The state was sued Wednesday over a law that delays unemployment benefits to 121,000 Californians, mostly seasonal and temporary workers, and forces 28,200 onto welfare rolls.
The suit was filed in U.S. District Court in San Francisco by the national AFL-CIO, but the statistics come from the state Employment Development Department. The department also estimates that solving the problem would add $12 million to administrative costs but save the taxpayers $40 million in welfare.
The dispute involves the timing of eligibility for jobless benefits. Under state law, a laid-off worker who earns at least $1,300 in a quarter becomes eligible for benefits four to seven months after that three-month period ends. The minimum dollar amounts are slightly less for workers whose earnings are spread over more than one quarter.
Year-round workers who meet the standard can generally collect benefits immediately after losing their jobs. But seasonal and temporary workers, whose earnings are concentrated in a brief period, may have to wait months after layoffs before receiving unemployment benefits.
If they find work during that period, they lose their eligibility for benefits. If not, their only recourse may be welfare.
Quoting EDD statistics, the AFL-CIO said the state's timetable delays $233 million in benefits to 121,000 Californians. Most eventually receive their benefits, but more than 48,000 never do, either because they find work in the interim or because they fail to reapply. More than $92 million in benefits are not collected as a result.
The system does not save the state money because the unemployment insurance fund is subsidized by employers, the AFL-CIO said. On the other hand, the $12.2-million administrative cost of eliminating the delay, an amount that would shrink in future years, is dwarfed by $40 million now spent in welfare to 28,200 people who should be collecting unemployment, the suit contends.
Asked for a response to the lawsuit, EDD spokeswoman Suzanne Schroeder distributed a copy of a letter sent to the Clinton administration last July asking that states be allowed to make their own rules. The letter was written by Illinois Gov. Jim Edgar and signed by six other governors, including Gov. Pete Wilson.
Making faster payments "would take a lot of work and cost money," Schroeder said.
The AFL-CIO claimed the state's system violates federal law, which requires states to pay unemployment benefits "with the greatest promptness that is administratively feasible."