Report 2014-101 Recommendation 6 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 #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

All Recommendations in 2014-101

Agency responses received are posted verbatim.