EDD wrongly denies hundreds of thousands of CA unemployment claims every year, report shows

SACRAMENTO, Calif. (KGO) -- A new state report says the Employment Development Department is wrongly denying benefits to hundreds of thousands of unemployed workers every year -- even though they are clearly eligible.

The report by the Legislative Analyst's Office looks at what happened even before the pandemic -- and says the EDD kept up to a "billion dollars" a year away from workers who deserved that money.

We have all heard about the crush of claims during the pandemic, when millions of workers were left with no benefits.

VIDEO: California delayed unemployment benefits for about 6 million people during pandemic, report says

California delayed or improperly denied unemployment benefits for roughly 6 million people during the pandemic because state policies "do not prioritize getting benefits to workers quickly," according to a nonpartisan report released by the Legislative Analyst's Office.

This new report says the EDD wrongly denied or delayed 6 million claims during that crisis. But it goes further and says the EDD routinely disqualifies hundreds of thousands of eligible workers every single year, even in normal economic times -- like now.

So many unemployed workers, who were all eligible for unemployment during the pandemic...

And all were denied -- until they got help from 7 On Your Side. But now lawmakers want the system to work on its own.

Chas Alamo of the Legislative Analyst's Office wrote the report saying the EDD's policies tend to deny benefits to workers even though they are clearly eligible.

"The experience that workers had during the pandemic with this program has really highlighted the need to simplify, to prioritize getting benefits to workers," Alamo said.

VIDEO: Bay Area couple warns EDD of identity theft. 2 years later, agency seizes their tax return

The couple filed a fraud report with the EDD in June 2020. In April 2022, the Franchise Tax Board told them the EDD was taking $1,800 of their refund.

Among the report's findings are that the EDD improperly delayed or denied benefits to 6 million workers during the pandemic.

But the agency had been disqualifying workers before that.

Between 2014 and 2019, about 250,000 workers per year appealed the EDD's denial of their claims.

Half of them won their case and got their benefits.

However, up to 300,000 more workers didn't try to appeal.

VIDEO: EDD seizes man's tax refund to repay benefits it sent to a scammer: 'Why is this happening to me?'

The EDD has not revealed how many tax refunds it has confiscated, but says many involve workers who were overpaid by mistake, or fraud or technicalities.

The report assumes many of them would have won their case...

So that left at least a half billion dollars unpaid to workers who deserved the money.

"We think that somewhere between $500 million, and a billion dollars each year is probably unpaid to eligible, California unemployed workers who are denied benefits by the department," Alamo said.

Among the reasons: the report says the EDD makes applications too complicated and puts too much weight on stopping fraud instead of delivering benefits.

VIDEO: EDD seizes Bay Area woman's tax refund, wages to pay back benefits it actually paid to scammer

The couple had no idea a scammer had used one's identity to get unemployment benefits -- until the EDD confiscated her tax refund... then her wages.

Fraud has dropped since federal benefits for gig workers ended.

The report also says the EDD favors businesses over workers in screening who is eligible for benefits.

"Because the truth is, we know very little about why the department denies claims that are later overturned on appeal. And our office believes it's a legislator's best interest to learn more about that," Alamo said.

The Legislative Analyst presented its findings to lawmakers who may now propose more changes at the EDD -- with the aim of getting those unpaid benefits into the hands of eligible workers who have been going without them all these years.

Take a look at more stories and videos by Michael Finney and 7 On Your Side.

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