Report 2014-101 All Recommendation Responses

Report 2014-101: Employment Development Department: It Should Improve Its Efforts to Minimize Avoidable Appeals of Its Eligibility Determinations for Unemployment Insurance Benefits (Release Date: August 2014)

Recommendation #1 To: Employment Development Department

To reduce the number of its determinations that are overturned on appeal, the Employment Development Department (EDD) should change its practices to ensure that its staff have demonstrated that all of the necessary elements of a false statement are adequately supported before disqualifying a claimant for unemployment benefits or assessing the associated 30 percent penalty on that basis. To do this, EDD should update its training to further emphasize that false statement disqualifications, especially those resulting from wage reporting, cannot be assessed unless all of the elements are present.

Annual Follow-Up Agency Response From September 2016

As indicated in the prior response, EDD implemented the first phase of this recommendation in December 2014, which included delivering statewide training to staff on the application of false statement disqualifications, as defined in the Unemployment Insurance (UI) Code, Section 1257(a). In March 2016, EDD delivered additional training to staff statewide to further emphasize the proper assessment of false statement disqualifications.

Implementation of the second phase of this recommendation included a comprehensive review of Section 1257(a). The review included policy and procedure updates to ensure that all elements of a false statement are adequately supported before assessing a disqualification. Based on the review of sample cases, EDD provided clarifying guidance to staff through a UI Program Notice issued in September 2016. The guidance was designed to assist staff in determining whether or not all of the necessary elements of a false statement are clearly present and supported in cases that involve wage reporting issues. More specifically, the notice guides staff in using the claim history to determine whether the elements of a false statement are supported, including whether the claimant's actions were willful.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

As indicated in our six-month response, in December 2014 we implemented the first phase of this recommendation, which included delivering training to staff statewide regarding the application of UI Code, Section 1257(a). The second phase involves a comprehensive review of Section 1257(a) policies and procedures and making the corresponding updates to our policies and training. Another part of the comprehensive review and potential findings will be based on the sample of Section 1257(a) appeal decisions reviewed for Recommendation 8. The second phase of implementation and review of Section 1257(a) policies will begin in mid-2016 due to its dependency on Recommendation 8.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

6-Month Agency Response

As indicated in our 60-day response, this recommendation is being implemented in two phases. The first phase of implementation involved delivering training to staff statewide regarding the application of UI Code, Section 1257(a) by the end of 2014; this was completed in December 2014. The implementation of the second phase, which is a comprehensive review of Section 1257(a) policies and procedures and making corresponding updates to our policies and training, will begin in mid-2015.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

This recommendation is being implemented in two phases. The first phase of implementation is currently in progress and involves updating and delivering training to staff statewide regarding the application of UI Code, Section 1257(a) to staff statewide by the end of 2014. We are in the development phase of updating the training and are on target to deliver the training to staff by December 2014. For the implementation of the second phase, in 2015 the Employment Development Department (EDD) will begin a comprehensive review of our Section 1257(a) policies and procedures and will update those as needed, in addition to making any necessary updates to our training.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #2 To: Employment Development Department

To reduce the number of its determinations that are overturned on appeal, EDD should revise its Web site and the materials that accompany the continued claim form to provide specific instructions to claimants on how to avoid common errors that claimants make when reporting wages, such as the error of applying some wages to the incorrect week.

Annual Follow-Up Agency Response From September 2016

As indicated in the prior response, the EDD's website was updated in November 2014 to provide substantive information on how to report wages properly in weeks of unemployment. Additionally, UI Online℠ includes specific continued claim instructions and a Help Text feature to further assist claimants in avoiding common errors when reporting work and wages.

Furthermore, between September 2015 and April 2016, EDD completed and posted four YouTube videos on the EDD's website and YouTube channel in both English and Spanish. The instructional videos include information on how to report work and wages properly when certifying for UI benefits including regular, entertainment industry, self-employment, commission, bonus, pension, and other types of income. These tutorials can be accessed on the EDD's website at http://www.edd.ca.gov/Unemployment/UI_Online_Videos.htm.

