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California EDD Halts New Claims to Shore Up Vulnerabilities

The state Employment Development Department is on the defensive, fighting back unemployment benefit fraud and an exploitable system. A new strike team report has outlined a path forward.

by Kathleen Pender, San Francisco Chronicle / September 21, 2020
Shutterstock/Uladzik Kryhin

(TNS) — California’s Employment Development Department has stopped taking new applications for unemployment benefits until Oct. 5 while it “resets” itself to “help prevent backlog growth,” it said in a news release issued late Saturday.

The announcement was issued along with a 109-page report from a strike team appointed by Gov. Gavin Newsom on July 29 to “modernize information technology programs and transform the customer experience” at the EDD, which has been unable to keep up with the crush of claims brought on by the pandemic. In addition to a huge backlog of initial claims that still need processing, the strike team estimated in its report that “no more than 1 in 1,000 people” who are trying to reach the sole call center able to help customers are getting through.

When the EDD starts taking claims again on Oct. 5, people applying online will use a new automated identity verification system that will require them to upload an identification document and a “selfie” photo using a camera-equipped mobile phone or tablet. That will cut down on manual identity verification, a leading source of payment delays, and let the EDD devote more resources to its backlog of unpaid claims.

Almost 600,000 Californians applied for unemployment insurance more than 21 days ago and have not had their initial claims processed. An additional 1 million people have received payments but subsequently had their claims halted for eligibility certification or other issues, and are awaiting resolution. Because of bottlenecks in the system, “California’s current backlog of undetermined claims is growing by at least ten thousand claims per day,” the strike team report said.

It also found fault with the EDD’s call centers. The one that can assist customers with their claims is only open weekday mornings, gets 6.7 million calls a month from about 600,000 individuals, and is unable to keep up.

One major bottleneck is the EDD’s process of flagging about 40% of new claims for manual processing, which delays a benefits determination for at least 21 days. Most are flagged for identity verification, often because the applicant’s name does not exactly match what is in Social Security or other databases, perhaps because they used a nickname or middle initial instead of a full name.

The EDD said that between January and June, about 60% of the mail it sent out seeking additional information to verify a claimant’s identity was returned. That response rate “dropped significantly to 15% in July and 9% in August — indicating a strong suspicion of recent fraud,” it said. In the last month or two, many Californians have reported getting multiple pieces of mail from the EDD addressed to their homes but in the names of persons they did not know. Some envelopes appeared to contain debit cards, which the EDD uses to pay benefits. On Sept. 10, the EDD announced a number of steps it was taking to prevent fraud, such as limiting the number of benefits it would send to people at the same address.

“Organized high-volume unemployment fraud is a very real problem in every state,” the strike team report said. However, most claims flagged for verification in California are legitimate. Fraudsters know how to submit false claims without getting flagged because “the current automated identity verification process is simplistic and easy to exploit.”

During the two-week “reset,” EDD will integrate an identity verification tool called ID.me, made by a company of the same name. This tool uses data sources and algorithms to “more accurately and efficiently validate a claimant’s true identity” during the application process and stop scammers “much earlier than through today’s follow up process involving notices through the mail,” the EDD said in a press release.

This tool will require new claimants to upload a photo of themselves and of their driver’s license, passport or other identification document. It is expected to reduce the percentage of new claims being flagged for manual processing verification to 10% and increase the speed at which new claims are paid. It is expected that applicants without a camera-equipped phone or tablet can either borrow one, call an ID.me center that will help them apply using a computer, or apply by mail, said Amy Palmer, a strike team spokeswoman.

People who want to file a claim before Oct. 5 will be directed to a temporary webpage where they can provide their contact information so EDD can get in touch with them after the reset ends.

People who have already applied for benefits will not use the ID.me, but the new system should free up resources for EDD to deal with unpaid claims.

The team also recommended that EDD adopt a “burndown” plan, in which “older claims will begin to be addressed immediately, and with relief coming to many claimants as soon as a few weeks from now, and the final remnants of the backlog resolved within four months,” it said.

Other short-term recommendations include implementing a new dashboard to identify and close bottlenecks in claims processing, placing outbound calls to claimants to resolve issues, publishing a new dashboard that will identify the unemployment backlog each week and the estimated time it will take to eliminate it, and making it easier to use the online claims system on mobile devices.

The strike team is headed by Yolanda Richardson, the California Government Operations Agency secretary, and Jennifer Pahlka, who co-founded the United States Digital Response, the United States Digital Service and Code for America. Pahlka is a private citizen who donated her time.

Its report was originally due Sept. 12, but Newsom said last week he was delaying its release to give the EDD time to respond.

The team also made a number of long-term recommendations. EDD Director Sharon Hilliard said her department “agrees with all of the report’s recommendations and has either implemented or is in the process of implementing all recommendations provided by the Strike Team.”

“The report highlights a number of troubling realities of how the department currently operates,” said George Warner, an attorney with Legal Aid at Work, a nonprofit that represents employees. “Particularly troubling is the report’s findings” that people calling EDD have “a statistically insignificant chance of actually getting help on their claims.”

Warner agreed that EDD “is far too focused on preventing fraud” and said workers who don’t speak English as a primary language “struggle to use the department’s website and access benefits. Even those fluent in English struggle to understand the department’s densely worded notices” and “get discouraged by the bureaucratic maze.”

©2020 the San Francisco Chronicle, Distributed by Tribune Content Agency, LLC.

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