Report 2014-101 Recommendations and Responses in 2015-041

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

Department Number of Years Reported As Not Fully Implemented Total Recommendations to Department Not Implemented After One Year Not Implemented as of 2014-041 Response Not Implemented as of Most Recent Response
Employment Development Department 1 8 8 N/A 8

Recommendation 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.

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 Status: Partially Implemented
  • Estimated Completion Date: June 2016
  • Response Date: September 2015

Recommendation 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.

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 Status: Partially Implemented
  • Estimated Completion Date: Mid-2016
  • Response Date: August 2015

Recommendation 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.

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 Status: Partially Implemented
  • Estimated Completion Date: December 2015
  • Response Date: August 2015

Recommendation 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.

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 Status: Partially Implemented
  • Estimated Completion Date: September 2015
  • Response Date: August 2015

Recommendation 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.

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 Status: Partially Implemented
  • Estimated Completion Date: December 2015
  • Response Date: August 2015

Recommendation 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.

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 Status: Pending
  • Estimated Completion Date: Late 2016
  • Response Date: August 2015

Recommendation 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.

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 Status: Pending
  • Estimated Completion Date: March 2016
  • Response Date: August 2015

Recommendation 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.

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 Status: Pending
  • Estimated Completion Date: June 2016
  • Response Date: August 2015

Current Status of Recommendations

All Recommendations in 2015-041