Finally, as mentioned in the prior response, EDD began including fraud prevention educational materials in its UI mailings to claimants, beginning March 2015. The fraud prevention materials cover topics such as how to report work and wages properly to avoid potential overpayments and fraud penalties. These materials were mailed to claimants for a one-year period and are now available on the EDD's website. Furthermore, in May 2016, following a collaboration with claimant advocacy groups, EDD completed an update to the booklet, Unemployment Insurance Benefits: What You Need to Know (DE 1275B), which now incorporates the information from its chart, Step-By-Step Guide: How to Certify for Ongoing Unemployment Benefits (DE 1275C). As a result of these efforts, claimants have been given expanded guidance on how to report work and wages properly.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

As indicated in our six-month response, as of November 2014 our website provides enhanced information on how to properly allocate wages in weeks of unemployment, specifically when the employer's work week/pay week is not the same as the statutory unemployment reporting week. We are making progress with revisions to the Step-By-Step Guide: How to Certify for Ongoing Unemployment Benefits (DE 1275C) and our efforts to include ways to reference examples similar to what was published on our website. In addition, we continue to meet with claimant advocacy groups to discuss the revised DE 1275C material to ensure that it is meaningful and useful. We expect to publish the changes to the DE 1275C in September 2015.

On April 25, 2015, we successfully implemented the UI Online system, which includes useful continued claim instructions and Help Text to further assist claimants in avoiding common errors.

Additionally, EDD is creating YouTube videos on how to properly report work and earnings when certifying for UI benefits. These tutorials provide various examples with calendar visuals and will be available in both English and Spanish. We expect the YouTube videos to be available to our customers on social media beginning in

August 2015. Separately, as anticipated, we began our endeavors in March 2015 to include fraud prevention educational materials (cited in our six-month response) with UI mailings. We are on target with the expected completion date in December 2015.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

6-Month Agency Response

In November 2014, we updated our website to include information demonstrating how claimants should allocate wages to weeks of unemployment, especially in situations when the employer's work week/pay week is not the same as the statutory unemployment reporting week. We are currently revising the Step-By-Step Guide: How to Certify for Ongoing Unemployment Benefits (DE 1275C) to include ways to reference examples similar to what was published on our website. Changes to this publication are expected to be released no later than June 2015. Additionally, beginning in March and continuing through December 2015, we will be including fraud prevention educational materials with UI mailings to remind claimants about UI fraud, the common causes of fraud such as failing to report work and wages or reporting them incorrectly, and the consequences of committing fraud, which include overpayments and penalties.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

In addition to the information we already have in place to educate claimants on how to avoid common errors that claimants make when reporting wages, we are in the process of developing additional examples for our website demonstrating how claimants should allocate wages to weeks of unemployment, especially in situations when the employer's work week/pay week is not the same as the statutory unemployment reporting week. We expect to publish those examples on our website no later than November 2014. We are also reviewing the Step-By-Step Guide: How to Certify for Ongoing Unemployment Benefits (DE 1275C) for ways to reference examples similar to what will be published on the website. Given the space limitations on the DE 1275C, an alternative may be to include a reference to our website where claimants can locate examples of how to allocate wages. Any changes will be incorporated in the next printing of the DE 1275C, which will be in 2015.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #3 To: Employment Development Department

To reduce the number of its determinations that are overturned on appeal, EDD should ensure that determinations are supported by sufficient fact-finding and relevant evidence by increasing the required number of attempts to reach claimants by telephone or e-mail before making a determination.

Annual Follow-Up Agency Response From September 2016

As indicated in prior responses, EDD provided additional training to staff on the importance of adequate fact-finding and documentation requirements to support legal decisions. Also, as detailed below, EDD has increased the number of attempts to contact claimants before making a determination.

The EDD implemented UI Online(sm)in April 2015. This system allows claimants to directly access and view their claim information, including eligibility interview appointment dates and times. Claimants can also reschedule their determination phone interview appointment to accommodate their schedules. From April 2015 through August 2016, claimants rescheduled 8,515 determination appointments through UI Online(sm). Another benefit is that EDD is now able to gather more claimant information up front when claimants re-open existing claims and certify for continued benefits.

The EDD implemented the Voice Callback System in November 2015. This system provides claimants with an automated phone reminder 48 hours before their scheduled eligibility determination phone appointment.

In August 2016, EDD began including an additional insert with the determination appointment notification to further educate claimants about the claim process and the importance of attending the eligibility interview. This insert is titled, "Important: Information About Your Unemployment Insurance Benefits."

In addition to the efforts above, EDD continues to provide the claimant with a written determination appointment notification. At the time of the appointment, EDD calls and interviews the claimant. If unable to reach the claimant, EDD leaves a message with a direct phone number providing the claimant with an opportunity to return the call.

All of these efforts further ensure that determinations are supported by sufficient fact-finding and relevant evidence.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

The insert that EDD began sending claimants in August 2016 provides good information to claimants regarding the importance of attending the phone interview. In addition, claimants now have the ability to view and reschedule phone interviews using EDD's online system. Combined with EDD's other efforts to provide automated reminders, we believe that EDD has sufficiently increased its efforts to reach claimants before making a determination.

1-Year Agency Response

As indicated in our six-month response, in September 2014, we conducted additional training for our staff on the importance of adequate fact-finding, better documentation of our findings, and summarizing facts in support of our legal decisions. Additionally, we are making progress implementing a new system to provide a phone call reminder to claimants of their upcoming eligibility determination appointments (cited in our six-month response). The anticipated completion date is September 2015. Separately, we met our goal of successfully implementing the UI Online system between April and June 2015. Claimants can now directly access and view their claim information and they have recently started rescheduling their determination appointments online without assistance from an EDD representative. Additionally, through the UI Online system, we are able to gather more claimant information upfront to assist in the fact-finding process and to utilize as relevant evidence that supports our legal decisions, when appropriate. We continue to explore the ability to send claimants' messages about their determination appointments through the UI Online system.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

EDD's response does not entirely address our recommendation. We agree that providing additional training to its staff on the importance of adequate fact finding and reminding claimants of their upcoming eligibility determination appointments would be beneficial. However, we also believe that EDD should increase the required number of attempts to reach claimants by telephone or electronically to obtain additional facts before making eligibility determinations.

6-Month Agency Response

As indicated in our 60-day response, in September 2014, we conducted additional training for our staff on the importance of adequate fact finding and better documentation of our findings, including training on properly summarizing facts in support of our legal decisions. Additionally, we are on track to implement the new system (cited in our 60-day response) to provide a phone call reminder to claimants of their upcoming eligibility determination appointments in 2015. Separately, in April 2015, we will be implementing our UI Online services system that will display appointments to claimants and provide them with the ability to directly access and view their claim information and reschedule their determination appointments without having to talk to an EDD representative. After UI Online is implemented, the EDD will explore other routes for communicating with claimants through the UI Online system to increase their awareness of their determination appointments, such as sending them reminder messages about their appointments. The estimated completion date is December of 2015.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

EDD's response does not entirely address our recommendation. We agree that providing additional training to its staff on the importance of adequate fact finding and sending messages to claimants reminding them of their upcoming eligibility determination appointments would be beneficial. However, we also believe that EDD should increase the required number of attempts to reach claimants by telephone or e-mail to obtain additional facts before making eligibility determinations.

60-Day Agency Response

In September 2014, we conducted additional training for our staff on the importance of adequate fact finding and better documentation of our findings, including training on properly summarizing facts in support of our legal decisions. In 2015, we will implement our new system to provide a phone call reminder to claimants of their upcoming eligibility determination appointments and separately implement our UI Online services to display appointments to claimants and provide them with the ability to directly access and view their claim information, as well as reschedule their determination appointments, without having to talk to an EDD representative. After UI Online is implemented in the spring of 2015, the EDD will be exploring other routes for communicating with claimants through the UI Online system, such as by sending them reminder messages about their appointments.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

EDD's response does not entirely address our recommendation. We agree that providing additional training to its staff on the importance of adequate fact finding and sending messages to claimants reminding them of their upcoming eligibility determination appointments would be beneficial. However, we also believe that EDD should increase the required number of attempts to reach claimants by telephone or e-mail to obtain additional facts before making eligibility determinations.

Recommendation #4 To: Employment Development Department

To reduce the number of its determinations that are overturned on appeal, EDD should allow additional time for its staff to process misconduct and voluntary quit cases, especially those that involve complex issues.

Annual Follow-Up Agency Response From September 2016

As indicated in the prior response, EDD released a macro application in December 2014, which automatically streamlines the determination process, thereby enabling staff to enter eligibility decisions more efficiently. This allows more time for determination interviewers to process complex determinations. In October 2015, EDD enhanced the macro application to decrease the determination processing time and improve efficiency even further. The introduction of the macro application has resulted in a 49-percent average decrease in determination processing time.

In addition, with the assistance of the EDD Business Process Improvement Team, EDD created an enhanced intranet site, which is continually updated to provide statewide UI staff quick access to various determination reference materials for adjudicating eligibility issues. Reference materials include, but are not limited to, the Benefit Determination Guide, legal citations, UI Program Notices, and various training information.

These efforts allow additional time for staff to process misconduct and voluntary quit cases, especially those that involve complex issues.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

As indicated in our six-month response, in December 2014 we released a macro application that streamlines the determination process enabling staff to enter eligibility decisions more efficiently and allowing more time for determination interviewers to process complex determinations. We continue working on enhancements to this application to further increase time savings with the determination process. Additionally, our UI Business Process Innovation team continues to advance with the development of a determinations SharePoint site, which will provide tools for staff to assist in streamlining the determination process and enhancing the documentation and quality of determinations. As noted in our six-month response, the site will be accessible to UI staff statewide and will provide quick access to various reference guides and materials to assist in completing determinations more efficiently. Unfortunately, due to lack of resources, the implementation of this site will be delayed until December 2015. In addition, progress is also being made to make the current fact-finding form more user-friendly and streamline the fact-finding that supports the legal eligibility decisions. We anticipate implementing the enhancements to the form in November 2015.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

6-Month Agency Response

In order to allow more time for determination interviewers to process the more complex determinations, in December 2014, we released a macro application to assist staff in entering eligibility decisions more efficiently. Additionally, our UI Business Process Innovation team conducted a study targeted at streamlining processes by reducing unnecessary administrative actions performed by staff during the determination process and enhancing the documentation and quality of the determinations. As a result of this study, the team is in the process of developing a SharePoint site that will be accessible to UI staff statewide that will provide quick access to various reference guides and materials to assist them in completing determinations. The team is also making enhancements to the current form used by staff to document their fact finding in an effort to streamline the forms and make them more user-friendly. The estimated completion date is in the fall of 2015.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

Through our Business Process Innovation project aimed at reviewing, rethinking, and potentially redesigning our UI business processes to help achieve improvements in performance, we are presently conducting a study targeted at streamlining processes by reducing unnecessary administrative actions performed by staff during the determination process and enhancing the documentation and quality of the determinations. The implementation of the Business Process Innovation team's recommendations are expected in early 2015, and are expected to include the development of reference guides to assist staff in managing the sequence of tasks to reduce unnecessary time spent on administrative actions. Additionally, in order to allow more time for determination interviewers to process the more complex determinations, we are programming a macro application to assist staff in entering eligibility decisions more efficiently. The first phase of this macro is expected to be released by December 2014.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #5 To: Employment Development Department

To reduce the number of its determinations that are overturned on appeal, EDD should improve its due diligence during the pre-appeal review process by considering appellants' reasons for appealing and by contacting claimants, employers, and third parties when necessary to obtain clarifying information that could result in a redetermination, which could eliminate or reduce the need for some appeals board hearings.

Annual Follow-Up Agency Response From September 2016

As indicated in the prior response, EDD conducted a pre-appeal review pilot from May to July 2015, using a sample of the UI Code Sections with a high California Unemployment Insurance Appeals Board (CUIAB) overturn rate.

Throughout this pilot, EDD identified ways to improve its pre-appeal review process. In August 2016, EDD offered additional guidance on reviewing and reconsidering appealed UI eligibility decisions to its statewide appeals staff through a UI Program Notice. Included in the notice were additional elements for staff to consider when reviewing appellant reasons for appeal. The notice also included guidance on how to use these elements when reassessing the EDD's original eligibility decision.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

From May to July 2015, we conducted a pre-appeal review pilot using a sample of the UI Code Sections with a high overturn rate by the California UI Appeals Board. Our team developed and applied pre-appeal review procedures in reviewing appeal letters to EDD determinations. The contents of the appeals and EDD determinations were analyzed. Data was collected regarding whether additional contact with the claimant or employer was necessary, whether the parties could be reached, the time spent on each appeal, and the number of issues affirmed, reversed, or modified.

The team reviewed 252 appealed issues. Additional information relevant to the disputed legal issue was provided in the written appeal by the appellant for only 44 (17.5%) of the 252 appealed issues. Of those 44 appealed issues, additional contact was warranted in 22 cases. Overall, 39 issues out of the 252 total issues (15.5%) were reversed or modified in favor of the appellant based on the written contents of the appeal letter and/or successful contacts to the claimant and/or employer. Despite those reversals/modifications, eight of those appellants still had outstanding issues needing to be decided by the California UI Appeals Board. On average, the time spent on each pre-appeal review took about 48 minutes, more than two times the baseline. Through this pilot we identified ways to improve our pre-appeal review process and will be providing staff clarifications on the current pre-appeals review practice. Additionally, the lessons learned will be used as a basis in implementing Recommendations 6 and 8.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

