Existing law declares the need to have a well-educated and highly skilled workforce. Existing law also declares specified principles to guide the states workforce investment system.

This bill would make a nonsubstantive change to those provisions.

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2358

Author:(Low) – As Amended Ver:March 21, 2024

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires the Employment Development Department (EDD) to release an employee’s wage information to a qualified third-party vendor if the employee provides EDD written permission for such release.

Specifically, this bill:

1. Defines, generally, a “qualified third-party vendor” to mean a consumer reporting agency that has provided the same service offered to EDD in another state and has had its business model, data sharing agreements, and other collateral materials reviewed, formally or informally, by the U.S. Department of Labor (DOL) for conformance with relevant federal rules.
2. Defines a “permissible use” to mean verifying an employee’s wages or employer, or using the employee’s wage information for credit granting and related account maintenance, residential leasing, employment screening, or insurance or government transactions, consistent with the purposes set forth in the federal Fair Credit Reporting Act (Act).
3. Requires, upon written consent of the employee, EDD to release an employee’s wage information to a qualified third party vendor, and requires EDD to allow, at the request of the employee, electronic transmission of such information, pursuant to an agreement with the vendor. The vendor may, upon written consent of the employee, share the employee’s wage information with a “subscriber” that pays a fee to a qualified third-party vendor to obtain consumer reports or other information. The subscriber may only receive wage information for a permissible use and may not resell or disclose wage information.
4. Requires EDD to enter into an agreement with a qualified third-party vendor to allow for electronic transmission of an employee’s wage information for permissible uses, but prohibits EDD from expending any additional state funds to execute agreement terms.
5. Specifies such wage information to be confidential and subject to applicable federal and state confidentiality laws, and provides that a person who, without authorization, knowingly accesses, uses, or discloses such information is guilty of a misdemeanor.

FISCAL EFFECT:

Total costs of an unknown, but significant, amount to EDD to enter into agreements with a qualified third-party vendor (General Fund (GF)). At a minimum, EDD will incur one-time costs of approximately $4.9 million to establish an information technology system to transmit confidential data to third-party vendors. EDD will also incur additional ongoing costs to meet the terms of the agreements, contingent on the number of agreements entered into with vendors, the length of such agreements, the number of claimant notices providing informed consent, the amount of data requested by vendors, and the level of oversight and auditing protections required by the DOL. EDD notes it would need approximately 20 months to implement this bill. Supporters of this bill note that federal rules around such wage sharing agreements require the vendor to reimburse the state for all incurred costs.

According to the Legislative Analyst’s Office, the GF faces a structural deficit in the tens of billions of dollars over the next several fiscal years.

COMMENTS:

1. Purpose. According to the author:

The state of California is fully aware of the housing situation in our region, including the increasing number of unhoused people. As a legislative body, we are responsible for reducing the barriers that prevent Californians from accessing financial essentials. This proposed bill aims to improve the accessibility of existing accommodations to those who would benefit from it.

1. Employment Screening Companies. According to the Consumer Financial Protection Bureau, employment screening companies are a type of consumer reporting company that provide information, including credit history, employment, salary, education, and professional license verification, to employers and other entities, such as non-profit volunteer organizations or government agencies, to verify employment income or determine eligibility for government assistance. Some companies may also provide other information, such as residential address history, criminal arrests and convictions, and fingerprint information. Many employment screening companies will not have information about an employee unless the employee authorized an employer or other end-user to obtain a report. This bill requires EDD to release an employee’s wage information to a qualified third-party vendor, such as an employment screening company, if the employee provides EDD written consent for such release. The vendor may, upon written consent of the employee, share the employee’s wage information with a subscriber, such as a prospective employer that buys wage information from the vendor.

This bill includes provisions designed to safeguard an employee’s data, such as specifying a permissible use must be consistent with the purposes set forth in the Act, requiring confidentiality by vendors and subscribers, and a prohibiting a subscriber from reselling or redisclosing wage information received from a vendor. However, this bill includes credit granting and related account maintenance as a permissible use, which may include debt collection in compliance with the Act. Additionally, while this bill states that federal and state confidentiality laws apply to these data sharing agreements and a vendor’s practices must conform to DOL rules, explicitly cross-referencing applicable federal and state code sections would ensure more robust consumer protections by making rights and enforcement clear, in the event certain existing laws apply only partially or conflict.

Analysis Prepared by: Irene Ho / APPR. / (916) 319-2081

Date of Hearing: April 17, 2024

ASSEMBLY COMMITTEE ON INSURANCE

Lisa Calderon, Chair

ABPCA Bill Id:AB 2358 (

Author:Low) – As Amended Ver:March 21, 2024

SUBJECT: Employment Development Department: disclosure of wage information: qualified third-party vendors

SUMMARY: Requires the Employment Development Department (EDD) to release an employee’s wage information to a qualified third-party vendor, as provided. Specifically, this bill:

1. Requires EDD to allow, at the request of the employee, the electronic transmission of the employee’s wage information directly to or through a qualified third-party vendor for permissible uses, as defined.
2. Requires the employee to provide EDD written permission for the release of wage information.
3. Defines permissible use to mean verifying an employee’s wages or using the employee’s wage information for credit granting and related account maintenance, residential leasing, employment screening, or insurance or government transactions, consistent with federal law, as specified.
4. Provides that all wage information reported to EDD and provided to a qualified third-party vendor shall remain confidential, as specified, and cannot be resold or disclosed by a subscriber.
5. Prohibits EDD from expending any additional state funds to execute the terms of the agreement with a qualified third-party vendor.
6. Provides that any person who knowingly accesses, uses, or discloses any information made confidential by this bill’s provisions is guilty of a misdemeanor, as provided.

EXISTING LAW:

1. Provides that information obtained in the administration of the Unemployment Insurance (UI) Code is confidential, not open to the public, and shall be for the exclusive use and information of the Director of EDD. (Unemployment Insurance Code (UI) Section 1094)
2. Requires the director to permit the use of any information in the director’s possession to the extent necessary to carry out certain enumerated purposes, including to enable federal, state, or local governmental departments or agencies, to verify or determine the eligibility or entitlement of any applicant for, or a recipient of, public social services, as specified, when the verification or determination is directly connected with, and limited to, the administration of public social services. (UI Section 1095)
3. Provides that all personal information received from EDD shall at all times be subject to applicable privacy and information security-related requirements arising under federal and state law. (Government Code Section 100503.9(b)(5))

FISCAL EFFECT: Unknown

COMMENTS:

1. Purpose. According to the author:

The state of California is fully aware of the housing situation in our region, including the increasing number of unhoused people. As a legislative body, we are responsible for reducing the barriers that prevent Californians from accessing financial essentials. This proposed bill aims to improve the accessibility of existing accommodations to those who would benefit from it.

1. Discussion. Millions of Californians are considered to be “credit invisible.” This makes it difficult for these individuals to access certain economic opportunities that require a credit report, including employment verification and tenant screenings. This bill seeks to use wage and employment data already collected by EDD as another way to verify past and current income and job history.

The provisions this bill would enact, to require EDD to release authorized employee wage information to a qualified third-party vendor, are allowable under existing federal and state law and federal rules require this service be cost neutral to the implementing state. Additionally, the safeguards contained in this bill related to the confidentiality of wage information are consistent with federal law. (See 20 CFR Part 603 related to the confidentiality and disclosure of state unemployment compensation information)

This bill would require opt-in by the individual and information would not be shared without an individual’s consent. If an individual opts-in and consents the information would only be shared with the third-party vendor that has directly contracted with EDD. This information is not reported to additional credit reporting bureaus and is only intended to be used for specified background screenings that require employment and wage verification.

REGISTERED SUPPORT / OPPOSITION:

Support

Cameo - California Association for Micro Enterprise Opportunity
End Poverty in California (EPIC)
Policy and Economic Research Council

Opposition

None on file.

Analysis Prepared by: Claire Wendt / INS. / (916) 319-2086