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Legislature needs to hold investigative hearings into California’s mass unemployment fraud

Legislature needs to hold investigative hearings into California’s mass unemployment fraud

  • Updated
Jobless claims at 870,000 as fraud and backlogs cloud data

FILE - In this July 18, 2020 file photo a closed sign hangs in the window of a barber shop in Burbank, Calif. California's unemployment rate has fallen to 11.4% in August. The Employment Development Department says the state added 101,900 jobs in August. Most of those were government jobs, including temporary positions for the U.S. Census. California lost more than 2.6 million jobs in March and April because of the coronavirus. (AP Photo/Marcio Jose Sanchez, File)

As residents of one of the highest taxed states in the nation, Californians have a right to expect the government they pay handsomely to provide the basic services their taxes fund.

We expect that when we lose our job, the money we paid in unemployment insurance will be available to sustain our families in a time of personal crisis. We expect that the state agency entrusted with this serious obligation will be able to handle our application for help. We expect that banks are a safe and secure place to keep our money, and that when we have money in an account at Bank of America, the money which belongs to us will not mysteriously disappear one day.

Regrettably, in the middle of a worldwide pandemic, these expectations have been dashed for the most vulnerable Californians relying on Unemployment Insurance. Our state’s agencies and financial institutions have failed them and have been unable to deliver the safety and security that they promised.

Since late March when California shut down businesses and schools to slow the spread of COVID-19, my staff has helped thousands of constituents who were unable to secure their unemployment insurance from an overwhelmed and backlogged Employment Development Department. EDD has blamed its computers, lack of staff and been given multiple opportunities for improvement, even halting claims processing for a two-week period for a system “reset.” All to no avail.

How could an agency in the state of California, the fifth-largest economy in the world and home to one of the greatest technological development centers in the world, Silicon Valley, be so unequal to the task at hand?

If that were not bad enough, in October, many of our constituents reported that their EDD debit cards distributed and managed by Bank of America were frozen. The Employment Development Department and Bank of America then proceeded to engage in a finger-pointing exercise. Meanwhile, constituents were without money to pay rent and buy groceries for their families. This happened to an estimated 350,000 Californians.

Just days after this unfortunate news came out, further scandal surrounding the Employment Development Department was revealed when nine local district attorneys throughout California went public with evidence of mass fraud involving federal, state and county inmates who have scammed an estimated $2 billion in fraudulent Unemployment Insurance claims. The Employment Development Department has reached a new level of ineptitude when death row murderers are getting their Unemployment Insurance claims processed while hard-working Californians who are owed their benefits get denied.

Legislators and constituents alike deserve a full accounting of where California taxpayer money has gone. It is time for the Legislature to step in and hold immediate investigative hearings to determine what went wrong and ensure this never happens again. Additionally, legislation has been introduced I am proudly co-authoring that will correct several glaring faults in EDD’s system such as requiring cross-checking of Unemployment Insurance claims information with state and county correctional inmate data.

It is far past time the state partners with technological experts in Silicon Valley to create a new apparatus that restores trust and meets the state’s Unemployment Insurance obligations in a timely manner.

This could have been corrected over eight months ago at the start of the pandemic, had the current administration been more proactive. We could have avoided paying out $2 billion in fraudulent claims, and our constituents would be able to pay their rent and feed their families.

It is going to take time and significant investment, but it is clear that the Employment Development Department is incapable of the task on its own. The government has to face the fact that we have broken trust with the citizens of our state, and we must work diligently to fix this. We must earn that trust back.


President-elect Joe Biden is set to focus on new areas of job growth when he officially takes office. Neils Lesniewski, Chief Correspondent for White House and Congress at Roll Call, joined On the Job: The December Jobs Report to break down what could be ahead.


Assembly member Megan Dahle, a Republican from Bieber, represents California’s 1st Assembly District. She wrote this commentary for CalMatters, a public interest journalism venture committed to explaining how California’s Capitol works and why it matters.

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