6-Month Agency Response

We established a team in January 2015 to implement this recommendation. Our team is meeting to develop their guidelines for reviewing the pre-appeal review process and determining actions that can be taken by our staff at the pre-appeal review point to help reduce the number of overturned determinations. The work of the team has been slightly delayed due to the EDD's need to ensure that our customers are being served in a timely manner during our heaviest workload season. We expect the team to start making recommendations by mid-2015.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

In order to ensure continuity and consistency in our analysis, we are establishing a team that will implement this recommendation. In a phased approach, this same team will also be implementing Recommendations 6 and 8, building on the knowledge they gather through each phase. We are currently making assignments and developing the team's scope of work. The team will begin their work in late 2014 and begin to develop their recommendations in early 2015.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #6 To: Employment Development Department

To reduce the number of its determinations that are overturned on appeal, EDD should identify those types of appeals that could be most influenced by EDD staff attendance at the appeal hearing, and analyze the feasibility and cost-effectiveness of participating in those hearings by telephone.

Annual Follow-Up Agency Response From September 2016

The EDD reviewed appeal case types that may be most influenced by the EDD's staff attendance at the hearings. The appeals most influenced included all issue types except separation appeals in which the employer and/or employee bear the burden of proof. Based on this information, EDD developed policies and procedures to prepare for and attend phone appeal hearings.

To analyze the feasibility and cost-effectiveness of participating at hearings by phone, from October 2015 through March 2016, two UI representatives attended 27 hearings covering 50 legal issues. The time spent preparing for and attending these hearings was 425 hours (8.5 hours per legal issue). For 43 (86%) of the 50 legal issues, there was no value in preparing for and attending the hearings, as 36 of them were dismissed for reasons such as the claimants' non-appearance and 7 determinations were reversed. Therefore, the 365 hours spent on these cases was not cost-effective.

Furthermore, in 2015, EDD transmitted approximately 72,000 appeals to CUIAB, excluding separation issues. If EDD were to attend 25 percent (18,000) of these hearings, staff would be required to spend approximately 153,000 hours (18,000 multiplied by 8.5 hours per legal issue) to prepare for and attend the hearings. This analysis assumes only one legal issue is transmitted per appeal, though often, appeal transmittals contain multiple issues. The 153,000 staff hours would equate to 90 staff (approximately 1,700 hours annually per staff). The annual costs associated with this effort would be about

$6.6 million, not including indirect costs such as management oversight, operating expenses, and equipment.

Based on this analysis, the EDD's participation at appeal hearings by phone will continue on a case-by-case basis. Given the amount of time and resources required to attend hearings, it is not feasible or cost-effective to increase the number of hearings the EDD's staff currently attend by phone.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

As indicated in our six-month response, to implement this recommendation we will conduct an appeals hearing pilot project involving targeted representation by telephone at appeal hearings, assuming permission is granted by the California UI Appeals Board for our representatives to appear by telephone in accordance with Code of Regulations,

Title 22, Section 5055. The team, established in relation to Recommendation 5, has been designated to also implement this recommendation due to a couple of reasons. First, we anticipate that the targeted representation will be on appeals filed on the same UI Code Sections that were the focus of Recommendation 5. Additionally, the pilot staff will follow the pre-appeal review procedures established in relation to Recommendation 5. We anticipate that our team will develop a pilot model by Summer 2015, deliver training to designated staff in August through September 2015, and begin submitting notices of representation and requests to appear before the California UI Appeals Board by telephone by September 2015. As discussed in our six-month response, the focus of this team will include: (1) assessing the cost-effectiveness of participating by telephone at appeal hearings (with consideration to whether additional funding and resources will be sought), and (2) considering the impact to other services we provide to our customers, such as our ability to file UI claims and process determinations timely. We expect to begin the pilot results analysis in the first quarter of 2016 and assess the outcomes of representation by UI Code Section.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

We established a team in January 2015 that will conduct an appeals hearing pilot project involving targeted representation by phone at appeals hearings, assuming permission is granted by the California UI Appeals Board for our representatives to appear by phone in accordance with Code of Regulations, Title 22, Section 5055. This team is separate from the team formed in conjunction with Recommendation 5 and will be conducting the appeals hearing pilot simultaneously with the other team. The appeals hearing pilot is still in the early stages and the team will receive training by April 2015 and then begin their representation at appeals hearings. As discussed in our 60-day response, the focus of this team will include: 1) assessing the cost-effectiveness of participating by phone at appeal hearings (with consideration to whether additional funding and resources will be sought) and, 2) considering the impact to other services we provide to our customers, such as our ability to answer customer calls. The estimated completion date is December of 2015.

