Addressing staggering fraud at EDD

The state auditor recently released a report on the massive unemployment insurance fraud occurring in California’s Employment Development Department (EDD).

Shortly after the release of the report, I participated in an oversight hearing to hold EDD accountable and seek solutions.

Since this pandemic began, my office has worked on EDD casework for nearly a thousand members of our community. While I am proud of the efforts my staff and I have made to help every person who has contacted my offices, roadblocks and deficiencies at EDD have kept too many from receiving the appropriate benefits.

The situation is unacceptable, and it is long past time for systemic change at the department.

During our oversight hearing of the joint Legislative Audit and Assembly Insurance committees, we took on a wide-ranging review of EDD, from its inadequate call center and outdated computer system to the large backlog of unemployment payments and jaw-dropping fraud.

The data collected in the auditor’s report show that EDD paid about $10.4 billion in claims believed to be fraudulent, with $1 billion paid as a direct result of EDD’s decision to remove a key safeguard against payment to claimants with unconfirmed identities.

When the department realized some of the fraud, it froze 344,000 claimant accounts without having a plan on how to selectively unfreeze accounts belonging to legitimate claimants. It is beyond egregious that EDD cannot fulfill its principal duty of discerning legitimate unemployment claims from billions of dollars’ worth of fraudulent ones.

One of the most shocking findings of this hearing was that EDD has been aware of key operational issues for nearly a decade but failed to correct them. These years of inaction and mismanagement left the department unprepared to serve Californians in their time of greatest need, and the people in our community are suffering because of it.

The auditor released a comprehensive set of recommendations to address some of the most severe deficiencies, and I have called for EDD leadership to implement these recommendations immediately.

One of the first recommendations is to establish a central unit within the department that will be responsible for coordinating all fraud prevention and detection efforts and developing a plan to assess and improve these efforts. This will help ensure that EDD can approach fraud in a comprehensive and coordinated manner.

So that EDD does not again mistakenly suspend any critical safeguards, the department would be required to plan which fraud prevention mechanisms can be adjusted to balance anti-fraud enforcement with the timely payment of claims.

Finally, EDD must immediately review benefit accounts that are frozen and, by the beginning of March, begin the process of unfreezing legitimate accounts.

With the changes I’ve listed above, and others that I have proposed, I am hopeful that we can bring necessary change to EDD to help Californians. In the meantime, my office is here to help you with issues at EDD or any other state department. Please call my Concord office at 925-521-1511 for assistance or to learn more about my work in Sacramento.

Reach Assemblyman Tim Grayson at (925) 521-1511. Visit or write the district office 2151 Salvio Street, Suite P, Concord, CA 94520