data and tax remittances, because it is cheaper and  
            more efficient.  Moving forward to reflect the realities of  
            modern electronic commerce makes sense from both a  
            governmental and private sector efficiency perspective.


          3)EDD Web site.  The requirement that employers must file  
            electronically would not result in employers being forced to  
            purchase specialized software.  All that will be necessary is  
            that the employers have internet access, because the EDD's Web  
            site will enable employers to file anything necessary merely  
            by logging on to  www.edd.ca.gov  .


          Analysis Prepared by:                                             
          Mark Rakich / INS. / (916) 319-2086  FN: 0001234