California State Auditor's Assessment of 6-Month Status: Pending

60-Day Agency Response

Using information gathered during the implementation of Recommendation 5, in the spring of 2015 and continuing into the summer of 2015, our team, implementing Recommendations 5, 6, and 8, will conduct a pilot project that will involve targeted representation by phone at appeals hearings, assuming permission is granted by the California UI Appeals Board for our representatives to appear by phone in accordance with Code of Regulations, Title 22, Section 5055. The pilot will include assessing the cost-effectiveness of participating by phone and consideration with respect to whether additional funding and resources will be sought or consider the impact to other services we provide to our customers, such as our ability to answer customer calls.

California State Auditor's Assessment of 60-Day Status: Pending

Recommendation #7 To: Unemployment Insurance Appeals Board, California

To identify and correct any policies, procedures, or practices that may be contributing to avoidable appeals filed by claimants and employers and thereby provide eligible claimants with unemployment benefits in a timelier manner, the California Unemployment Insurance Appeals Board (appeals board) should do the following: By September 1, 2014, the appeals board should aggregate the outcomes associated with each of the legal issues that it decided during fiscal year 2013-14 and make these data available to EDD. In addition, the appeals board should make similar updated data available to EDD twice each fiscal year thereafter.

6-Month Agency Response

On January 5, 2015, the CUIAB made available to EDD and any appeal party aggregated unemployment insurance (UI) benefit appeal outcome data for July - December 2014 on our public website. Previously, on August 28, 2014, the CUIAB made this outcome data for fiscal year 2013-14 available on our public website. We will make similar aggregated data available to EDD twice each fiscal year hereafter.

California State Auditor's Assessment of 6-Month Status: Fully Implemented

60-Day Agency Response

On August 28, 2014, the CUIAB made available to EDD, and any appeal party, the aggregated unemployment insurance (UI) benefit appeal outcome data for fiscal year 2013-14 by posting this data on our public website under the "Statistics" tab, as the "Judicial Appeal Outcomes" item. We will make similar aggregated data available to EDD twice each fiscal year hereafter.

California State Auditor's Assessment of 60-Day Status: Partially Implemented

Recommendation #8 To: Employment Development Department

To identify and correct any policies, procedures, or practices that may be contributing to avoidable appeals filed by claimants and employers and thereby provide eligible claimants with unemployment benefits in a timelier manner, EDD should do the following: Using the appeals board's data from fiscal year 2013-14, EDD should identify the legal isssues where its determinations are most frequently overturned, and use these data to establish initial performance benchmarks. In addition, similar to the review that EDD's audit and evaluation division performed in 2012, EDD should then review samples of its overturned determinations and the appeals board's decisions on these legal issues to identify trends in the reasons the appeals board cites for overturning EDD's determinations. With this information, EDD should review its policies, practices, and training related to these areas and identify and correct any weaknesses that may be contributing to the overturning of determinations. By April 1, 2015, EDD should report to the Legislature on the results of this review and any changes it plans to make to its determination process.

Annual Follow-Up Agency Response From October 2017

Using the Appeals Board's data from State Fiscal Year (SFY) 2013-14, EDD identified three Unemployment Insurance Code sections as the legal issues where determinations are most frequently overturned along with the corresponding overturn rates. The EDD will continue to monitor the overturn rates for these three sections and will periodically review other appealed issues to determine additional ways to decrease the rates. The goal is to decrease the average overturn rate for all issue types over the next few years. Information regarding the determinations and overturn rates, as well as the established benchmarks are provided in the attachment.

The EDD has conducted its review of samples of overturned determinations and Appeals Board decisions to identify trends in the reasons the Appeals Board cites for overturning EDD's determinations. Through the implementation of other CSA recommendations, EDD has also reviewed related policies, practices, and training to identify and eliminate areas that may have been contributing to the overturn of determinations. Based on these reviews, had some of the changes to EDD's practices been in place before EDD issued the determinations, some of the determinations most likely would not have been overturned. Further information is provided in the supplemental document.

With regard to reporting to the Legislature, EDD testified the results of this review to the Senate Labor and Industrial Relations Committee Unemployment Insurance Oversight Hearing on May 5, 2017. The EDD will continue to report applicable findings and opportunities for improvement to the Legislature using the budgetary process or other informational updates as the reporting vehicle.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We received EDD's report regarding its effort to use the appeals board's data to identify the legal issues where its determinations are most frequently overturned and to identify trends in the reasons the appeals board overturned the determinations. EDD reported that compared to fiscal year 2013/14, it has reduced the overturn rate for each of the three frequently overturned legal issues. Total appeals have also decreased.

