Independent Automotive Professionals Association

Small Business Employer Advisory Committee (SBEAC)
May 10, 2011

Pam Harris is the acting Director for EDD. EDD has been without a director for quite a while.

Nikki Ayers was mentioned for helping in developing the new ACES program (Accounting and Compliance Enterprise System).

Due to hiring freeze EDD has been promoting from within to fill positions being vacated due to retirement. The attrition rate at EDD is 14%.

Cathy Jackson (SBEAC Chair) stated that the major concern of SBEAC is the lack of support from State Government. California has become the least small business friendly state in the nation; number 51, Washington, DC, is better that California.

The mood of the day was focused on this problem. Most speakers stated that Governor Brown wants to make California more business friendly and is going to address it after the budget is set.

Marty Keller, Governor’s Small Business Advocate:

Mr. Keller stated that tax revenues are above projections at this time. Business owners have to re-invent themselves to be able to stay competitive in the new global market (Being active in social marketing, etc.). Marty stated that the market will improve as the housing and unemployment issues dissolve. Getting involved in the new and immerging marketing programs will be beneficial to our long-term business viability. EDD and other entities offer this education.

Mr. Keller said that in order to help small business existing regulations will have to be changed or removed. Marty had six criteria for regulation requirements:

All regulations must be written in plain English so that anyone can understand them without misunderstanding them.
Regulations must have real world purpose.
Regulations must be enforced without prejudice or favoritism
There should be no duplication of agencies.
There should be only one enforcement agency to insure consistency and to insure that a business is not being fined for the same infraction by more that one agency.
No regulation can be reviewed by those who drafted it.

Pam Harris, EDD Chief Deputy Director:

Ms. Harris stated that she wants EDD to become more efficient and effective and she is structuring EDD to do so. She also wants to spend our money wisely by reducing improper unemployment payments and addressing fraud. She wants to streamline business regulation so that businesses can actually do business in California. She said that Governor Brown wants to make the state lean and mean, and to make the state’s business transparent.

Ms. Harris also wants to re-engineer all programs to make the EDD more business friendly. She wants the employment service that helps employers find employees to be more user friendly, and to insure that a person receiving unemployment benefits that is offered a job and declines it will lose their benefits. She is to establish an anonymous hot line to report an applicant who declines a job offer.

Federal Unemployment Tax Act (FUTA) tax will be extended for 2 years if the Presidents bill goes through. The $7,000 unemployment taxable ceiling will be raised to $15,000, more than likely in 2012.

It was brought up that it is futile for an employer to fight a fraudulent unemployment claim, because there are no just results. Ms. Harris showed interest in that comment.

Governor Brown wants one business ID number for each business, to be used for all agencies.

Unemployment Insurance (UI) benefit overpayment is being addressed. Illegal unemployment benefits are actively being pursued and a penalty of 30% is accessed.
The UI Fund is insolvent and the problem is not being addressed. The insolvency is 16 billion dollars. Ms. Jackson has established a committee to offer suggestions on how to address the insolvency issue.

Talbot Smith, UI Deputy Director: UI update and the President’s proposal.

UI update:

The most recent data indicates that 1.3 million people are on UI benefits.

The unemployment rate is now 12.0% in California.

The UI is running at a deficit, the Fed is picking up the balance. In the past, the Fed has not charged interest but now will.

The President’s Proposal Goals:

Provide immediate relief to employers in indebted states for the next two years.
Provide states with a way to improve the solvency of their UI programs, while keeping federal revenues neutral.

Waive interest payments:

For calendar years 2011 and 2012 state would be relieved of their interest payments on Federal loans
No interest would accrue on any outstanding advances from January 1, 2011 through December 30, 2013.
Interest would again be charged beginning January 1, 2013 with the first payment due on September 30, 2013.

Suspend the Federal Tax Credit Reduction on Borrowing States:

For calendar years 2011 and 2010 employers in indebted states would be relieved of any automatic increase (credit reduction) in the Federal Unemployment Tax Act (FUTA).
Outstanding loan balances on January 1, 2011, and January 1, 2012, would not be considered for and state in calculating future amounts of FUTA credit reduction.