Annual Follow-Up Agency Response From September 2016

Now that Recommendations 1 through 6 are fully implemented, the appeals project team will focus on implementing this recommendation. The EDD has reviewed Fiscal Year 2013-14 appeals board data to identify the legal issues that most frequently caused the EDD's determinations to be overturned by CUIAB. The EDD has also begun working with its Audit and Evaluation Division to establish techniques of recognizing trends in cases where EDD determinations were overturned. Additionaly, EDD plans to establish initial performance benchmarks and enhance the corresponding policies, procedures, and training to minimize overturned determinations. The EDD will report the results of this review and any changes it plans to make to the determination process to the Legislature using the budgetary process or other informational updates to the Legislature as the reporting vehicle.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

Our focus continues to be on implementing Recommendations 5 and 6 in order to use the information and experience gained from them to assist in a thorough analysis for this recommendation. We are approaching full implementation of Recommendation 5 and have begun our implementation efforts for Recommendation 6 (as indicated in Recommendations 5 and 6). Once Recommendations 5 and 6 are complete, we will proceed with our plan to redirect that team to work on the analysis required to implement this recommendation. As indicated in our six-month response, the analysis will involve reviewing EDD's original determinations, as well as full hearing records that must be requested from the California UI Appeals Board. We are on schedule with reporting on the initial outcomes of the analysis beginning late 2015.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

As indicated in our 60-day response, the analysis associated with this recommendation will be a time-consuming and resource-intensive effort, which will require reviewing not only the EDD's original determination documents, but also reviewing the full hearing records that will have to be requested from the California UI Appeals Board. Our focus right now is on implementing Recommendations 5 and 6 with the understanding that the information and experience gathered in the implementation of those recommendations will help us perform a more meaningful in-depth analysis. Once Recommendations 5 and 6 are implemented, those teams will be redirected to working on the analysis required to complete this recommendation. We will start reporting on the initial outcomes of this analysis in late 2015.

California State Auditor's Assessment of 6-Month Status: Pending

We are not convinced that this has to be a time-consuming or resource-intensive effort. The California Unemployment Insurance Appeals Board (appeals board) posted fiscal year 2013-14 data on its public Web site in a usable format six months ago. The appeals board's data indicates whether appeals were favorable or unfavorable for every unemployment insurance legal issue. We believe EDD could aggregate this data to easily identify the appeal issue areas with the highest number of overturned determinations. Using this information, EDD could review samples of its determinations and the appeals board's decisions in these issue areas to identify trends in the reasons the appeals board cites for overturning EDD's determinations. With this information, EDD could review its policies, practices, and training related to these areas to identify and correct any weakness that may be contributing to the overturning of its determinations. This is essentially the process that we used to select and review the 90 appeals for our analysis. This process is also similar to the methodology that EDD's audit and evaluation division used in 2012 to identify several opportunities for EDD to improve its determination process.

60-Day Agency Response

We maintain that we must receive aggregated data in a usable format in order for us to use the data to identify the reasons the California UI Appeals Board cites for overturning our determinations. While the California UI Appeals Board posted information on their website about some outcomes associated with each of the legal issues pursuant to Recommendation 7, the information does not provide the reasons for decisions, or a level of detail necessary for us to identify trends in the reasons for the overturns. We are now working on a plan to select a sample of overturned appeals, as well as the necessary elements that must be reviewed in order for us to perform a meaningful analysis. The analysis of the data will be conducted by the new team being formed in connection with the implementation of Recommendations 5 and 6 (refer to Recommendations 5 and 6). The EDD will report on the initial outcomes of the first analysis by the fall of 2015. The analysis will be a time-consuming and resource-intensive effort, which will require reviewing not only the EDD's original determination documents, but also reviewing the full hearing records that will have to be requested from the California UI Appeals Board.

California State Auditor's Assessment of 60-Day Status: Pending

We believe that the California Unemployment Insurance Appeals Board (appeals board) posted data in a usable format. The appeals board's data indicates whether appeals were favorable or unfavorable for every unemployment insurance legal issue. We believe EDD could aggregated this data to easily identify the appeal issue areas with the highest number of overturned determinations. Using this information, EDD could review samples of its determinations and the appeals board's decisions in these issue areas to identify trends in the reasons the appeals board cites for overturning EDD's determinations. With this information, EDD could review its policies, practices, and training related to these areas to identify and correct any weakness that may be contributing to the overturning of its determinations. This is essentially the process that we used to select and review the 90 appeals for our analysis. This process is also similar to the methodology that EDD's audit and evaluation division used in 2012 to identify several opportunities for EDD to improve its determination process. Finally, we are not convinced that this has to be a time-consuming or resource-intensive effort.

Recommendation #9 To: Employment Development Department

To identify and correct any policies, procedures, or practices that may be contributing to avoidable appeals filed by claimants and employers and thereby provide eligible claimants with unemployment benefits in a timelier manner, EDD should do the following: EDD should use the semiannual data that the appeals board provides to determine whether changes it makes to its process result in reductions in the percentage of its determinations that are overturned on appeal. EDD should also review these data to determine whether it needs to conduct additional reviews of its determinations and the appeals board's decisions to identify additional opportunities for improvement. EDD should report these results to the Legislature annually.

Annual Follow-Up Agency Response From October 2017

Beginning with SFY 2013-14 data and continuing through SFY 2016-17, EDD has used the Appeals Board's semiannual data to determine whether changes it has made to its processes (including policies, practices, and training) have resulted in reductions in the percentage of its determinations overturned on appeal. Since SFY 2013-14, there has been an overall decrease in the percentage of determinations that are overturned. To identify additional opportunities for improvement, EDD will continue to review Appeals Board data annually to determine whether it needs to conduct additional reviews of its determinations and corresponding Appeals Board decisions.

Finally, EDD will report applicable findings and opportunities for improvement to the Legislature using the budgetary process or other informational updates as the reporting vehicle.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

We received EDD's report regarding its effort to use the appeals board's data to identify the legal issues where its determinations are most frequently overturned and to identify trends in the reasons the appeals board overturned the determinations. EDD reported that compared to fiscal year 2013/14, it has reduced the overturn rate for each of the three frequently overturned legal issues. Total appeals has also decreased. EDD should ensure it continues to report the results of its reviews to the Legislature.

Annual Follow-Up Agency Response From September 2016

Once Recommendation 8 is implemented, the appeals project team will analyze the CUIAB's data to determine whether the EDD's process changes resulted in an overturned determination percentage reduction. The EDD will also review this data to determine whether additional reviews of determinations are needed, and will review the CUIAB's decisions to identify additional opportunities for improvement. The EDD will report applicable findings and opportunities for improvement to the Legislature using the budgetary process or other informational updates to the Legislature as the reporting vehicle.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

1-Year Agency Response

As stated in our six-month response, we will build on the available California UI Appeals Board data and the information gathered with the implementation of Recommendations 5 and 6, selecting the elements crucial to perform an in-depth analysis for this recommendation. Our objective remains the same, to determine whether the changes we made to our processes resulted in a decreased number of determinations overturned on appeal. Due to the slight delays with Recommendation 5, we will report applicable findings and opportunities for improvement to the Legislature using the budgetary process or other informational updates to the Legislature as the reporting vehicle by an estimated completion date in late 2016.

California State Auditor's Assessment of 1-Year Status: Pending

6-Month Agency Response

As stated in our 60-day response, we will use the limited data provided by the California UI Appeals Board to the degree possible. To implement Recommendations 5 and 6, we are using the limited data to help determine our initial focus of those efforts. As time progresses, we will build on that data and collect the elements necessary to do a more in-depth analysis that will help us determine whether the changes we have made to our processes have resulted in a reduction in the number of determinations that are overturned on appeal. As applicable, we will report our findings and opportunities for improvement to the Legislature using the budgetary process or other informational updates to the Legislature as the reporting vehicle. The estimated completion date is December of 2015.

California State Auditor's Assessment of 6-Month Status: Pending

We believe that the California Unemployment Insurance Appeals Board has provided EDD useful data in a usable format.

60-Day Agency Response

The EDD has just begun to implement the recommended changes. As time progresses, we will use the limited data provided by the California UI Appeals Board to the degree possible to determine whether the changes we have made to our processes result in reductions in the number of determinations that are overturned on appeal. As previously shared, we will be glad to report our findings and opportunities for improvement to the Legislature using the budgetary process as the reporting vehicle, or with any other legislative committee.

California State Auditor's Assessment of 60-Day Status: Pending

We believe that the California Unemployment Insurance Appeals Board has provided EDD with useful data in a usable format.

All Recommendations in 2014-101

Agency responses received are posted verbatim.