Increase the Taxable Wages Base subject to UI Taxes:

In 2014, the minimum taxable wage base subject to UI taxes would be increased from $7000.00 per worker to $15,000.00 and then indexes to the growth in average wages each year.
Each state with a taxable wage base below $15,000.00 would be required to raise its state wage base for its employers to receive the full FUTA tax credit.

Lower the Federal Unemployment Tax rate:

Beginning in 2014 the effective FUTA tax rate would be reduced to 0.38% from the current 0.8%.
This changes the total FUTA tax from 6.2% to 5.78% where it will remain each year afterward.
The proposal does not change the existing FUTA credit amount (5.4%), the value of the minimum state maximum tax rate (5.4%), or the FUTA credit reductions applied to states with outstanding advances.

Enacted state legislation:

Senate Bill 1211- Unemployment insurance: Eligibility for Elected officials Chapter 222, Statutes of 2010

Signed into law September 13, 2010.
Effective January 1, 2011.
Clarifies existing law which prohibits an elected official from receiving UI benefits based on income earned as an elected official and prohibits the waiver of any overpaid amount.

Assembly Bill 2364: Unemployment insurance: Good Cause to leave Work Chapter 678, Statues of 2010

Signed into law September 30, 2010.
Effective January 1, 2011.
Broadens the UI good cause provisions related to a quit due to domestic violence to include individuals and their families (rather than individuals and their children).
Ensures California qualifies for additional federal funds under the American
Recovery and Reinvestment Act.

Assembly Bill 2055: Unemployment Insurance Benefit Eligibility: Imminent Domestic Partners Chapter 590, Statutes of 2010

Signed into law on September 30, 2010.
Effective January 1, 2011.
Extends UI benefits to individuals who leave work voluntarily to accompany a partner to whom registration with the Secretary of State for domestic partnership is “imminent”.

Assembly Bill 2058: Unemployment Insurance: Retaining Benefits Chapter 591, Statutes of 2010.

Signed into law on September 30, 2010.
Effective no later than July 1, 2011.
Expands eligibility for the California Training Benefits (CTB) program by allowing for both automatic and potential approval under specified circumstances.

Alternate Base Period:

Overview:

Assembly Bill X3 29 was signed into law on March 27, 2009, required the department to implement an alternate Base Period (ABP) for claimants who are not eligible using the regular base period (BP).
Although current statutes require the ABP to be in effect no later than September 3, 2011, actual implementation will take place April 2012.

Current Process:

The BP is a 12-month period.
The BP is used to establish an individual’s eligibility to file a valid UI claim.
California’s current BP is the first four of the last five completed quarters.

Changes due to ABP:

If an individual cannot establish a claim using the regular BP, the department will attempt to file a valid claim using an ABP.
The BP used to establish an ABP claim is the last four completed quarters at the time the claim is filed.

Benefits:

Provides UI benefits to claimants who wouldn’t otherwise qualify.
Allows UI to better assist unemployment workers who are recent entrants into the labor market.
Allows California to take advantage of up to $839 million in federal special funding.

Automation Projects:

Electronic Benefit Payment Project:

This project establishes the use of electronic benefit payments via debit cards and direct deposit (eliminates the use of paper checks).
Implemented for Disability Insurance payments starting December 2010.

Carol Frost, Accounting and Compliance Enterprise System (ACES).

Ms. Frost’s presentation was on the online collection system, accounting system (replacement of TAS), and audit management system which allows you to manage your account.

Ms. Frost stated the ACES system is up and running with nominal problems. Several suggestions came from this meeting that she said would be implemented.

The goal of ACES is to go paperless. She also wants feedback in the system.

Ms. Jackson is going to set up a conference call to critique the ACES program.

Simon Ramsubhag: Enforcement

Mr. Ramsubhag gave a report on the underground economy stating that his team has been in the field actively pursuing companies that are not reporting or under-reporting to the EDD. He is very encouraged be the initial results. The industries that they are targeting are restaurants, garment, construction, wrecking yards, agriculture, auto body, tire shops, pallet manufacturers. He provided us with a tip line: (888) 745-3886
EDD provided us with their tip line: (800) 852-5711

In conclusion: Ms. Jackson has formed two sub groups: