Exhibit 89 — In re Bank of America California Unemployment Benefits Litigation (Dkt. 350-90, S.D. Cal. No. 3:21-md-02992)

Record facts

U.S. District Court for the Southern District of California · No. 3:21-md-02992-GPC-MSB · Doc. 350-90 · 2024-10-24 · Docket on CourtListener

Full text

EXHIBIT 89 
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Employment Development 
Department 
EDD’s Poor Planning and Ineffective Management 
Left It Unprepared to Assist Californians 
Unemployed by COVID‑19 Shutdowns
January 2021
REPORT 2020‑128/628.1
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For questions regarding the contents of this report, please contact Margarita Fernández, Chief of Public Affairs,  at  916.445.0255
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Elaine M. Howle  State Auditor
621 Capitol Mall, Suite 1200    |    Sacramento, CA 95814    |    916.445.0255    |    916.327.0019 fax    |    www.auditor.ca.gov
January 26, 2021 
2020-128/628.1
The Governor of California 
President pro Tempore of the Senate 
Speaker of the Assembly 
State Capitol 
Sacramento, California 95814
Dear Governor and Legislative Leaders:
In September 2020, the Joint Legislative Audit Committee directed my office to conduct an emergency 
audit of the Employment Development Department’s (EDD) response to effects of the COVID-19 
pandemic. In August 2020, we also identified as a high-risk issue the management of federal funding in 
response to the COVID-19 pandemic, and EDD is one of the state agencies responsible for managing that 
funding. For these reasons, we performed this audit of EDD’s unemployment insurance (UI) program.
In mid-March 2020, UI claims surged to unprecedented levels, and elevated claim levels persisted 
through October 2020. Although it would be unreasonable to have expected a flawless response to 
such an historic event, EDD’s inefficient processes and lack of advanced planning led to significant 
delays in its payment of UI claims. EDD was unable to automatically process nearly half of the claims 
submitted online between March and September 2020; instead, many of these claims required manual 
intervention from staff. As a result, hundreds of thousands of claimants waited longer than 21 days—
EDD’s measure of how quickly it should process a claim—to receive their first benefit payments. EDD 
has begun to modify its practices and processes to increase the rate at which it automatically processes 
online claims, but the automation it has gained during the pandemic is not fully sustainable.
In addition, EDD responded to the claim surge by suspending its determinations of eligibility for 
most claimants, thereby compromising the integrity of the UI program. In spring of 2020, the 
secretary of the Labor and Workforce Development Agency directed EDD to pay certain claimants 
UI benefits without making key eligibility determinations and to temporarily stop collecting biweekly 
eligibility certifications. Although both directives were designed to provide Californians with benefit 
payments as quickly as possible, the U.S. Department of Labor has not waived these requirements 
and, consequently, EDD now faces a very large impending workload of eligibility certifications that 
threatens its ability to operate effectively.
Moreover, EDD struggled to provide claimants assistance with their claims. At the beginning of the 
claim surge, EDD’s call center answered less than 1 percent of the calls it received. EDD quadrupled its 
available call center staff to more than 5,600 people in response to its call center problems, but these 
staff were often unable to assist callers and only marginally improved the percentage of calls it answered. 
Despite knowing for years that it had problems with call center performance, EDD has not yet adopted 
best practices for managing the call center, leaving it ill prepared to assist Californians effectively.
Respectfully submitted,
ELAINE M. HOWLE, CPA 
California State Auditor
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Selected Abbreviations Used in This Report
BSM
Benefit System Modernization
CARES
Coronavirus Aid, Relief, and Economic Security
EDD
Employment Development Department
EPR
Employment program representatives
ODI
California Office of Digital Innovation
PUA
Pandemic Unemployment Assistance
UI
Unemployment Insurance
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CONTENTS
Summary	
1
Introduction	
5
Significant Weaknesses in EDD’s Claims Processing and Workload 
Management Leave It at Risk of a Continuing Backlog of Claims	
11
Recommendations	
22
Because EDD Responded to the Claim Surge by Suspending 
Certain Eligibility Requirements, Many Californians Are at Risk 
of Needing to Repay Benefits	
25
Recommendations	
34
EDD Took Uninformed and Inadequate Steps to Resolve Its 
Call Center Deficiencies	
37
Recommendations	
47
Despite Multiple Warnings, EDD Did Not Prepare for an  
Economic Downturn	
49
Recommendations	
53
Appendix A
2020 EDD Call Data	
55
Appendix B
Scope and Methodology	
57
Assessment of Data Reliability	
59
Response to the Audit
Employment Development Department	
61
California State Auditor’s Comments on the Response From 
the Employment Development Department	
71
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SUMMARY
In March 2020, government directives ordered businesses to close and residents to stay 
at home in response to the COVID‑19 pandemic (pandemic). Millions of Californians 
were left unemployed and in critical need of assistance to replace some of the income 
on which they relied to pay for essentials such as housing and food. The Employment 
Development Department (EDD) administers the State’s unemployment insurance 
(UI) program. The economic shutdowns in early 2020 led to historically high numbers 
of UI claims in a very short time (claim surge), and further shutdowns began in 
December 2020, raising the potential for additional spikes in unemployment. This audit 
reviewed EDD’s response to the claim surge, its handling of the resulting backlog of 
unpaid claims, and the assistance it has provided to individuals through its call center. 
This audit report concludes the following:
Significant Weaknesses in EDD’s Claims Processing and Workload 
Management Leave It at Risk of a Continuing Backlog of Claims.
EDD has presented unclear information about its claim backlog. 
In December 2020, EDD publicly reported a backlog of about 
685,700 claims. However, fewer than 20,000 of these claims were 
waiting for payment because of EDD’s failure to resolve an issue with 
them. EDD’s presentation of backlog information has led to confusion 
about its performance during the pandemic. Nevertheless, when 
claims rose dramatically in mid-March, EDD’s inefficient processes 
contributed to significant delays in its payment of UI claims. 
Specifically, EDD was unable to automatically process nearly half of 
the claims submitted online between March and September 2020; 
instead, many of these claims required manual intervention from 
staff. As a result, as of September 2020, the timeliness of payments 
to claimants had declined when compared to the year before. 
Hundreds of thousands of claimants waited longer than 21 days—
EDD’s measure of how quickly it should process a claim—to receive 
their first benefit payment. Beginning in March 2020, EDD began 
modifying its practices and processes to increase the rate at which 
it automatically processes online claims, eventually reaching an 
automation rate of more than 90 percent by November 2020. 
However, it is unlikely to sustain that rate when it returns to 
post‑pandemic operations because of the short-term nature of some 
of the automation measures it has taken to address the backlog. 
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Because EDD Responded to the Claim Surge by Suspending Certain 
Eligibility Requirements, Many Californians Are at Risk of Needing 
to Repay Benefits. 
In March 2020, the secretary of the Labor and Workforce 
Development Agency (agency secretary) directed EDD to pay 
claimants UI benefits before determining whether they met key 
program eligibility requirements, and EDD expanded this directive 
to include most program eligibility determinations. In April 2020, 
the agency secretary further directed EDD to temporarily stop 
collecting the certifications claimants must regularly submit that 
assert they remain eligible for benefits. Although both directives were 
designed to provide Californians with benefit payments as quickly 
as possible, the United States Department of Labor had not waived 
the federal requirements addressed by the directives and has since 
questioned the actions EDD took. As a result, EDD now faces the 
challenge of processing delayed determinations and certifications 
of eligibility, which will require significant time and resources, and 
it has not adequately planned how it will address this impending 
workload. These actions also removed a barrier to fraud, and 
claimants who applied in good faith may have to repay the benefits 
they received if EDD finds them retroactively ineligible for some or 
all of those benefits. 
EDD Took Uninformed and Inadequate Steps to Resolve Its Call 
Center Deficiencies. 
Even before the claim surge, EDD struggled to answer claimants’ 
calls. Once the claim surge began, EDD’s call center performance 
deteriorated dramatically: it answered less than 1 percent of the calls 
it received. EDD quadrupled its available call center staff to more 
than 5,600 people in response to its call center problems, but these 
staff were often unable to assist callers and only marginally improved 
the percentage of calls it answered. Despite knowing for years that 
it had problems in the call center, EDD has not yet adopted best 
practices for managing the call center or for providing assistance to 
callers—such as tracking the reasons why claimants call and whether 
it resolves callers’ issues—leaving it less prepared to effectively assist 
the many Californians attempting to navigate the claim process 
for the first time as a result of the pandemic.
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Despite Multiple Warnings, EDD Failed to Prepare for an 
Economic Downturn. 
During the Great Recession of 2008 and 2009, EDD experienced 
many problems similar to those we note in this report. Further, it 
has been aware of deficiencies with its claim process and call center 
for years. Nonetheless, in March 2020, EDD had no comprehensive 
plan for how it would respond if California experienced a recession 
and UI claims increased correspondingly. The 2020 claim surge was 
unprecedented and would have presented significant challenges no 
matter how prepared EDD was, but it failed to act comprehensively 
to prepare for downturns and to address known deficiencies. As a 
result, its areas of weakness became key deficiencies in its response 
to the claim surge, and these were a cause of serious frustration for 
unemployed Californians in need of assistance.
Selected Recommendations
Legislature
The Legislature should require EDD to do the following:
•	 Report at least once every six months on its website the amount of benefit payments 
for which it has required repayment and the amount repaid.
•	 Develop a recession plan so that it is well prepared to provide services during 
economic downturns. The planning process should consider lessons learned from 
previous economic downturns, including the recent pandemic-related claim surge.
EDD
By March 2021, EDD should revise its public dashboards about the number of backlogged 
claims to clearly describe the difference between those waiting for payment and those 
that are not.
By June 2021, EDD should determine how many of its temporary automation measures 
for claims processing it can retain and by September 2021, it should make those a 
permanent feature of its claims processing.
To address its deferred eligibility determinations, EDD should immediately begin 
performing a risk assessment of its deferred workloads and determine the most 
appropriate order in which to progress through the work.
To improve its call center performance, by May 2021 EDD should begin tracking 
the reasons why callers need assistance and tracking whether it resolves caller 
issues successfully.
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4
Agency Comments
EDD acknowledged that it must make improvements to its 
administration of the UI program. It agreed with all of our 
recommendations and indicated it would implement all of them.
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Introduction
Background
The Employment Development Department (EDD) provides 
billions of dollars in partial wage replacement benefits each year 
to Californians who need and seek such benefits (claimants). 
California’s Labor and Workforce Development Agency, headed 
by an agency secretary, oversees EDD. 
One of EDD’s primary responsibilities is its 
administration of the unemployment insurance 
(UI) program. Funded through taxes on employers, 
the UI program provides temporary financial 
assistance to unemployed workers who meet the 
eligibility requirements summarized in the text box. 
EDD allows claimants to file a claim for benefits in 
three ways: online through its UI Online application 
system, on paper, or by phone. Most claimants file 
their claims using UI Online. 
EDD has established a number of processes to 
ensure that it provides benefits only to eligible 
claimants. As Figure 1 shows, when a claimant 
submits an initial claim, EDD’s benefits information 
system identifies any possible issues that might 
affect eligibility. If it does not identify such issues, 
it processes the claim. If it does identify such 
issues, EDD staff manually review the claim to 
determine whether it meets the eligibility requirements. Once 
EDD has determined that an initial claim is eligible, it takes steps 
to verify the claimant’s continuing eligibility to receive benefits. 
Specifically, every two weeks, a claimant must answer a series of 
questions certifying continued eligibility. These certifications are 
known as continued claims. 
The Federal Government Provided Additional UI Benefits to 
Mitigate the Economic Impact of the Pandemic
In March 2020, in response to the COVID‑19 pandemic, the federal 
government passed legislation providing additional UI benefits 
to supplement California’s existing UI program. Table 1 provides 
an overview of existing and additional benefits. Under the regular 
UI program, not everyone who becomes unemployed is eligible 
for benefits. For example, self-employed workers and business 
owners are not usually eligible. To cover these individuals during 
the pandemic, the federal government created the Pandemic 
Unemployment Assistance (PUA) program. For those workers 
Key Unemployment Benefits  
Eligibility Requirements
Monetary
•	 Earned enough wages during a specified period to 
establish a claim
Nonmonetary
•	 Totally or partially unemployed through no fault of 
the claimant
•	 Able and available to work
•	 Actively seeking suitable work
Source:  State law.
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who are eligible under the regular UI program and received 
regular benefits, the federal government provided additional 
benefits. Programs providing these additional benefits include 
the Pandemic Emergency Unemployment Compensation (PEUC) 
program and what EDD terms the Federal-State Extended 
Duration (FED‑ED) program. 
Figure 1
EDD’s Online Claim Filing Process Involves Manual and Automated Filing
If a claim cannot be filed automatically, EDD must manually review the claim to 
determine what issues need to be resolved. Potential issues include mismatched 
information and concerns about the claimant’s identity.
Claimant files a claim through 
EDD’s website.
EDD’s benefit information system 
attempts to automatically file the claim.
If a claim is filed automatically, 
EDD sends the claimant an estimated 
benefit amount and a copy of the 
continued claim form to sign and return 
to EDD to receive the first payment.
Source:  EDD’s procedure documents.
In addition, when the Governor’s stay-at-home order went into 
effect in March 2020, EDD waived the requirement that claimants 
must seek work in order to maintain eligibility for benefits. Many 
other states implemented similar waivers in response to the 
economic repercussions resulting from the pandemic. 
EDD Received an Unprecedented Volume of Claims in 2020
The dramatic rise in unemployment and the expansion of 
unemployment benefits created a massive surge in claims (claim 
surge) after California’s statewide stay-at-home order went into 
effect on March 19, 2020. California’s statewide unemployment 
rate rose from 4.3 percent in February 2020 to 16.2 percent by 
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April 2020. Unsurprisingly, UI claims rose sharply in March 
and April, and they remained well above historic monthly totals 
through October 2020, as Figure 2 shows. In fact, individuals 
filed about 13 times as many claims in April 2020 as in April 2019. 
Ultimately, from March through November 2020, EDD reports 
that it processed more than 17 million regular UI and pandemic 
unemployment assistance claims—eight times as many claims 
as were filed for the entirety of 2019—and it paid more than 
$111 billion in unemployment insurance benefits.
Table 1
Summary of Major Unemployment Benefits
BENEFIT TYPE
DESCRIPTION
MAXIMUM TIME CLAIMANTS 
MAY COLLECT BENEFITS
Pandemic 
Unemployment 
Assistance (PUA)
Benefits for individuals who 
are ineligible under regular 
unemployment insurance, such 
as self-employed workers, or 
individuals who have exhausted 
regular unemployment benefits
46 weeks*
Regular UI
California’s unemployment 
insurance program
26 weeks
Regular UI Extensions
Pandemic Emergency 
Unemployment 
Compensation (PEUC)
Additional benefits for claimants 
who have exhausted regular 
UI benefits
13 weeks
Federal-State 
Extended Duration
Additional benefits for claimants 
who have exhausted PEUC benefits
20 weeks
Source:  Analysis of state and federal laws.
Notes:  In addition to the benefits listed in the table, supplemental payments of $600 were 
available to claimants between March 29 and July 25, 2020, and supplemental payments of 
$300 were available to claimants between July 26 and September 5, 2020.
The table does not reflect changes to UI benefits enacted by the federal government in 
December 2020. 
*	 The 46 weeks include any week in which a claimant received regular or extended benefits under 
state or federal law.
This claim surge is unprecedented in California’s recent history. 
For instance, in 2009 and 2010, at its height for UI claims from 
the Great Recession, EDD received about 3.8 million claims in 
each of those years. The pandemic, however, increased statewide 
unemployment more dramatically in only a few months: EDD 
received 6.5 million claims in the first half of 2020 alone.
Along with the surge in claims came delays in the receipt of benefit 
payments, as EDD was overwhelmed by the extraordinary number 
of claims. When a claimant has waited more than 21 days after 
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submitting an application for either processing of payment or 
disqualification, EDD considers that claim as part of its backlog. 
This metric is similar to a measurement used by the United States 
Department of Labor (Department of Labor) that measures the 
timeliness of the first payment of UI benefits according to 14-day 
and 21-day time frames, depending on the specific requirements of a 
state’s UI program. According to data from the Department of Labor, 
for regular UI claims filed from April through September 2020, EDD 
provided 80 percent of claims with a first payment within 21 days—
leaving more than 800,000 claimants in the regular UI program 
waiting longer than the 21 days to receive their first payment. 
In contrast, for claims filed in 2019, EDD provided 88 percent of 
claims a first payment within the designated window. 
Figure 2
Californians Filed Claims for Unemployment Insurance Benefits at a Historic Rate and Number, Even Compared to 
the Great Recession
2019-2020
SEPTEMBER
OCTOBER
NOVEMBER
DECEMBER
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
Claims Received
0
250,000
500,000
750,000
1,000,000
1,250,000
1,500,000
1,750,000
2,000,000
2,250,000
2,500,000
2009-2010
2,355,000
*
Source:  EDD’s claim filing data.
*	 The claim surge from the Great Recession of 2008 and 2009 persisted through 2009 and 2010.
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Recent Steps to Improve the Effectiveness of EDD’s UI 
Claims Processing
In July 2020, the Governor directed the secretary of California’s 
Government Operations Agency and a former chief deputy of the 
White House Office of Science and Technology Policy to lead a 
team (called a strike team) to recommend reforms at EDD related 
to its UI claims processes. The strike team received assistance from 
staff from both the California Department of Technology and the 
Office of Digital Innovation. The strike team’s report, issued in 
September 2020, made 100 recommendations to improve EDD’s 
claim processing and to reduce the number of claims in its backlog, 
which EDD was reporting had reached about 1.6 million. 
Because of the volume of claims in the backlog and the extensive 
delays in payment, the Legislature also requested that the California 
State Auditor (State Auditor) conduct an emergency audit of EDD’s 
response to the economic impact of the pandemic, which the Joint 
Legislative Audit Committee (Audit Committee) approved in 
September 2020. The committee determined that our office should 
take into consideration the results of the strike team and thus begin 
the audit after the strike team had completed its review but no later 
than the end of September 2020. Additionally, in August 2020, we 
designated the State’s management of federal funds related to the 
pandemic as a high-risk statewide issue, giving us the authority to 
conduct audits related to that issue. We identified EDD as one of 
the state agencies responsible for managing a portion of the federal 
COVID-19 funds because of its management of the new UI funds 
authorized by the Coronavirus Aid, Relief, and Economic Security 
Act (CARES Act). 
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Significant Weaknesses in EDD’s Claims 
Processing and Workload Management Leave It 
at Risk of a Continuing Backlog of Claims
Key Points
•	 In December 2020, EDD reported that it had about 685,700 claims in its backlog. 
However, EDD has presented unclear and inconsistent information about 
the backlog leading to the belief that all claims in its backlog were waiting for 
payment. In fact, fewer than 20,000 of those claims had waited for payment 
longer than 21 days because of EDD’s failure to resolve an issue with the claim. 
•	 Although EDD has made improvements since the pandemic began to increase 
the number of claims it can process without manual intervention, it cannot 
rely in the long term on some of these adjustments because they are dependent 
upon its suspending critical requirements. As a result, EDD remains at risk of its 
backlog of claims continuing or increasing. 
•	 EDD has failed to adequately plan for additional possible increases in UI 
claims when making staffing decisions. This failure to prepare leaves EDD 
vulnerable to future workload disruptions from spikes in claims caused by 
additional pandemic-related shutdowns or even predictable seasonal changes 
in employment levels.
EDD’s Backlog Dashboards Misrepresent the Number of Claims With Delayed Payments
At the end of September 2020, EDD began reporting the numbers of backlogged 
initial and continued claims on dashboards on its website, using an approach 
recommended by the strike team. EDD represented this backlog as the number 
of claimants awaiting payment because EDD had yet to act on their claim. As of 
December 15, 2020, EDD reported that a total of about 685,700 initial and continued 
claims were remaining in its backlog. However, contrary to EDD’s characterization 
of the backlog, this number does not represent the actual number of claims needing 
action so that claimants can receive payments. Instead, the count in the backlog also 
includes claims needing actions unrelated to issuing payments. This disconnect may 
cause confusion for the public and policymakers and also creates a false picture of 
the work EDD has done and needs to do. We asked EDD to modify its calculation 
to isolate the number of claims in the backlog that were waiting on payment due to 
incomplete work on EDD’s part. That modified calculation showed that of the 
685,700 claims EDD reported, fewer than 20,000 had incomplete work that EDD 
needed to perform so that the claim could be paid. Table 2 shows the key differences 
between EDD’s reported numbers—which uses the approach that the strike team 
recommended and that EDD adopted—and the revised calculation. 
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Table 2
EDD’s Public Dashboards Are Significantly Overstating the Number of 
Backlogged Claims That Remain Unpaid Because of EDD Inaction
BACKLOG AS REPORTED ON  
EDD’S PUBLIC DASHBOARDS
ITEMS THAT DO NOT 
DEPEND ON EDD 
TAKING ACTION TO 
ISSUE PAYMENT
BACKLOG OF 
UNPAID CLAIMS 
THAT EDD MUST 
TAKE ACTION TO 
RESOLVE
Initial Claims
Pending EDD Action
27,300
–       14,500
=      12,800
Claimant Must Submit Certification
345,700
–       345,700
=      0
Continued Claims
Pending EDD Action
312,700
–      308,000
=      4,700
Totals
685,700
     17,500
Source:  EDD’s public backlog dashboards as of December 15, 2020, the strike team report, 
and analysis EDD performed using instructions we provided.
The strike team’s approach to calculating the backlog included 
claims EDD had already paid, in order to better capture EDD’s total 
pandemic workload. A key strike team observation was that EDD 
measured the timeliness of the first payments it made to claimants 
but that it did not adequately measure how frequently unresolved 
issues halted subsequent payments. In addition, to have fully 
addressed all pending work on a claim, EDD sometimes must make 
other determinations, such as examining whether the claimant 
received an overpayment. As a result of its observations, the strike 
team recommended a new definition of the backlog and provided 
EDD with a specific methodology for how to calculate the backlog. 
The strike team’s backlog methodology also included claims where 
payment has been delayed but where resolving the delay requires 
action by the claimant. Specifically, it includes a category that counts 
claims where the claimant has not submitted his or her eligibility 
certification. Although EDD does not pay a claim without this 
certification, these are not claims for which unresolved work on EDD’s 
part is delaying payment. Because there are a large number of these 
claims, including them inflates the total backlog of claims for which 
EDD must take action. On December 15, 2020, there were about 
346,000 claims for which claimants had not submitted certifications.
For those claims that require the claimant to submit their eligibility 
certification, EDD has taken action during the pandemic to help 
claimants who may not understand this requirement. Specifically, EDD 
extended the amount of time claimants have to submit their eligibility 
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certifications from 21 to 120 days from the date EDD issues or mails 
the certification form to them.1 EDD has also been reaching out 
to these claimants through mailed correspondence and emails to 
remind them to submit these certifications. Unless the claimant takes 
action, these claims will expire 52 weeks after the beginning date of 
the claim, at which point the claimant would have to file a new claim. 
Although it has taken some actions to remind claimants that they need 
to submit their certifications to be paid benefits, some claimants may 
have struggled to obtain from EDD effective assistance with their claim. 
We describe in greater detail later in this report the challenges that 
claimants have faced trying to reach EDD for assistance through its call 
center, as well as how EDD has at times been unable to help virtually any 
of the claimants that contact its call center and has not answered all web 
correspondence that claimants submit. Further, other actions that EDD 
took, such as its action in early January 2021 to require over 1 million 
claimants to undergo further identity validation, may exacerbate the 
difficulties that claimants face when contacting EDD for assistance. 
According to the UI support division chief, EDD knew before 
publishing the first calculation of backlogged claims in late 
September 2020 that the calculation included claims that were 
not waiting for payment. According to her, the strike team’s 
recommendation was to include these claims because the work EDD still 
had to perform could ultimately affect the total amount the claimant 
would receive. For example, in cases where a pending issue is related 
to possible overpayment to a claimant, EDD must determine whether 
it paid the claimant the proper amount and, if not, it must issue an 
overpayment notice to recoup the improperly paid benefits.
Although the strike team’s calculation is useful to EDD for 
understanding its key workloads and managing staff to address 
that work, EDD’s public characterization of the backlog has been 
different and, at times, inconsistent. EDD has spoken publicly about 
the backlog several times, with the context of its statements coming 
amidst concerns about late benefit payments. In that context, EDD 
spoke during a legislative hearing and in press releases about the 
backlog of work it has to process without clearly indicating that 
the backlog figures on the dashboards represented more than just the 
number of individuals awaiting payments. Notably, in a press release 
from mid-September 2020, shortly before it released the new backlog 
calculation, EDD stated that its backlog included over one million 
claimants who had “stopped receiving payments.” We found that 
EDD missed chances to be more explicit about the composition of the 
backlog, including at a legislative hearing in October 2020 at which 
the former director of EDD did not clarify that the backlog included 
paid claims despite several questions about the backlog. 
1	 In January 2021, EDD reduced this extended amount of time from 120 days to 30 days. There was a 
corresponding drop in the number of claims represented in its public dashboard as EDD no longer 
considered over 250,000 claims to be in its backlog.
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EDD must have an accurate understanding of its entire workload so it 
can provide clear information about that workload to the public and 
policy makers, and so it can determine its priorities. As we describe 
in more detail later in this report, EDD faces significant challenges 
in the coming months as it begins to address a substantial volume 
of deferred work while still fulfilling its duty to issue timely payment 
to claimants. Not all of that additional work will be captured by the 
strike team’s method of calculating EDD’s backlog. EDD will be able to 
manage those challenges more successfully if it has a comprehensive 
understanding of its workload. Such an understanding will allow it to 
better balance its efforts so that it is making informed decisions between 
expediting payments, combating fraud, and performing other deferred 
work. In the absence of a comprehensive workload measurement, EDD 
is at significant risk of placing its staff’s attention on tasks that are less 
urgent than others it has not accounted for. 
EDD is at significant risk of placing its staff’s 
attention on tasks that are less urgent.
Therefore, the backlog calculation that the strike team 
recommended—or some enhanced version of it—will likely prove 
helpful to both EDD and external stakeholders for understanding the 
workload challenges EDD faces even though it does not provide an 
accurate measurement of unpaid claims. If EDD clearly indicates the 
difference between its total pending workload versus unpaid claims, 
this will add clarity to the discussions about EDD’s performance, 
workload challenges, and the urgency with which the State or EDD 
must take action to address related conditions.
EDD’s Inefficient Processes Were Unable to Handle the Claim Surge, 
Resulting in Late Payments 
As we discuss in the Introduction, EDD did not make timely 
payments to a significant percentage of claimants during the claim 
surge. According to data EDD reports to the Department of Labor, 
its rate of first-payment timeliness declined significantly from 
April to September 2020 compared to the same months in 2019. 
In a regular year unaffected by the pandemic, the Department of 
Labor measures California’s first-payment timeliness by assessing 
the percentage of claims paid within 14 days of the end of the first 
week a claimant is eligible for benefits. For claims submitted in April 
through September 2019, EDD reported that it paid about 75 percent 
within that 14-day period. In contrast, for the same period in 2020, 
EDD reported that it made only 61 percent of payments within 
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14 days. Although these delayed payments occurred in part because 
of the unprecedented number of claims EDD received, its inefficient 
claims processing also played a significant role. State law requires 
EDD to periodically review policies and practices in the UI program 
and identify those that result in delayed eligibility determinations or 
benefits payments, those that increase its workload, and those that 
provide little or no value in identifying fraud or abuse. However, 
instead of continually improving its policies and practices, EDD has 
allowed inefficient manual processes to remain. In the three months 
preceding the claim surge, EDD’s automatic initial claim processing 
rate was at about 30 percent. Since the claim surge began, these 
inefficient processes have delayed benefits for claimants who require 
them for essential needs, such as food or shelter. 
Most notably, nearly half of the claims EDD processed in the first 
six months of the claim surge required additional intervention to 
complete filing after claimants submitted them online. In total, 
about 4.7 million of the 9.9 million claims EDD processed during this 
period—about 48 percent—were not filed automatically in UI Online, 
EDD’s online UI application service.2 Many of the remaining claims 
required staff involvement to verify claimant identities or resolve issues 
related to employment information, as Figure 3 shows. For example, 
when a claimant submits an application with a first or last name that 
does not precisely match the existing name in EDD’s benefits system, 
staff need to manually review the claim to resolve the mismatch. EDD’s 
workload reports indicate that activities like manual identity verification 
require significant time for its staff to complete, when compared to 
other manual work performed by EDD staff for UI claims. 
EDD also struggled to efficiently process work related to continued 
claims during the claim surge. As of September 2020, continued 
claims represented the majority of those claims for which EDD had 
pending work to perform that it had not resolved within 21 days. 
As we explain in the Introduction, after the approval of their initial 
claims, claimants must certify every two weeks that they continue to 
meet eligibility requirements. EDD’s processing of these continued 
claims has frequently required significant staff attention. For 
example, sometimes claimants submit eligibility certifications that 
contain employment or wage information that does not match the 
information on their original filings. Staff must investigate these 
unmatched certifications, and EDD does not pay such claims until it 
resolves the issues in question.
2	 As noted in the Introduction, EDD also accepts claims filed on paper or by phone. These claims are 
not included in the information we present about the number or percentage of claims filed online 
that were manually processed versus automatically filed because they are, by definition, manually 
processed claims.
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Figure 3
Most Issues That Prevented Automatic Claim Filing Related to Prior 
Employment or to Identity Verification
26%
69%
5%
Employment
Information
Identity 
Verification
Other
Unemployment Benefits
Source:  EDD data and internal reports for the month of August 2020.
Note:  Data in the figure are from August 2020. We also compared these data to the months 
of March and June 2020 and found the percentages to be comparable.
According to the strike team’s report from September 2020, EDD’s 
failure to promptly process both initial and continued claims was in 
part the result of its staffing decisions. Most notably, the strike team 
reported that EDD assigned its most experienced claims processers 
to help train newly hired claim-processing staff. This responsibility 
left these experienced individuals too little time to focus on actually 
resolving claims. The strike team developed a staffing and workload 
projection tool (workload tool) that isolated 16 critical areas of work 
for EDD to focus on to eliminate its work backlog by January 2021. 
The strike team noted that this tool would help address the most 
time-intensive areas of work that required additional staff to 
increase productivity.
EDD Recently Increased the Percentage of Claims It Processes Without 
Staff Intervention, But It May Struggle to Maintain This Progress
EDD asserted that it more quickly paid claims that were delayed 
by implementing several measures, namely, by redirecting its 
experienced staff to claims processing, using the workload tool 
from the strike team, and adopting the automation measures we 
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discuss in this section. Figure 4 summarizes those automation 
measures. One of those measures was implementing a new 
method of identity verification as a part of its online claim filing 
process. EDD chose a tool known as ID.me, which is an identity 
authentication platform that new claimants must now use to 
verify their identities before they can file a claim online. EDD 
implemented ID.me after the strike team recommended that 
it adopt automated identity verification to reduce its manual 
workload. Before ID.me, EDD performed manual identity 
verification. According to EDD’s IT branch deputy director, the 
department had been researching and meeting with vendors 
in July 2020 to discuss automating identity verification. When 
EDD implemented ID.me in October 2020—nearly seven months 
after the claim surge began—it helped to increase the automated 
processing of new initial claims from about 57 percent to slightly 
more than 90 percent. In other words, EDD can now automatically 
process more than 90 percent of new claims filed online without 
intervention from staff. 
However, ID.me is not wholly successful at automating identity 
verification, and there is a continued need to manually process 
some claims. If claimants cannot verify their identity through 
ID.me, EDD requires them to file their claims either by paper or 
phone instead of online. Data from the first eight weeks of EDD’s 
use of ID.me show that among the estimated number of legitimate 
claimants who attempted to validate their identities, about 
20 percent—just under 144,000—were unsuccessful in validating 
their identity.3 Because EDD has not implemented a way for these 
claimants to file their claims online, they are forced to use the more 
laborious process of filing their claim by phone or paper, which 
also creates more work for EDD staff. Moreover, EDD asserted that 
it cannot use ID.me on existing initial claims in its backlog that 
require additional identity verification; instead, EDD staff must 
complete identity verification using traditional manual methods. 
About 20 percent—just under 144,000—
were unsuccessful in validating 
their identity using ID.me.
3	 ID.me estimates the number of unsuccessful attempts to validate identities that were suspected 
of fraud. Those attempts are not included in the 144,000.
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Figure 4
EDD Significantly Changed Its Operations to Issue Payments More Quickly
AUTOMATIC CLAIM FILING RATE 
AS OF NOVEMBER 2020:
BEGINNING IN MARCH 2020...
IN OCTOBER 2020...
More Than 90%
Relaxed rules for filing a claim 
resulted in more claims filed 
automatically.
New identity verification 
resulted in fewer claims 
going to manual review.
But EDD’s changes are not all sustainable...
...because federal law 
temporarily changed 
eligibility requirements for 
some claims, EDD altered its 
processes to effect these 
changes and to automatically 
file more claims.
F I L E D


NONE
Source:  EDD claim filing reports and interviews with EDD staff.
EDD has also improved its automatic processing of initial claims 
by implementing an emergency claims processing tool (emergency 
processing tool) in March 2020. The emergency processing tool is 
an IT solution that allows claims to progress through EDD’s systems 
under more relaxed claim filing rules than would normally apply to 
claims. If a claim may require manual processing, the emergency 
processing tool reviews it and attempts to resolve any issues so 
that the claim can advance toward payment without requiring 
intervention from staff. For the most complex of claims, this tool 
I 
,,,, 
\ 
/ 
-- ,,.. 
,,.. 
/ 
I 
I 
I y 
--
---► 
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may not be effective and staff may still need to intervene. Since 
its implementation and through September 2020, the emergency 
processing tool successfully filed 20 percent of all processed claims. 
Although EDD instituted this tool at the outset of the claim surge, it 
has modified it since to increase the number of claims that the tool 
routes for automatic filing.
EDD was not able to project whether it will sustain the rate of 
more than 90 percent of initial claims filed automatically once the 
pandemic conditions subside. ID.me is likely to continue to support 
EDD’s efficiency even during regular operations; however, it is less 
clear that EDD will continue to sustain the level of automation 
resulting from using the emergency processing tool. Although EDD 
temporarily relaxed certain rules so it could issue more timely 
payments, reapplying these rules once EDD’s workload decreases 
is likely important. For example, one rule relates to determining 
whether regular UI claimants had been paid at least the minimum 
required amount of wages in the qualifying period before the 
date they filed their claim to be eligible for benefits. Relaxing this 
rule helped to reduce EDD’s manual workload because Pandemic 
Unemployment Assistance (PUA) claimants are not required to 
have earned a minimum amount of wages to receive a minimum 
weekly benefit amount. Therefore, when claimants filed for UI 
benefits without indicating wages but had noted that COVID-19 
had affected their ability to be employed, this relaxed rule allowed 
EDD to automatically file their claims as claims for PUA benefits 
without needing to manually process the claim. However, when the 
PUA program expires, EDD will likely find it cannot continue to 
automatically file claims that have this particular issue.
Depending on how much functionality EDD can preserve in this 
tool, its automation rate may decrease considerably. When we asked 
EDD about whether it would be able to continue using the relaxed 
rules integral to the emergency processing tool to sustain its level of 
automation, the UI support division chief indicated that EDD will 
eventually analyze the tool to determine which relaxed rules will be 
important to reinstate and which can now be incorporated into the 
UI Online application process. The earliest EDD expected it could 
perform this analysis was spring 2021. 
Depending on how much functionality 
EDD can preserve in its emergency 
processing tool, its automation rate 
may decrease considerably.
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Because of a recommendation from the strike team, EDD now has 
a significant opportunity to increase its automation and efficiencies 
as it emerges from its current backlog. In November 2016, EDD 
initiated a multiyear Benefit Systems Modernization (BSM) project 
to modernize its UI, State Disability Insurance, and Paid Family 
Leave benefit systems by implementing a single, integrated benefit 
system. EDD had planned to implement the UI portion of the BSM 
solution last, with an expected completion date of March 2024. 
However, at the recommendation of the strike team, EDD paused 
the implementation of BSM. The strike team recommended 
that EDD restart the project with an incremental approach of 
modernizing the benefits systems based on areas of critical need. 
To make sure that it retains as much of the improvement in its 
automated claim filing rate as possible, EDD should identify 
opportunities for incremental system modifications that it can 
implement in the near term to improve its claim processing, 
such as implementing online applications for claimants who are 
currently required to file on paper or by phone.
EDD’s Failure to Plan for Another Rise in UI Claims Leaves It 
Vulnerable to a Continuing Backlog
In the fall of 2020, EDD did not plan for another increase in UI 
claims in the winter months, which left it susceptible to a rise in 
backlogged claims. EDD has used the workload tool that the strike 
team provided to help understand and manage its backlog of claims 
and address the most critical areas of work as its highest priority. 
The workload tool has guided EDD in deciding to increase or to 
decrease the staff it assigns to claims processing. However, because 
the workload tool uses data EDD enters to estimate its upcoming 
workload, the tool’s usefulness is directly related to the quality of 
the information EDD provides, and EDD has not used available data 
about upcoming claims or modeled possible scenarios it could face 
if there is another round of economic shutdowns. In the absence of 
such modeling, EDD’s overly optimistic projections of its workload 
may lead it to shift staff and other resources away from claims 
processing, leaving it shorthanded again if claim volumes spike. 
A key input to the workload tool is the number of claims that EDD 
expects to receive in coming weeks: a higher number of expected 
claims results in a higher projection of the level of work EDD will 
need to address. Nonetheless, at the time we began our audit in 
October 2020, the management team overseeing the tool was 
updating EDD’s projections each week by using the number of new 
claims from the previous week as the expected number of claims 
for each week in the upcoming three months. Effectively, this 
decision resulted in EDD’s projected workload for a multiple-month 
period being entirely reliant on the claim rate of just one week. 
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Such a narrow input can have a dramatic effect on EDD’s 
understanding of its upcoming work. For example, during the last 
three weeks of October 2020, the number of new claims submitted 
dropped each week. When EDD updated its workload projection 
each week, it entered the decreasing numbers of new claims, 
causing its projected workload for the coming months to fall. In 
November 2020, the EDD management team altered its approach 
slightly and began using an average of the new claims from prior 
weeks going back to mid-October as its new expected number of 
claims, and used that approach through the end of our fieldwork. 
However, this is still a retrospective as opposed to a prospective 
approach. A prospective approach would involve using a reasonable 
increase or decrease factor based on expected unemployment rates 
and historical data.
EDD had information it could have used to implement a more 
accurate approach. For example, UI claims historically trend upward 
at the end of the year and into January. From 2015 through 2019, 
claims rose an average of 25 percent between October and January 
of the following year. EDD explained that claims generally increase 
during this period because of winter weather’s effect on seasonal 
industries, such as agriculture, and because of January layoffs in the 
retail industry following the holidays. However, EDD did not take 
these historic trends into account in forecasting its workload.
Perhaps more importantly, EDD failed to take into account indicators 
that the pandemic might worsen and result in significant economic 
repercussions. EDD was aware that in November 2020, COVID-19 
cases rose in California. On December 3, 2020, the Governor issued 
regional stay-at-home orders to be enacted if the capacity of regional 
hospitals’ intensive care units fell below 15 percent. These events 
increased the likelihood of a rise in UI claims as businesses shut down 
or reduced their operations. In fact, a forecast that EDD’s Program 
Estimates Group (estimate group) released in October 2020 predicted a 
21 percent increase in new claims from October through January 2021. 
However, EDD’s management team decided not to use this forecast for 
workload planning. In addition, EDD did not take into consideration 
the possibility that the federal government would approve additional 
UI benefits or make more changes to existing UI programs that would 
increase EDD’s workload. Recent action by the federal government in 
late December 2020 brought about such changes and now EDD faces 
additional work that it had not planned to perform. 
EDD had information it could have used 
to implement a more accurate approach to 
projecting its workload.
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EDD’s process improvement manager (improvement manager)—
who is part of the management team that uses the workload 
tool—agreed that modeling multiple scenarios, including a large 
increase in claims, would be beneficial. However, she indicated that 
the management team has not had the time or opportunity to do 
so. According to the improvement manager, EDD’s management 
team decided not to use the estimate group’s forecasts for new 
claims from November 2020 through January 2021 to project 
EDD’s workload because, among other reasons, the group’s forecast 
had overestimated the number of claims EDD would receive in 
October 2020. The improvement manager acknowledged that as 
of the beginning of November, the team had not held extensive 
discussions about how an increase in claims resulting from either 
new federal legislation or another economic shutdown would 
affect EDD’s projection of work. Under the current economic 
climate, EDD’s failure to include these factors in its modeling is a 
surprising omission and a significant misstep. If EDD continues to 
project its work based only on recent claim submission rates, it risks 
being unable to quickly address spikes in its workload and issue 
timely payments to Californians in need of assistance. 
Recommendations
Legislature
To ensure that EDD’s claims processing is as effective and efficient 
as possible, the Legislature should require EDD to convene a 
working group to assess the lessons learned from the claim surge 
and identify the processes that EDD can still improve. That working 
group should do to the following:
•	 Include representatives from EDD’s UI branch, IT branch, and 
executive management. It should also include representatives 
from the strike team.
•	 Issue a report on the lessons learned from the claim surge by 
no later than January 2022. The report should identify any 
improvements that the working group recommends that EDD 
make and include a review of EDD’s implementation of the strike 
team’s recommendations.
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EDD
To provide a more transparent picture of claims in its backlog, by 
March 2021 EDD should revise its public dashboards to clearly 
indicate the number of claims that have waited longer than 21 days 
for payment because EDD has not yet resolved pending work on 
the claim.
To ensure that its identity verification processes are as robust as 
possible, EDD should determine by June 2021 the reasons why 
claimants cannot successfully complete their identity verification 
through ID.me and work with its vendor to resolve these problems. 
EDD should thereafter regularly monitor the rate of successful 
identity verifications to ensure that it consistently minimizes 
unnecessary staff intervention. 
To retain as much automation in initial claims processing as 
possible, by June 2021 EDD should determine the automation 
modifications achieved through its emergency processing tool 
that it can retain and by September 2021 it should make those a 
permanent feature of its UI Online application.
To ensure that it does not delay needed improvements to its IT 
systems, EDD should, by June 2021, identify the elements of the 
BSM that can assist it in making timely payments and that it can 
implement incrementally. It should then prioritize implementing 
the elements most likely to benefit Californians.
To ensure its ability to respond in a timely fashion to fluctuations 
in its workload, EDD should immediately begin modeling workload 
projections that account for possible scenarios that would cause 
a spike in UI claims. EDD should plan its staffing around the 
likelihood of those scenarios, including having a contingency plan 
for less likely scenarios that would have a significant impact on 
its workload. 
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Because EDD Responded to the Claim Surge 
by Suspending Certain Eligibility Requirements, 
Many Californians Are at Risk of Needing to 
Repay Benefits
Key Points
•	 In March 2020, EDD halted most of its work related to determining whether 
UI claimants were eligible for benefits. Although that step likely resulted in 
more timely delivery of payments to individuals in need, it conflicted with core 
UI program tenets. EDD is now faced with a workload of about 12.7 million 
deferred eligibility issues that affect up to 2.4 million claimants, and also 
related efforts to recover benefits it paid to any of those claimants it may 
deem ineligible. 
•	 For eight weeks in the spring of 2020, EDD suspended the requirement 
that claimants certify their eligibility to continue receiving benefits after 
their initial claims were paid. This decision created another large pending 
workload for EDD and left nearly 1.7 million Californians at risk of needing to 
repay benefits. 
To Mitigate the Number of Delayed Payments, EDD Stopped Determining Whether All 
Claimants Were Eligible to Receive Benefits 
As claims began to surge in March 2020, EDD halted most of its work determining 
whether claimants were eligible for UI benefits. This action curbed the size of its 
claims backlog significantly and resulted in more timely payments to Californians. 
However, it also compromised the integrity of the program and may hinder the 
ability of the department to conduct day-to-day operations in the future. As we 
discuss in the Introduction, claimants must meet various eligibility requirements to 
qualify for UI benefits. In response to the pandemic, the Department of Labor issued 
guidance about the flexibility states had to interpret and understand key eligibility 
requirements. Specifically, it advised states about how to determine whether an 
individual was able and available for work in light of the pandemic. However, the 
Department of Labor maintained that states must still apply the able and available 
criteria. If a claimant might be ineligible, EDD staff must conduct additional work—
such as an interview with the claimant—to make an eligibility determination. 
Indications of potential ineligibility include a claimant reporting that he or she 
voluntarily quit a job or was discharged for work-related misconduct. However, 
as Figure 5 shows, EDD suspended the work necessary to make most eligibility 
determinations in order to better manage its workload. 
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Figure 5
EDD Delayed Eligibility Decisions to Keep Its Claim Backlog From Growing
EDD paid benefits without making most eligibility 
decisions.
When economic shutdowns caused record numbers 
of Californians to apply for unemployment benefits...
In the upcoming months, EDD will have to review 
12.7 million eligibility issues affecting up to 
2.4 million claimants...
to determine which claimants may not have actually 
been eligible for all of the benefits they received and 
now need to repay money they received.
Source:  Review of March 20, 2020, memo from agency secretary, data from EDD, and 
federal guidance.
------------------
-----
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EDD enacted these changes at the very beginning of the claim 
surge. Specifically, on March 20, 2020, the agency secretary 
directed EDD to temporarily pay all claims without determining 
whether claimants met key eligibility criteria: being able to, and 
available for, work. The agency secretary made this directive after 
receiving a recommendation from EDD to do so. This directive 
remained in effect at the beginning of December 2020. However, the 
agency secretary’s directive required EDD to maintain its identity 
verification practices as well as to continue to allow employers 
to contest unemployment claims.4 In response, EDD stopped 
making some of the specific eligibility determinations the agency 
secretary had identified, but it also suspended its review of many 
additional eligibility issues that it would usually examine. These 
issues included, for example, determining whether a claimant who 
reported voluntarily quitting a job or refusing suitable work had 
good cause to do so. Effectively, EDD stopped making most required 
eligibility determinations. According to EDD’s general counsel, the 
Labor and Workforce Development Agency did not learn of this 
additional action on EDD’s part until several months later. 
EDD suspended its review of many eligibility 
issues that it would usually examine.
As we noted earlier, EDD struggled to pay claims on time during 
the claim surge in spite of the fact that it made this decision. 
Had EDD performed additional work required for eligibility 
determinations before issuing payments, the backlog would have 
been even greater, and it almost certainly would have further 
slowed access to critical benefits for many Californians. 
However, the Department of Labor determined that this decision 
likely compromised the integrity of California’s UI program. 
In September 2020, the Department of Labor learned about 
EDD’s decision to suspend many eligibility determinations. On 
December 4, 2020, the Department of Labor notified EDD that it 
believed those actions conflicted with a core tenet of the UI program, 
namely not paying benefits to ineligible claimants. It noted that 
without conducting eligibility determinations, EDD could not be 
certain that individuals are eligible for benefits and instructed EDD 
to immediately resume all eligibility determinations. It also directed 
EDD to begin examining all the suspended determinations that had 
4	 Because employers fund unemployment insurance through taxes, they are stakeholders in the 
process. An employer could contest a claim for various reasons, including because it fired 
the employee for work-related misconduct. 
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accumulated. As of December 3, 2020, EDD’s claims processing 
system had flagged about 12.7 million potential eligibility issues on 
claims since March 2020, affecting up to 2.4 million claimants. 
Although EDD’s actions likely allowed it to pay benefits faster, EDD 
now faces an impending workload for which it has no clear plan to 
address and that could have significant consequences for claimants. 
Resuming all eligibility determinations will slow how quickly EDD 
can process claims and pay benefits. Processing the 12.7 million 
suspended determination issues on prior claims will also present 
significant challenges. EDD estimates it takes 30 minutes on 
average to resolve a determination. Even if it only had to resolve 
half of the suspended determination issues, it would still take EDD 
over 3 million hours to do so. According to the UI support division 
chief, this calculation overestimates the number of determinations 
needing significant work to address. However, EDD’s own 
analysis of the work that must be done is still preliminary. As of 
mid‑December 2020, the UI support division was in the process 
of drafting a plan for resuming all eligibility determinations 
and addressing deferred determinations. The plan was due to 
be finalized in January 2021. Ensuring that benefits are paid in a 
timely fashion while simultaneously reviewing the unprecedented 
number of claims for which it suspended determinations represents 
a workload never before seen by the department, which is 
already struggling, and threatens its ability to effectively conduct 
ongoing operations. 
EDD now faces an impending workload for 
which it has no clear plan to address and 
that could have significant consequences 
for claimants.
When it conducts these eligibility determinations, EDD will 
likely find that some of these claimants were in fact not eligible 
for the benefits they received. For example, EDD told us that in 
2019, it disqualified about 164,000 claims because it found during 
its eligibility review that the claimants had voluntarily quit or 
been dismissed because of misconduct. Although some ineligible 
claimants are actively attempting to defraud the UI program, others 
may be genuinely confused about the eligibility requirements. These 
claimants now face the possibility that they may have to repay some 
or all of the benefits they received in good faith—and many will 
have already spent these benefits. 
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If a claimant has to repay benefits, EDD offers installment payment 
options. For nonfraud repayments, claimants typically have 
48 months to repay the amount they owe. Further, EDD generally 
has the ability to waive repayment when cases meet certain criteria, 
such as when there is no fraud involved. However, it is unclear the 
extent to which it can do so for the current claims because it has not 
yet analyzed them. State law outlines a two-year period during which 
EDD can issue an overpayment notice requiring the repayment of 
benefits in cases that do not involve fraud. 
However, in the case of fraudulent claims, the likelihood that 
EDD could recoup the payments may be very low. For example, EDD 
informed us that in September 2020, it flagged about 250,000 claims 
as having been filed using suspicious addresses. In the event these 
claims represent fraudulent activity, EDD may find it difficult to 
identify the bad actors who filed the claims and to pursue recovery 
of the benefits it paid out. That difficulty will come primarily because 
these claims were likely filed using another person’s identity and 
address at which the perpetrators likely do not live. 
In the case of fraudulent claims, the likelihood 
that EDD could recoup the payments may be 
very low.
As it moves forward and implements the Department of Labor’s 
directive, EDD must employ a strategic approach to ensure—to the 
extent possible—that it provides eligible Californians with benefits to 
which they are entitled in a timely fashion. A key factor in planning 
the approach EDD takes will be assessing the risk level of the various 
eligibility issues. For example, EDD may identify that some eligibility 
issues have historically been more common reasons to disqualify 
an individual or are more indicative of fraud. Further, it may find 
that because the federal government temporarily broadened certain 
eligibility requirements, it is unlikely to disqualify individuals for 
certain reasons it may have used to do in the past. Once it has 
developed a risk assessment model, EDD would need to use it to process 
the 12.7 million deferred determinations to ensure that it is addressing 
those that represent the highest risk of ineligibility or fraud first. 
If EDD cannot complete the risk assessment modeling on its own, 
it should consider partnering with another state agency or hiring 
contracted help to expedite the work. The improvement manager noted 
that although outside help could take some of the burden off EDD’s 
limited staff resources, EDD staff would still need to provide assistance in 
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obtaining and understanding data and EDD processes. In her opinion, it 
would be a better return on investment to hire additional staff to perform 
data analysis, as these staff could serve as a continuing resource for EDD.
Because EDD Told Claimants Not to Certify Their Continued Eligibility, It 
Faces Another Significant Workload It Must Manage 
A second decision by the agency secretary to suspend required work 
has created another large, pending workload for EDD and has left close 
to 1.7 million Californians at risk of needing to repay benefits that they 
received in the first half of 2020. UI claimants must certify every other 
week that they remain eligible for benefits, and EDD must validate 
those certifications by confirming the information the claimants 
report in order for the claimants to continue receiving payments. 
These certifications are California’s way of ensuring compliance with 
federal program integrity requirements. However, on April 23, 2020, 
the agency secretary directed EDD to suspend the certification 
requirement for claimants for eight weeks, from mid‑March through 
early May 2020. The agency secretary stated that she was issuing the 
directive in light of a persistent inability of many claimants to access 
EDD’s website to submit certifications because of a historically high 
volume of claims and the pressure they had placed on the website. 
Following this direction, EDD automatically paid claimants without 
requiring them to submit certifications for their continued claims 
(autocertifications). Autocertifications are different from the 
eligibility issues we discuss in the previous section, wherein claimants 
submitted information about their claims but EDD deferred eligibility 
determinations. In the case of autocertifications, EDD did not require 
the necessary certifications from any continued claimants during the 
eight-week period. According to information from EDD, it paid nearly 
1.7 million claimants more than $5.5 billion in benefits over this period. 
A few days after the agency secretary’s directive, EDD’s director 
recommended to the agency secretary that California stop its 
autocertification process earlier than originally planned. The director 
noted that autocertifications did not reduce traffic on EDD’s website, 
created a larger manual workload for staff when some claimants 
chose to mail in certifications, and did not meet standards in federal 
law and regulations. In response, the agency secretary reaffirmed her 
direction to continue autocertifying claimant eligibility. Correspondence 
we reviewed shows that the agency secretary coordinated with 
the California Office of Digital Innovation (ODI) when making this 
decision. The communication shows that ODI staff agreed with the 
EDD director that autocertifications had not reduced traffic on the 
EDD website and separately noted that the autocertifications were not 
having the desired effect because claimants chose to certify anyway. 
However, ODI also noted in its assessment that EDD’s systems had 
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experienced problems because of certifications and that certification 
volumes were likely to grow in the immediate future, which left 
EDD vulnerable to additional system problems in the future. Finally, 
ODI noted that ending the autocertification process early when the 
time period for autocertification was almost completed could lower 
claimants’ level of trust with EDD and could make it harder for EDD 
to effectively communicate with claimants in the future. Separately, 
the correspondence we reviewed also show that the agency secretary 
shared ODI’s concerns about system stability and that EDD would 
lose credibility because of the conflicting messages to the public. 
In May 2020, the Department of Labor issued a letter to all states 
reminding them of the requirement to continue collecting biweekly 
certifications and that even the temporary suspension of claimant 
certification does not meet standards in federal law.
Similar to the decision to suspend eligibility determinations, 
the agency secretary’s decision to suspend the certification 
requirement likely resulted in more timely payments to UI 
claimants. However, that decision again threatens EDD’s ability 
to effectively administer the UI program at a time when residents 
of California still depend on timely assistance. These pending 
retroactive certifications represent a significant workload that EDD 
will need to process, in addition to the upcoming work in addressing 
the millions of eligibility determinations that it has postponed 
since March 2020. During July and August 2020, EDD notified 
the nearly 1.7 million affected claimants that they would need to 
retroactively submit all certifications by November 21, 2020, for 
the weeks they received benefits. To avoid placing an additional 
burden on its unemployment benefits information system that 
typically receives the online certifications, EDD contracted with a 
vendor to implement a new system for accepting these retroactive 
certifications. As of November 23, 2020, about 67 percent of these 
claimants—or 1.1 million—had submitted retroactive certifications, 
representing the equivalent of almost 4 million weeks of benefits 
that EDD will need to process. As it continues to collect retroactive 
certifications, EDD will need to validate that claimants were eligible 
for payments and that they were paid the appropriate amount of 
benefits. For those claimants who do not submit their retroactive 
certifications, EDD must investigate the claims and potentially 
initiate the process to recoup the overpaid amounts. 
EDD notified the nearly 1.7 million affected 
claimants that they would need to 
retroactively submit all certifications.
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These retroactive certifications add to EDD’s already sizeable 
volume of work. In October 2020, EDD told us that it did not know 
how quickly the Department of Labor expected it to complete 
processing these millions of retroactive certifications. The UI 
support division chief indicated that EDD would begin to process 
the retroactive certifications when it finished processing the 
backlog of claims, which it expected to complete in January 2021. 
However, as EDD finishes its work on backlogged claims, it faces 
not just these retroactive certifications but also the continuing 
economic repercussions from the COVID-19 pandemic and the 
Department of Labor’s recent directive to resume all eligibility 
determinations that we discuss in the previous section. In other 
words, EDD is at risk of having to manage another influx of claims 
while also processing the retroactive certifications and its deferred 
eligibility work. Given the previous challenges that EDD has had 
in managing higher than normal levels of work, it is not clear that 
EDD will be able to effectively and efficiently manage all three of 
these workloads. 
Further, if EDD determines that a claimant was ineligible or that it 
paid claimants more than they were eligible to receive, it will need 
to begin a process to recoup the identified overpayments. Some 
claimants may have experienced a change in eligibility or a return 
to partial employment after filing their claims that would have 
affected the benefit amount they received had EDD collected and 
reviewed their certifications as usual. Figure 6 shows an example 
of such a situation in which even a claimant who followed all of 
EDD’s instructions could be asked to repay benefit payments. In 
each of the three calendar years preceding 2020, the percentage 
of the total benefits that EDD paid to claimants for which it 
later issued overpayment notices was about 3 percent. EDD’s UI 
support division chief does not believe that this historic ratio 
will necessarily apply to the $5.5 billion it paid in benefits during 
the autocertification period because the eligibility requirements 
have been more lax for some claim types during the claim surge. 
Nonetheless, as a guide, we used the historic overpayment rate of 
3 percent to estimate that of the $5.5 billion EDD paid to claimants, 
it will likely need to issue repayment notices to claimants that total 
more than $160 million. As we discuss in the previous section, EDD 
has the authority to forgive repayment on some, but not all, claims, 
and for nonfraud cases, EDD allows claimants up to 48 months 
to repay benefits. Nonetheless, for those claimants who justifiably 
believed they received the correct benefit amount or who made 
unintentional errors in their claim files due to their unfamiliarity 
with the claims process, these overpayment notices could represent 
a serious financial strain. 
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Figure 6
Some Claimants May Owe Repayment of Benefits Because EDD Did Not Collect Eligibility Certifications
Before the COVID-19 shutdowns, 
Jane taught classes full time at a 
fitness studio.
Jane filed a regular unemployment 
insurance claim in March 2020 and 
began receiving benefits.
In April 2020, EDD 
instructed Jane not to submit 
her continuing eligibility 
certifications.
At the end of April 2020, Jane 
began teaching classes online 
part time. This income may make 
her ineligible for some of the 
benefits she is receiving from 
EDD. Jane reported the income 
to EDD, but it did not review 
her correspondence.
In July 2020, Jane learns she needs 
to submit retroactive certifications 
and does so immediately.
Even though Jane followed all of EDD’s instructions 
and was suffering financially, EDD may now request 
she repay money she may not have.
EDD must validate her certifications 
and review her change in income. 
Afterwards, EDD may determine 
that Jane was ineligible for part of 
her benefit amount.
Source:  A hypothetical example based on state and federal law and regulations, EDD policies and procedures.
I 
\ 
---- -- ~ 
___ .,,,,,,. 
I 
I 
/ 
/ 
I 
·--
/ 
---
,,, 
/ 
I 
I 
I 
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Finally, the claim surge and corresponding delayed payment on 
claims has generated significant levels of interest from the public 
and the Legislature. EDD’s claims processing has been the subject 
of many news reports and legislative hearings, and members of 
the Legislature report fielding numerous calls from constituents 
about their claims. It is almost certain that a similar level of interest 
will exist for information about how many Californians may be 
subject to overpayment notices and how far EDD has progressed in 
processing that workload. Consequently, the Legislature would add 
to the public transparency of EDD’s operations by requiring it to 
report on these and other related metrics when it resolves both the 
retroactive certifications we discuss in this section and the deferred 
eligibility decisions we discuss earlier. 
Recommendations
Legislature
To ensure transparency in EDD’s operations and provide 
information to policymakers, the Legislature should require EDD to 
report on its website at least once every six months the amount of 
benefit payments for which it must assess potential overpayments, 
the amount for which it has issued overpayment notices, the 
amount it has waived overpayment on, and the amount repaid 
related to those notices. The reports should encompass benefit 
payments EDD made from March 2020 until the time when it 
resumes all eligibility determinations. EDD should be required to 
publish these reports until the repayment period for all the notices 
has elapsed.
EDD
To continue providing timely payment of benefits to Californians 
in need while also effectively responding to the Department of 
Labor’s directive regarding immediately resuming all eligibility 
determinations and resolving all suspended determinations, EDD 
should do the following:
•	 Perform a risk assessment of its deferred workloads, including 
deferred eligibility determinations and retroactive certifications. 
EDD’s assessment should take into account the relative 
likelihood that it issued payments to ineligible claimants by 
considering historic overpayment trends as well as the new or 
altered eligibility requirements the federal government adopted 
in response to the pandemic. If necessary, EDD should either 
partner with another state agency or contract for assistance in 
performing the analysis in support of this assessment.
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•	 Develop a workload plan that prioritizes its deferred workloads 
based on the risk assessment and determine the staffing and 
IT resources needed to accomplish the work within expected 
time frames. 
•	 Hire and train staff as necessary in order to carry out the 
workload plan.
•	 Using the workload plan, EDD should process the deferred work 
in alignment with the following: the need to pay timely benefits 
to new or continued claimants, federal expectations about the 
urgency of the deferred work, and any deadlines by which EDD 
may no longer be allowed to recoup inappropriately paid benefits.
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Blank page inserted for reproduction purposes only.
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EDD Took Uninformed and Inadequate Steps to 
Resolve Its Call Center Deficiencies
Key Points
•	 Even before the claim surge, EDD struggled to answer a high rate of calls. 
Then, at the start of the surge, EDD answered less than 1 percent of calls and 
failed to answer hundreds of thousands of requests for assistance that 
claimants submitted online.
•	 Although EDD added thousands of staff members in response to the claim 
surge, it failed to adequately address the significant weaknesses in its call 
center’s performance, in part, because of its lengthy training program and 
in part, because it has not collected critical information about why claimants 
call for help.
•	 EDD has not implemented best practices for managing its call center that 
would help it operate more effectively and improve its customer service.
The Claim Surge Worsened the Already Poor Performance of EDD’s Call Center
EDD provides several different avenues through which UI claimants can request 
assistance, including its UI Online website, email, online chat, and call center. As 
of January 2020, the call center had about 1,270 EDD agents located in field offices 
across the State. These agents provide customer service by answering questions and 
providing assistance to Californians who need help with UI claims, and they also 
spend time performing off-phone work processing UI claims. When contacting the 
call center, claimants call a toll-free number and navigate a series of prerecorded 
messages—known as Interactive Voice Response—that routes callers based on the 
options they select. 
Even before the claim surge, EDD struggled to meet a critical benchmark for 
its call center’s performance. Specifically, in 2014, EDD made a commitment to 
the Legislature to answer 50,000 claimant calls per week as a result of receiving 
increased funding to hire staff. EDD refers to this commitment when it makes 
staffing decisions and it pointed us to other documents related to that commitment 
as a way to measure the success of its call center. However, from January to 
mid‑March 2020, EDD answered only about 42,000 calls per week on average. 
Although it answered at least 50,000 calls in four of the 11 weeks in the period, it 
failed to meet this benchmark in the other seven weeks, and it was often significantly 
below 50,000. Worse yet, the calls EDD answered represented less than 25 percent 
of the 184,000 calls requesting to speak to an agent it received on average each 
week. In fact, EDD’s phone system blocked 17 percent of call attempts because of its 
technical capacity limitations.
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When we asked EDD about the performance of its call center 
during this period, it cited two factors—a low unemployment 
rate that resulted in less funding for staff and the number of 
holidays early in the year—as contributing to its struggle to 
answer 50,000 calls each week. However, EDD often failed to meet 
the 50,000-call requirement even during several weeks without 
holidays. Further, the 2014 commitment that EDD made to the 
Legislature did not have an allowance for answering 50,000 calls 
some weeks while failing to do so in other weeks. Regarding the 
high percentage of blocked calls, EDD asserted that the majority 
of these calls occurred during particularly busy times of day, such 
as the first few minutes that the call center was active on Monday 
mornings. However, call data also show that once total calls 
increased at the start of the claim surge, a significant portion of 
calls were blocked during all call center hours.
The claim surge exacerbated EDD’s struggles at answering calls 
to the point at which the call center effectively stopped providing 
service to almost all callers. As Figure 7 shows, the number of 
callers trying to reach the call center spiked drastically from 
120,000 per week in the middle of March 2020 to more than 1.7 
million in a single week by the end of April 2020, while the number 
of calls EDD answered increased only marginally. During this 
period, individuals attempting to reach EDD’s call center were 
almost universally unsuccessful in speaking to an agent—hundreds 
of thousands of callers were unable to speak with an agent each 
week, and EDD answered an average of only 0.5 percent of total 
calls per week. In fact, based on the number of unique callers 
and total calls at the end of April 2020, the average unique caller 
attempted to reach EDD at least 10 times. This suggests that if 
EDD had been able to more immediately answer questions from a 
greater number of unique callers, the total number of calls would 
have likely fallen. We provide additional details about the calls EDD 
received in Appendix A.
EDD answered an average of only 
0.5 percent of total calls per week from 
mid‑March to the end of April 2020.
Although it took some action to address the large volume of 
calls, EDD failed to meaningfully improve its call answer rates 
or customer service. On April 15, 2020, the Governor signed an 
executive order requiring EDD’s oversight agency to expand call 
center hours and ensure sufficient staffing levels to process claims. 
Following this order, EDD quickly implemented a preliminary, 
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minimal version of a new phone system—known as a virtual 
contact center (VCC)—in late April 2020. The VCC allowed agents 
who were working remotely because of stay-at-home orders to 
answer claimant calls, but it lacked some functionality that EDD’s 
previous phone system featured. Additionally, EDD expanded 
call center hours and began adding thousands of agents to 
answer calls and perform other tasks related to claim processing. 
We discuss the shortcomings of EDD’s hiring efforts in the 
next section. 
Figure 7
Hundreds of Thousands of Callers Did Not Reach EDD Agents When Calling 
During the Pandemic
0
180,000
360,000
540,000
720,000
900,000
1,080,000
1,260,000
1,440,000
1,620,000
1,800,000
Unique 
Callers
Calls 
Answered
JANUARY
FEBRUARY
MARCH
APRIL
MAY
JUNE
JULY
AUGUST
SEPTEMBER
OCTOBER
Callers had to call an 
average of 10 times.
(weekly)
(weekly)
EDD began adding call center staff 
because its capacity is limited by its 
staff, who can each answer about 
200 calls per week.
2020
Source:  EDD call center data, staffing records, and interviews with EDD staff.
( 
iUE 
awz 
I 
I 
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These two actions resulted in a gradual increase in the number of 
full-time equivalent agents answering calls, from fewer than 100 at 
the start of April 2020 to about 1,000 by the end of August 2020.5 
This increase in staff may have had some positive effect, as total 
calls decreased significantly during the month of August. However, 
the number of unemployed Californians and claims filed during 
August 2020 also dropped, which likely also contributed to the 
decrease in total calls. Although EDD agents answered about 
161,000 total calls during the first week of August, these answered 
calls still represented only 16 percent of the roughly 1 million 
unique callers who contacted EDD during that week, highlighting 
the fact that the vast majority of callers faced continued difficulty 
in speaking with agents. 
EDD’s poor call center performance during the claim surge is 
of special concern because EDD also failed to answer hundreds of 
thousands of questions claimants submitted online during this 
period. EDD stated that the questions generally involved concerns 
claimants encountered as they filed claims. For example, claimants 
often sought to correct mistakes they had made in reporting 
wages because they were worried about penalties they might 
face for overpayments. In just two of the help categories that 
claimants could select—both of which pertained to claimants 
trying to alert EDD to mistakes on their claim documentation—
over 400,000 unanswered questions accumulated from March 
through October 2020. 
In November 2020, EDD decided to automatically resolve messages 
in these two categories without addressing them. After reviewing 
a small number of these messages, EDD determined that many 
were likely no longer pertinent because the claimants had likely 
received their UI payments since they sent their messages. The 
chief of the UI support division, which in part provides technical 
and administrative assistance to the rest of the UI branch, asserted 
that staff time could be spent more productively on other work 
related to paying claims rather than responding to these messages. 
However, EDD’s failure to respond to such a large number of 
online messages from claimants—while simultaneously struggling 
to answer the vast majority of calls it received—highlights the 
degree to which it left hundreds of thousands of claimants without 
answers during uncertain times. 
5	 Full-time equivalent (FTE) is a metric that measures the equivalent number of full-time employees 
based on hours worked rather than the total number of employees. Because some agents spend 
only part of the day on the phone, EDD’s FTE total is lower than the total number of staff who 
answer calls.
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Although EDD Added Thousands of New Agents, They Were Often 
Unable to Assist Callers
EDD added thousands of agents in response to the claim surge. 
As we mention earlier, in January 2020, EDD had about 1,270 agents 
responsible for answering calls to its call center and processing 
UI claims. EDD refers to these agents as employment program 
representatives (EPR agents). According to EDD’s UI southern 
operations division chief, EPR agents generally spend four hours a 
day answering phone calls. EDD indicates that the job duties of an 
EPR agent include answering calls and providing prompt, accurate, 
and courteous customer service, but EPR agents also have other job 
duties such as interviewing claimants to verify information on their 
applications. From January through October 2020, EDD hired more 
than 2,000 additional EPR agents.
However, the newly hired EPR agents could not be immediately 
available to answer calls because they needed to first complete a 
lengthy training program. EDD trains EPR agents in each aspect 
of the UI claim process—including how to file claims and how 
to determine whether claimants are eligible for benefits—so that 
they are well equipped to answer most questions from callers. 
EDD indicated that as a result, until mid-March 2020, the training 
program took from 10 to 13 months to complete. Although EDD 
made changes in response to the claim surge that eliminated some 
training time, fully training a new EPR agent still took nine months. 
In fact, EDD explained that training may take longer because 
managers sometimes divert new employees from training to help 
complete other priority assignments.
The newly hired EPR agents could not 
be immediately available to answer calls 
because they needed to first complete a 
lengthy training program.
EDD’s two UI operations division chiefs said that they sometimes 
assign EPR agents to answer calls partway through training, after 
the new agents have learned how to file claims. EDD estimates 
that reaching this stage of the training takes an average of 90 days. 
According to the UI program training manager, at that point EPR 
agents should be ready to answer questions about filing claims but 
are unable to answer questions about eligibility determinations. 
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The EPR agents whom EDD hired in April and May 2020 are 
not expected to begin training in eligibility determinations until 
January 2021. 
In part because of the considerable time EDD needs to train its 
2,000 new EPR agents, EDD added another 2,000 employees as 
tier 1 agents. Before the onset of the claim surge, EDD did not 
employ any tier 1 agents. EDD told us it created this tier of agents 
with the expectation that it could train and deploy them more 
quickly than EPR agents. EDD acquired these tier 1 agents by 
hiring new staff, redirecting existing staff from other branches, 
and contracting with a vendor. EDD initially taught tier 1 agents 
only how to provide basic technical assistance, such as how 
claimants could register online or reset a password in contrast to 
the more robust training that it provides to EPR agents. In total, by 
October 2020 EDD had quadrupled its call center staff for the UI 
program to more than 5,600 people, as Table 3 shows.
According to EDD, tier 1 agents began answering calls on its new 
VCC phone system in late April 2020, just days after the Governor 
ordered the increase of call center staffing; however, EDD had no 
pre-existing plan for training tier 1 agents, which left it little time 
to develop a new training plan. Further, EDD had not adequately 
determined the skills those agents would need to effectively answer 
calls, hindering the training team’s ability to develop appropriate 
training that aligned with the needs of callers. 
Table 3
EDD Has Quadrupled Its Call Center Staff in Response to COVID-19
CALL CENTER STAFF
JANUARY 
2020
OCTOBER 
2020*
EPR Agents
1,270
3,580
Tier 1 Agents
Office technicians
0
850
Redirected EDD staff
0
710†
Vendor staff
0
500
Tier 1 total
0
2,060
Total Staff
1,270‡
 5,640‡
Source:  EDD staffing data.
*	 Staffing totals include new employees who are still in training.
†	 Total redirected EDD staff as of November 1, 2020.
‡	 Total staff, regardless of number of hours worked. Some agents spend only part of the day 
on the phone.
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Again according to EDD, it did not use specific data on the reasons 
people call EDD when designing this training program because it 
did not have these sorts of data. Thus, EDD taught the tier 1 agents 
only how to provide basic technical assistance, in large part because 
it already had available training materials on these topics and 
because its EPR agent training was too long and complex to feasibly 
teach in a short window of time. However, it quickly recognized 
that callers needed more than technical assistance. Within three 
weeks, EDD expanded its training to include additional skills, such 
as how to add certain wage or certification information, in hopes 
of assisting more claimants. Even though the expanded tier 1 agent 
training covered some of the same topics as the EPR agent training, 
it did not cover them in as much depth. 
The fact that EDD did not incorporate into its training for 
tier 1 agents the specific reasons people call has had significant 
consequences for the callers who reach these agents because they 
have been unable to assist many callers. When tier 1 agents are 
unable to answer a caller’s question, they can try to transfer the 
caller to an EPR agent. However, because EPR agents are not always 
available to accept the transfer, EDD has its tier 1 agents keep a list 
of unresolved calls that they cannot transfer (callback list). When we 
examined callback list data provided by EDD for late April through 
late October 2020, we found that on average, tier 1 agents added to 
the callback list 29 percent of the calls they answered. This suggests 
that tier 1 agents were often unable to provide the same degree of 
prompt customer service that EDD expects from its EPR agents.
Moreover, the actual number of callers whom tier 1 agents were 
unable to assist may be greater than our analysis of callback data 
suggests. Our ability to determine the number of callers EDD 
actually assisted is limited because EDD does not track whether it 
resolves callers’ questions. As a result, it cannot demonstrate whether 
it addressed the concerns of callers who are not on the callback list. 
In September 2020, the strike team estimated that the maximum 
percentage of answered calls that tier 1 agents successfully resolved in 
the first week of August 2020 was just greater than 1 percent.
EDD does not track whether it resolves 
callers’ questions.
EDD has made some improvements to its tier 1 training since tier 1 
agents began answering calls in late April 2020. Specifically, it has 
added new topics to make tier 1 agents more effective at answering 
calls. It has also implemented a training database to make available 
key information that can help tier 1 agents answer claimants’ 
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questions. In addition, in October 2020 the training manager began 
analyzing callback list data to identify the types of questions tier 1 
agents need the most help answering. However, EDD undertook 
these improvements only recently, and tier 1 agents remain unable 
to complete many responsibilities that EPR agents can complete.
Despite Its Ongoing Struggles, EDD Has Not Adopted Best Practices 
to Effectively Manage Its Call Center 
EDD has not implemented several best practices that would enable 
it to improve the performance of its call centers. Improving its 
ability to successfully respond to callers is of critical importance, 
as providing customer service to claimants is one of EDD’s key 
responsibilities. We reviewed numerous reports and articles related 
to managing both commercial and government call centers to 
identify best practices for improving customer service that EDD 
should adopt. Figure 8 summarizes these practices. EDD either has 
not adopted these practices or lost the features that enable them 
when it implemented its new VCC phone system in April 2020. 
Consequently, EDD is not operating as effectively as it could be 
nor always resolving callers’ questions.
EDD has yet to adopt a critical and foundational best practice 
that commercial and government call centers use: collecting 
and analyzing call data to understand the specific reasons why 
customers are calling. In 2011, we recommended that EDD track this 
kind of data, and, in 2017, it provided evidence that it had performed 
some of this type of analysis. Yet it appears it is no longer doing 
so with its new VCC phone system. Although EDD has data that 
tracks the specific reasons why people call, EDD’s staff confirmed 
that it has not yet begun analyzing these data or using them to 
better manage its call centers. If EDD analyzed call data that show 
the specific questions driving the highest volume of calls—such as 
questions about filing a new claim or verifying identity—it could 
adjust call center operations to better address these concerns.
Knowing why people call for help would enable EDD to more 
efficiently train agents to answer the questions driving the 
highest call volume. As we previously discuss, it currently takes 
EDD nine months to train a newly hired EPR agent to answer all 
claim‑related questions. However, with a better understanding of 
why most people call for assistance, EDD could quickly train agents 
to answer common inquiries. Further, both EDD’s former phone 
system and its new VCC phone system route callers to agents based 
on the issue with which they need assistance, a feature known as 
skills‑based routing. EDD could therefore quickly train agents in 
specific skills and then route callers to those agents as appropriate, 
allowing it to more efficiently train agents for answering calls. 
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When we asked EDD’s training director about the possibility of 
using call data and skills-based routing to make its training more 
nimble, she replied it would be both feasible and beneficial, and she 
would like to implement this approach in the future. Leveraging call 
data and skills-based routing to efficiently train staff would have 
particularly valuable benefits during periods of high call volume, 
such as recessions, because it would allow EDD to more quickly 
hire and train additional staff. 
Figure 8
EDD Should Implement Best Practices to Improve Call Center Performance 
and Customer Service
Best practice
Benefits
Collect and analyze data on why 
people call EDD.
Adjust operations and training to 
better address claimant needs.
Segment training into specific 
skills based on the most common 
reasons people call EDD.
Create more targeted and efficient 
training and operations, allowing 
for a more agile response to 
staffing needs.
Monitor and track the number 
of callers whose questions are 
resolved on their first call.
Maximize the number of callers 
helped by the first agent they 
speak with, and identify 
additional training needs.
Source:  Review of call center best practices and documentation of EDD’s call center operations.
Although faster training and use of new staff is a key benefit EDD 
could derive from analyzing call data, it is perhaps even more 
critical for EDD to use its call data to understand why claimants are 
turning to the call center in the first place. EDD has implemented 
self-service options—such as UI Online and a frequently asked 
questions (FAQ) webpage—that allow Californians to obtain 
assistance with minimal intervention from an EDD agent. Given 
that EDD will likely never have the number of trained agents 
needed to answer all of the calls it receives at peak volumes, 
it should take steps toward identifying how it can improve its 
self‑service options so that fewer individuals need to call for 
assistance. By analyzing call data to better understand the specific 
reasons why claimants use the call center, EDD could revise its 
self-service options to better address the questions and challenges 
claimants face. For example, EDD could pinpoint specific steps or 
_L 
I 
I 
I 
I 
I 
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issues in the claim process that result in claimant difficulties and 
then update UI Online or add content to its FAQ webpage to help 
claimants resolve these issues without agent intervention. In doing 
so, EDD would likely reduce the number of claimants requesting 
assistance through its call center, increasing the likelihood that 
callers promptly receive the assistance they need.
Further, EDD’s UI branch is also not tracking one of the most 
critical performance indicators for call centers. The sources we 
reviewed consistently identified as essential the practice of tracking 
the number of callers whose questions were answered on their 
first call. This indicator is referred to as first-call resolution. Both 
commercial and government call centers track first-call resolution 
because it demonstrates whether call center customers are actually 
being helped, not just whether the calls are being answered. As we 
explain earlier, EDD made a commitment to the Legislature in 2014 
to answer 50,000 calls a week; however, simply answering a call 
does not ensure that a claimant is helped, and EDD must track and 
prioritize first-call resolution to ensure that it is actually helping 
those claimants who connect with an agent. EDD stated it would 
be possible for the new VCC phone system to provide an after-call 
survey that asks callers whether their concerns were resolved; in 
fact, it has already implemented a similar survey in its disability 
insurance branch. However, despite its ability to measure first-
call resolution and the importance of using this metric to gauge 
performance, EDD indicated that it would be difficult to track first-
call resolution for UI customers and that it has no clear plans to 
begin tracking this metric. 
EDD must track and prioritize first-call 
resolution to ensure that it is actually 
helping those claimants who connect 
with an agent.
By choosing not to measure first-call resolution, EDD is failing to 
collect critical data on how well its call center is performing, and 
it is missing opportunities to use these data to adjust operations 
to ensure that it adequately assists callers. According to EDD, the 
first-call resolution metric is not a straightforward metric to track 
because it is unclear whether EDD should measure the agent’s or 
customer’s opinion that the call was actually resolved. Additionally, 
EDD stated that the VCC phone system lacks the built-in tools 
needed to easily track this metric. However, given that EDD has 
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already implemented similar functionality for another branch, we 
see no reason why EDD should not measure first-call resolution for 
callers to the UI branch. 
Finally, when EDD quickly implemented the preliminary, minimal 
version of the new VCC phone system in April 2020, it lost valuable 
functionality featured in the old phone system for improving 
efficiency and the claimant call experience. For instance, when 
it transitioned to the new VCC system, EDD lost the ability to 
play a series of prerecorded messages advising claimants of their 
rights and responsibilities after they file their claim. Currently, 
EDD agents must spend the time needed to manually read this 
information to claimants. EDD implemented the prerecorded 
messages for its previous phone system because it estimated that 
by spending less time on calls with individuals, agents would be 
able to answer more than 6,500 additional calls each year. Thus, the 
current need to verbally read advisements to claimants effectively 
reduces the amount of time EDD agents have available to answer 
other calls. EDD estimated it would implement this functionality 
by mid-January 2021.
Another feature EDD abandoned when switching to the new 
VCC system was the ability for callers to choose to have the next 
available agent call them back or to schedule a specific time for 
callback from an EDD agent. This feature benefitted callers by 
allowing them to engage in other activities instead of waiting on 
hold until an agent became available. EDD stated it was looking 
into the possibility of adding this feature, though it did not 
offer a timeline for when it will determine whether and when to 
implement this functionality.
Recommendations 
To ensure that it is able to take informed steps to provide better 
customer service through improved call center performance, 
EDD should implement a formal policy by no later than May 2021 
that establishes a process for tracking and periodically analyzing 
the reasons why UI claimants call for assistance. By no later than 
October 2021, and every six months thereafter, EDD should analyze 
these data to improve its call center by doing the following:
•	 Identifying and resolving weaknesses or problems with the 
ways in which it provides assistance to UI claimants through 
self‑service and noncall-center options.
•	 Developing specialized training modules to quickly train its 
call‑center staff on the most commonly requested items with 
which callers want assistance.
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To assess the effectiveness of its call center, by May 2021 EDD 
should implement a policy for tracking and monitoring its rate of 
first-call resolution. EDD should review first-call resolution data at 
least monthly to evaluate whether it is providing effective assistance 
to callers.
To maximize the number of calls that its staff are able to answer, 
as soon as possible EDD should add the prerecorded message 
functionality to its new phone system to advise claimants of their 
rights and responsibilities after they file their claim with an agent.
To provide a more convenient customer experience, as soon as 
possible EDD should implement those features of its new phone 
system that allow callers to request a callback from an agent instead 
of waiting on hold for assistance.
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Despite Multiple Warnings, EDD Did Not Prepare 
for an Economic Downturn
Key Points
•	 Before the claim surge, EDD did not adopt a comprehensive plan for how it 
would respond to economic downturns when its UI program is in higher 
demand. Having such a plan would have strengthened its poor response to the 
2020 claim surge.
•	 EDD has for years been aware of many of the problems in its UI claims 
processing and customer assistance efforts that this report identifies. In fact, 
key problems related to its management of the UI program in 2020 were also 
present during the Great Recession of 2008 and 2009. Nonetheless, EDD did not 
take adequate steps to address these deficiencies.
EDD’s Failure to Plan for a Recession Hindered Its Response to the Claim Surge 
When the claim surge began in March 2020, EDD was far from prepared. As 
we note in the Introduction, the rise in claims was unprecedented in its size and 
speed, and we recognize that it is not realistic to expect that EDD would have 
flawlessly responded to such a challenge. Nonetheless, the key factors that limited 
how effectively EDD responded to the claim surge resulting from the pandemic—
inefficient processes; a lack of readily available, qualified staff; and poor management 
of its call center—are the same factors that would degrade its ability to respond to 
a more regular occurrence like an economic recession. According to the National 
Bureau of Economic Research—an entity that tracks recessions—the United States 
has entered a recession approximately every five and a half years on average since 
January 1950. As the department that oversees California’s UI program, EDD should 
be well aware that recessions regularly occur and that its operations may be stressed 
when handling the resulting increased workload. Consequently, we expected that 
EDD would have a plan for scaling up its UI program in response to a recession so 
that it could provide timely assistance to Californians. However, EDD had no such 
plan ready, and as Figure 9 shows, its failure to prepare left it poorly positioned to 
respond to the claim surge. 
Although EDD has recognized that having a plan for an economic downturn is 
important, it only very recently took steps to create such a plan. EDD indicated 
that its UI branch began planning for a recession in 2019—almost a full 10 years 
after the end of the Great Recession of 2008 and 2009. When we asked EDD to 
explain its delay, it noted that it has implemented numerous improvements to its 
business processes since the Great Recession, such as training agents to both file 
claims and confirm that claimants are eligible for benefits instead of only one or the 
other. Although we acknowledge these efforts, they are not the same as adopting a 
comprehensive recession plan. 
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Figure 9
EDD Was Not Prepared for the Economic Shutdown
EDD has been aware of key operational 
issues for nearly ten years . . .
but it failed to develop a 
comprehensive recession plan.
INEFFICIENT 
CLAIM FILING 
PROCESS
TWOTHIRDS OF 
ONLINE CLAIMS 
DID NOT FILE 
AUTOMATICALLY
25% OF FIRST 
PAYMENTS WERE 
ISSUED LATER 
THAN 14 DAYS
LESS THAN 10% 
OF CALLS WERE 
ANSWERED
LACK OF READILY 
AVAILABLE, 
QUALIFIED STAFF
POOR 
CALL CENTER 
MANAGEMENT
As a result, the economic downturn 
worsened EDD’s already poor 
performance.
Pre-Shutdown Order
ALMOST 40% OF 
FIRST PAYMENTS 
WERE ISSUED LATER 
THAN 14 DAYS
LESS THAN 1% 
OF CALLS WERE 
ANSWERED IN 
EARLY APRIL
Post-Shutdown Order
Source:  Analysis of past audit reports, EDD’s recession planning documents, claim data, and 
call data.
Among other key features, a fully developed recession plan would 
include the indicators that EDD’s management would use to 
guide its decision making about staffing and process changes, 
descriptions of the available adjustments to business practices that 
EDD could make, and policies and procedures to facilitate these 
adjustments. These features are among those broadly recommended 
in a recession plan published by the State of Oregon Employment 
U,ASlDUE] 
0 
(9-..fl 
01313 
X 
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Department in 2017 that was featured at a 2019 conference of the 
National Association of State Workforce Agencies. Put simply, 
a recession plan would allow EDD to respond to economic 
downturns with a predetermined strategy that has considered the 
full effect on its operations rather than responding in the moment 
with untested actions.
EDD’s delay in developing such a plan cost it valuable preparation 
time. EDD published an initial draft of a plan in January 2020 that 
articulates its overall vision for recession preparedness. But when 
the economic effects of the COVID-19 pandemic began, EDD was 
only in the beginning stages of developing specific policies, tools, 
and metrics that its staff would use during a recession to respond 
to the increased workload. EDD has since suspended its recession 
planning in order to respond to the claim surge.
EDD has long been aware of the kinds of problems in its operations 
that have hindered its response to the claim surge. For example, 
earlier in this report, we detail how UI claims became backlogged 
and went without payment in part because of EDD’s inefficient 
claims processing practices. This situation closely resembles 
deficiencies we reported in March 2011.6 In that report on EDD’s 
administration of the UI program, we noted that EDD had failed 
to meet federal timeliness standards for making payments for 
several years leading up to the Great Recession and that in 2010, 
its performance worsened to the point that it was making only 
62 percent of its payments on time. We also noted that EDD needed 
to increase its efficiency to meet acceptable performance levels 
in the long term. EDD’s payment timeliness has improved only 
marginally since 2011, which suggests that the actions EDD has 
taken in the interim have been insufficient.
EDD has long been aware of the kinds 
of problems in its operations that have 
hindered its response to the claim surge.
To effectively address the issue of timely payments, EDD needs to 
continue identifying inefficiencies and streamlining its processes 
as we recommend earlier in this report. More efficient processes 
will assist EDD in making timely payments regardless of how high 
demand for UI benefits becomes. However, to be prepared for times 
6	 Employment Development Department: Its Unemployment Program Has Struggled to Effectively 
Serve California’s Unemployed in the Face of Significant Workload and Fiscal Challenges, 
Report 2010-112.
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when claims for UI benefits grow beyond its normal capacity, EDD 
should identify noncritical work or tasks that it can pause or stop 
until the economy has improved. Identifying these types of tasks 
would minimize the need for drastic steps like halting eligibility 
determinations, which, as we note earlier, increased the risk of 
payment being made to claimants who were ineligible, including 
those who deliberately filed fraudulent claims.
Similarly, EDD’s lengthy staff training program—which has 
impeded its ability to quickly prepare agents to answer phone 
calls—is not a new problem. We reported in March 2011 that EDD 
took an average of three to nine months to train agents, during 
which time those employees were likely not as productive. EDD 
repeated this point in the draft of its recession plan. Reflecting on 
the Great Recession, EDD explained that its inability to quickly 
hire a qualified and skilled workforce made meeting its workload 
demands difficult. EDD also stated that several factors, including 
a lack of preparation and an insufficient number of trained staff, 
pressured it to lower its hiring expectations and implement a 
reactive hiring strategy during the Great Recession. Although 
EDD was aware of problems with its ability to quickly scale up 
its workforce, it did not take steps to address those problems for 
almost 10 years. Had EDD begun the recession planning process 
earlier, it likely would have been able to provide more timely 
assistance to more Californians during 2020.
We reported in March 2011 that EDD took 
an average of three to nine months to 
train agents.
In another example, we recommended in our March 2011 report 
that EDD analyze data to gain a better understanding of why people 
who call for assistance request to speak to an agent so that it could 
take steps to reduce the number of calls it receives. In 2017, EDD 
provided us with examples of various types of analyses that it 
performed in response to our recommendation. However, EDD has 
not incorporated the practice of analyzing the reasons for calls into 
its regular UI operations. Specifically, EDD was unable to provide 
us with any meaningful analysis related to the reasons why people 
called for assistance in March and April 2020. Had EDD continued 
to conduct the type of analysis we first recommended in 2011, it 
could have developed targeted trainings to use when scaling up its 
staff, which might have helped it avoid adding and training agents 
who often could not assist claimants. Such an analysis might also 
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have allowed EDD to quickly identify ways to curb the increase in 
calls by providing the needed guidance to callers through other 
means, such as through its FAQ webpage.
To better serve Californians, EDD needs to make recession 
planning a priority. Given its history of inadequate preparation, 
it is reasonable for the Legislature to require EDD to develop a 
recession plan and to keep the plan up to date. Planning effectively 
for economic downturns includes two key analyses. The first is 
an assessment of the necessary changes to EDD’s operations to 
make the department more flexible and adaptable to changes in 
demand. For example, to make sure it can quickly increase its 
pool of qualified staff, EDD could cross-train non-UI staff and use 
rotations to UI assignments and refresher training to keep those 
staff ready to assist in the event of a claim surge. Second, EDD 
needs to decide on the indicators that it will use to determine when 
and how to adjust its practices to respond to economic downturns. 
For example, EDD must monitor economic indicators that suggest 
it may face increased UI workloads in the near future. Any efforts 
that EDD can take to prepare are an investment in its own success 
and that of Californians affected by future economic downturns.
Recommendations
To ensure that EDD is better prepared to provide effective services 
and assistance to Californians during future economic downturns, 
the Legislature should amend state law to require EDD to develop 
a recession plan that takes into account the lessons learned from 
previous economic downturns, including the pandemic. At a 
minimum, the Legislature should require EDD’s plan to include 
the following:
•	 The indicators EDD will monitor and use to project the likely 
upcoming workload that it will face.
•	 The steps EDD will take to address increases in its workload, 
such as cross-training non-UI staff, changing its staffing levels, 
prioritizing specific tasks, and adjusting the way it performs 
certain work.
•	 The altered policies or procedures that EDD will activate if a rise 
in UI claims becomes significant enough to warrant that step.
The Legislature should require EDD to develop the plan within 
12 months of the effective date of the related change to state law. 
To address new developments in UI processes, programs, or other 
relevant conditions, the Legislature should require EDD to update 
its recession plan at least every three years thereafter. 
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We conducted this performance audit in accordance with generally accepted government auditing 
standards and under the authority vested in the California State Auditor by Government Code 8543 
et seq. Those standards require that we plan and perform the audit to obtain sufficient, appropriate 
evidence to provide a reasonable basis for our findings and conclusions based on the audit objectives. 
We believe that the evidence obtained provides a reasonable basis for our findings and conclusions 
based on our audit objectives.
Respectfully submitted,
ELAINE M. HOWLE, CPA 
California State Auditor
January 26, 2021
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Appendix A
2020 EDD Call Data 
The Audit Committee asked us to report on certain trends in calls 
to EDD’s call center. Specifically, the Audit Committee asked us to 
determine trends in the volume of calls received, the time it takes 
EDD to respond to callers, the percentage of callers connected 
to an agent, and the number of calls prematurely disconnected. 
Table A presents call data that EDD provided us for 2020, 
including the trends the Audit Committee requested. However, 
EDD does not track the number of calls in which the caller was 
disconnected. Instead, we present the number of unanswered calls. 
We determined the number of unanswered calls by combining the 
number of calls blocked from entering the system, calls that entered 
the system but were then deflected because an agent was not 
available to answer, and calls that the caller abandoned before an 
agent answered.7 For blocked and deflected calls, the phone system 
plays a recorded message telling the caller that EDD cannot take 
their call and to call back later. 
Table A
EDD Call Center Metrics for 2020
MONTH*
AVERAGE 
WEEKLY 
UNIQUE 
CALLERS†
TOTAL  
CALLS
CALLS 
ANSWERED 
BY EDD 
AGENTS
PERCENTAGE 
OF CALLS 
ANSWERED‡
UNANSWERED 
CALLS§
PERCENTAGE 
OF CALLS 
UNANSWERED‡
 CALLS TO 
SELF-SERVICE 
LINE
PERCENTAGE 
OF CALLS TO 
SELF-SERVICE 
LINE‡
WEEKLY AVERAGE 
FULL-TIME 
EQUIVALENT 
AGENTS ON PHONEII
AVERAGE 
HOLD TIME 
(MINUTES)
JANUARY
(12/29/19 – 
2/01/20)
120,080
2,817,338
189,801
6.7%
1,627,879
57.8%
1,021,259
36.3%
159
9.5
FEBRUARY
(2/02/20 – 
2/29/20)
121,365
1,435,635
180,401
12.6
609,946
42.5
665,215
46.3
172
2.8
MARCH
(3/01/20 – 
3/28/20)
301,981
5,785,032
148,268
2.6
3,449,859
59.6
2,205,025
38.1
199
5.9
APRIL#
(3/29/20 – 
5/02/20)
1,127,561
61,592,966
279,449
0.4
52,813,826
85.8
8,527,199
13.8
222
20.6
MAY
(5/03/20 – 
5/30/20)
1,299,632
53,052,337
533,128
1.00
47,708,529
89.9
4,845,510
9.1
574
28.2
JUNE
(5/31/20 – 
6/27/20)
1,118,034
46,220,542
519,394
1.1
41,472,258
89.7
4,237,133
9.2
599
34.9
7	 Blocked and deflected calls generally occur during periods of high call volume. Blocked calls were 
caused by a technological limitation in EDD’s old phone system that limited the number of calls 
the system could handle at once. Deflected calls could occur in EDD’s old phone system and can 
still occur in its new VCC system when EDD does not have enough agents to answer the number 
of incoming calls and wait times exceed established limits.
continued on next page . . .
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MONTH*
AVERAGE 
WEEKLY 
UNIQUE 
CALLERS†
TOTAL  
CALLS
CALLS 
ANSWERED 
BY EDD 
AGENTS
PERCENTAGE 
OF CALLS 
ANSWERED‡
UNANSWERED 
CALLS§
PERCENTAGE 
OF CALLS 
UNANSWERED‡
 CALLS TO 
SELF-SERVICE 
LINE
PERCENTAGE 
OF CALLS TO 
SELF-SERVICE 
LINE‡
WEEKLY AVERAGE 
FULL-TIME 
EQUIVALENT 
AGENTS ON PHONEII
AVERAGE 
HOLD TIME 
(MINUTES)
JULY
(6/28/20 – 
8/01/20)
1,048,233
50,251,351
697,132
1.4%
44,161,328
87.9%
5,401,211
10.8%
669
31.6
AUGUST
(8/02/20 – 
8/29/20)
720,810
17,271,613
775,825
4.5
13,359,085
77.4
3,143,201
18.2
931
32.8
SEPTEMBER
(8/30/20 – 
10/03/20)
640,703
11,031,294 1,143,254
10.4
6,404,147
58.1
3,490,532
31.6
1,018
20.0
OCTOBER
(10/04/20 – 
10/31/20)
859,210
3,649,193
230,301
6.3
1,735,764
47.6
1,684,715
46.2
1,153
16.3
Source:  EDD reports on call data.
*	 EDD’s call data is summarized weekly, leading to some months with 4 weeks and some with 5 weeks.
†	 EDD’s call data records the number of unique callers in a given week. Therefore, this column records the average weekly callers for each month. 
‡	 Percentages do not total to 100 percent due to rounding. 
§	 Claimants whose calls were blocked, deflected, or abandoned ultimately did not speak to an agent; therefore, we have summarized these metrics 
under the single heading of unanswered calls. 
II	 EDD agents perform both on- and off-phone work in a given week; therefore, the call data records the number of full-time equivalent staff who 
answered phones each week. 
#	 EDD implemented the first version of its new VCC phone system in April 2020.
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Appendix B
Scope and Methodology
The Audit Committee directed the State Auditor in September 2020 
to conduct an emergency audit of EDD’s response to COVID-19. 
Additionally, state law authorizes our office to establish a program 
to audit and issue reports with recommendations to improve any 
state agency or statewide issue that we identify as being at high risk 
for the potential of waste, fraud, abuse, and mismanagement or 
that has major challenges associated with its economy, efficiency, 
or effectiveness. In August 2020, we designated the State’s 
management of federal funds related to Coronavirus Disease 2019 
(federal COVID‑19 funds) as a high‑risk statewide issue, and EDD 
as a state agency responsible for a portion of that statewide issue. 
For these reasons, we performed this audit of EDD’s UI program. 
The table below lists the audit objectives and the methods we used 
to address them.
Table B
Audit Objectives and the Methods Used to Address Them
AUDIT OBJECTIVE
METHOD
1
Assess the reasons for backlogged 
unemployment insurance claims (claims) and 
the effectiveness of EDD’s efforts and time 
frames for eliminating the backlog, including 
but not limited to, technological issues and 
state or federal laws that have contributed to 
the delay or that prevent EDD from processing 
claims faster.
•  Reviewed federal and state law and documents and interviewed staff to assess EDD’s 
UI program.
•  Interviewed staff and obtained documentation, including EDD policies, procedures, 
and reports, to determine the size of the backlog and the reasons claims became 
backlogged from March through the end of September 2020. 
•  Analyzed documentation to determine whether EDD was successful at reducing the 
claims backlog. Determined what mechanisms and strategies EDD employed to reduce 
the backlog and the rate of manual staff intervention in claims processing.
•  Analyzed documentation provided by EDD to determine what work EDD temporarily 
suspended, including making claimant eligibility determinations, and how that delayed 
workload would affect EDD’s ability to process backlogged claims or conduct its 
regular business. 
•  Interviewed staff and analyzed documentation to determine whether technological 
issues contributed to delays in claim processing.
continued on next page . . .
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AUDIT OBJECTIVE
METHOD
2
Evaluate the effectiveness of EDD’s actions to 
improve call center performance and response 
time. This evaluation should also include EDD’s 
hiring, on-boarding, and training efforts to 
increase call center staffing levels.
•  Interviewed staff and obtained documentation of EDD’s actions to improve call 
center performance.
•  Reviewed staffing documentation to determine how many staff EDD had redirected 
from its other branches, borrowed from other state agencies, contracted for, and 
hired from January through October 2020. 
•  Reviewed training materials and plans to determine the timing and content of 
training EDD provided to its new call center staff.
•  Analyzed callback data and call transfer data to evaluate the effectiveness of new 
call center staff.
•  Reviewed research articles and reports regarding call center operations to identify 
best practices and determined whether EDD had implemented those best practices 
for its call centers.
•  Evaluated EDD’s draft Economic Resilience Plan to determine whether EDD had policies 
and procedures in place to respond to an economic downturn and whether the plan 
included emerging recession planning practices. Assessed the extent to which EDD 
addressed past audit findings concerning the UI program.
3
Determine the magnitude of EDD’s claims 
workload, including the number and percentage 
of claims that were approved, denied, pending, 
and backlogged since the beginning of 
the pandemic.
•  Analyzed EDD reports to determine the number of claims EDD received and the 
percentages it approved, denied, or had pending in the backlog as well as the age of 
claims in the backlog as of December 9, 2020. To determine the percentage increase 
in claims during the pandemic, we compared the number of claims received in 2010 
and 2019 to those received in 2020.
•  Interviewed staff and obtained documentation to determine how EDD resolved 
claims, and whether it complied with relevant state and federal requirements.
•  Reviewed EDD’s reports pursuant to AB 107 with respect to the number of 
denied claims and found EDD’s calculation approach to be reasonable. As of early 
January 2021, EDD reported the number of denied claims since March 2020 to be 
about 675,000, or about 4 percent of all claims processed.
4
Assess EDD’s call center capacity and determine 
trends in the volume of calls received, the time it 
takes EDD to respond to callers, the percentage 
of callers connected to a representative, and 
the number of calls where the caller was 
disconnected from the call.
•  Interviewed staff and obtained documentation of EDD’s old phone system and its 
current VCC phone system to determine the capacity and features of each.
•  Analyzed weekly call data reports to determine trends in the volume of calls that EDD 
received, the time it takes EDD to respond to callers, the percentage of unique callers 
connected to an agent, and the number of unsuccessful calls. Unsuccessful calls include 
calls that were blocked from the entering the system, calls that were deflected because 
no agents were available, and calls that were abandoned by the caller. EDD call data 
reports do not track the number of calls that were disconnected.
5
Assess the technological infrastructure to 
determine if it is delaying or preventing EDD 
from processing claims faster.
Interviewed staff and reviewed documentation, including system performance reports, 
documents tracking EDD’s progress on implementing strike team recommendations, IT 
Plan of Action and Milestones, correspondence between department staff and the Office of 
Digital Innovation, and various Benefits Systems Modernization status documents.
Source:  Analysis of state law, planning documents, and information and documentation identified in the table column titled Method.
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Assessment of Data Reliability
The U.S. Government Accountability Office, whose standards 
we are statutorily obligated to follow, requires us to assess the 
sufficiency and appropriateness of computer-processed information 
we use to support our findings, conclusions, or recommendations. 
In performing this audit, we relied on electronic data files and 
summary reports from information systems that we obtained 
from EDD’s UI and IT branches. To evaluate the data, we 
reviewed existing information about the data, interviewed staff 
knowledgeable about the data, and assessed documentation to 
validate general details about the data. In addition, we reviewed the 
query that EDD uses to calculate its number of backlogged claims 
to better understand how the department calculates its reported 
numbers. EDD was unable to provide a complete description of the 
query. Further, in light of the short timeframe of this emergency 
audit, we did not perform detailed testing of the data we relied on. 
Consequently, we found the data to be of undetermined reliability. 
Although we recognize this determination may affect the precision 
of the numbers we present, there is sufficient evidence in total to 
support our audit findings, conclusions, and recommendations.
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PO Box 826880  •  Sacramento, CA 94280-0001  •  edd.ca.gov 
January 11, 2021 
 
 
Elaine M. Howle, CPA 
California State Auditor 
621 Capitol Mall, Suite 1200 
Sacramento, CA 95814 
 
 
Dear State Auditor Howle: 
I appreciate your acknowledgement of both the unprecedented challenges 
faced by EDD and the massive undertaking it was to get much-needed benefits 
out since the start of the COVID-19 pandemic and the fact that this is not a 
challenge unique to California.  I also recognize there is much work to be done 
to improve our state’s unemployment system and will implement all 
recommendations provided to EDD in this audit.   
During the course of this pandemic, in addition to operating the state’s 
unemployment insurance program, EDD has implemented four brand new 
federal benefit programs – Federal Pandemic Unemployment Compensation 
(FPUC), Pandemic Unemployment Assistance (PUA), Pandemic Emergency 
Unemployment Compensation (PEUC), and Lost Wages Assistance (LWA).  PUA 
in particular was designed without the same safeguards as California’s standard 
unemployment program and opened the system to fraud at record levels. The 
federal guidance for the PUA program provided insufficient support to states 
grappling with an unprecedented volume of claims.   
Additionally, states have seen complex, coordinated and aggressive attacks by 
national and international criminals. Without coordinated assistance from the 
Trump Administration, states were left to deal with this extraordinary influx of 
fraud on their own while also endeavoring to distribute benefits to people in 
desperate need.  
While there are additional improvements that EDD must make, the department 
has taken steps to increase efficiencies, expedite payment processes, and  
 
* 
California State Auditor’s comments begin on page 71.
*
_,-----....___ Employment 
EDD Development 
Department 
~ I .  
f 
. 
State of Ca 
I orn1a 
Gavin Newsom, Governor 
California Labor and Workforce Development Agency 
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State Auditor Howle 
January 11, 2021 
Page 2 
 
 
 
 
prevent fraud including: 
 Enhanced automation of the federal Work Sharing Program, which helps 
businesses avert layoffs by reducing staff hours and allowing staff to 
receive both part-time earnings and a prorated percentage of UI 
benefits, thereby keeping their jobs and allowing the business to remain 
open.  
 EDD automated claim processing through a new temporary tool and as 
noted in the audit, was recommended for long term use.  
 In July Governor Newsom announced a Strike Team to set a path for 
reforms at EDD to improve the claimant experience, expedite payments 
and improve processes.  
o EDD has implemented 48 of 100 Strike Team recommendations and 
is reviewing implementation timelines for long-term 
recommendations.  
o By January 27, EDD will eliminate the backlog of 1.6 million claims 
identified by the Strike Team. 
o EDD launched ID.me a third-party identify verification program that 
helps stop identity fraud at the beginning of the process and helps 
process claims more quickly compared to the previous manual 
verification process.  
 From October 1 to December 30, 2020, ID.me stopped over 
357,000 fraudulent attempts to file a claim. This represents 30 
percent of all claimants who have filed using ID.me.  
o Increased transparency by launching a new dashboard tracking 
claims and backlog numbers – this continues to be refined as EDD 
receives feedback from stakeholders and pursuant to the audit 
recommendation.  
o Adopted a burndown chart as a workload management tool to 
allocate resources properly to manage the backlog.  
 Implemented Document Upload solution for claimants to provide 
documents online. 
 Completed migration to the Virtual Contact Center to improve the 
customer experience.  
1
2
3
4
5
6
0 
0 
0 
0 
0 
0 
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State Auditor Howle 
January 11, 2021 
Page 3 
 
 
 
 
 EDD implemented the new Knowledge Management System which allows 
the department to more quickly onboard new hires and ensure more 
timely and a greater continuity of responses provided by call center staff. 
 Launched a state level coordination group led by the Governor’s Office 
of Emergency Services (CalOES), in partnership with State District 
Attorneys, and federal and state law enforcement partners, which has 
already put additional safeguards in place and is actively investigating 
and prosecuting fraud cases. 
You also point out that many of these problems at EDD existed during the last 
recession. We agree that in order to function in bad times, the government 
needs to make investments in good times in infrastructure, technology, funding, 
and staff training and prioritize ensuring access to the most vulnerable, including 
the limited-English speaking and other populations facing accessibility barriers. 
This audit has redoubled our resolve to explore ways we can reinforce our 
infrastructure and capabilities to respond more effectively to surges like this.  
The leadership team at EDD is committed to building an EDD that improves in 
the short run and can deliver in times of crisis. We are committed to carrying out 
your recommendations, as shown in EDD’s attached responses. Thank you for 
your assistance and for the recommendations. Please know that we will 
continue to collaborate with you as EDD moves forward.                                                         
 
 
Sincerely, 
 
 
Rita Saenz 
Director 
 
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Public Release Date: January 26, 2021 
CSA Audit: Poor Planning and Ineffective Management Left It Unprepared to Assist 
Californians Unemployed by COVID-19 Shutdowns 
 
Employment Development Department Response 
California State Auditor Report #1 2020-128 
January 2021 
Title: EDD’s Poor Planning and Ineffective Management Left It Unprepared to 
Assist Californians Unemployed by COVID-19 Shutdowns 
The EDD prepared the following responses to the recommendations provided within the 
CSA Report 2020-128: 
Recommendation #1 
To provide a more transparent picture of backlogged claims, by March 2021 EDD 
should revise its public dashboards to clearly indicate the number of claims that have 
waited longer than 21 days for payment because EDD has not yet resolved pending 
work on the claim.  
EDD Response to Recommendation #1: 
The EDD agrees with this recommendation. The EDD first initiated a data dashboard to 
illustrate weekly unemployment claim activity in May and has made revisions since. In 
addition, two new dashboards were implemented in September with the advice of the 
EDD Strike Team to reflect work on an established backlog of claims, and a legislatively 
required (AB107) dashboard was also implemented to illustrate categories of claims that 
may end up taking more time to resolve along with call center data. 
Over the last few months, the EDD has been working to refine the data and further 
clarify what should be considered backlog and agrees with the recommendation to 
clarify the dashboard data by removing two categories, 1) “Waiting for claimant 
certification” because this category is not dependent on EDD action, and 2) “Pending 
overpayment” since this is not a barrier to payment. 
All of the major data elements are being consolidated into one user-friendly data 
dashboard which shows trends over the pandemic and will clearly indicate the number 
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of unique claimants waiting longer than 21 days for payment because of unresolved 
issues. That new tableau-style dashboard is scheduled for release in February 2021. 
Recommendation #2 
To ensure that its identity verification processes are as robust as possible, EDD should 
determine by June 2021 the reasons why claimants cannot successfully complete their 
identity verification through ID.me and work with its vendor to resolve these problems. 
EDD should thereafter monitor the rate of successful identity verifications on a regular 
basis to ensure that it consistently minimizes unnecessary staff intervention. 
EDD Response to Recommendation #2: 
The EDD agrees with this recommendation and is working with the vendor to determine 
and document the causes of why some claimants have had difficulty in successfully 
completing their identity verification through ID.me.  While the majority of claimants are 
able to complete the identity verification process using ID.me, EDD will analyze the root 
causes of when claimants cannot successfully complete the process and work closely 
with ID.me to address any issues.  We will also monitor metrics on identity verifications 
on a regular basis to continuously improve our claimants’ experience and help improve 
the processing times. Our goal is to complete this process by June 2021. 
Recommendation #3 
To retain as much automation in initial claims processing as possible, by June 2021, 
EDD should determine the automation modifications achieved through its emergency 
processing tool that it can retain and, by September 2021 it should make those a 
permanent feature of its UI Online application. 
EDD Response to Recommendation #3: 
The EDD agrees with this recommendation. Our goal is, by June 2021, to complete an 
evaluation of the temporary claims processing automation measures that we have taken 
and assess which measures will continue to serve us in a permanent manner. EDD will 
analyze efficiencies to improve processing times while maintaining claimant identity 
controls in place. EDD plans to make permanent the identified modifications by 
September 2021. 
Recommendation #4 
To ensure that it does not delay needed improvements to its IT systems, EDD should 
by, June 2021, identify the elements of the BSM that can assist it in making timely 
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payment and that it could implement in an incremental fashion. It should then prioritize 
implementing the elements most likely to benefit Californians. 
EDD Response to Recommendation #4: 
EDD agrees with this recommendation. At the recommendation of the EDD Strike Team 
and in coordination with the Department of Technology, the BSM project was paused in 
September 2020. One reason this step was taken was to refocus the project so that 
inefficiencies could be more fully reviewed to ensure operational challenges identified 
during the pandemic are not included on a new platform.  Instead, EDD will review 
policies and procedures and administrative simplification of the program before 
launching a new BSM project.  
We also recognize that continual improvement is needed and our goal is, by June 2021, 
to identify capabilities that we can leverage and implement sooner that will allow for 
enhancements in claims processing and payments. We will implement any such 
solution in an iterative and modular approach and will prioritize based on benefits to our 
constituents as the key driver of modernization priority. 
Recommendation #5 
To ensure its ability to respond in a timely fashion to fluctuations in its workload, EDD 
should immediately begin modeling workload projections that account for possible 
scenarios that would cause a spike in UI claims. EDD should plan its staffing around the 
likelihood of those scenarios, including having a contingency plan for less likely 
scenarios that would have a significant impact on its workload. 
EDD Response to Recommendation #5: 
The EDD agrees with this recommendation that economic forecasts and related 
workload changes need to be an integral part of UI workload management. The EDD 
will continue to model future economic conditions, potential workload scenarios and the 
associated staffing needs. Historically, UI staffing levels are linked to the state 
unemployment levels/rates and based on recession data. The establishment of the UI 
Branch Command Center Division in January 2021 will assist with workload forecasting 
and workload management.  
The EDD established an Unemployment Insurance Command Center Division in 
January 2021 to help oversee the planning of workloads and resource allocations. One 
of the primary functions will be to help forecast future workloads, customer service 
demands while considering the claimant experience through focus groups, etc. and 
staffing levels needed to meet performance objectives. The Command Center will 
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identify tools to project/forecast workloads, staffing/resource allocations to help measure 
production, performance and quality. In summary, the Command Center will focus on 
identifying tools to minimize contact center calls and provide for more self-service 
options, make data driven decisions for resource allocations based on projected 
workloads peaks and valleys and review quality of the customer service. 
To continue providing benefits to Californians in need while also effectively 
responding to the Department of Labor’s directive regarding immediately 
resuming all eligibility determinations and resolving all suspended 
determinations, EDD should do the following: 
Recommendation #6 
Perform a risk assessment of its deferred workloads, including deferred eligibility 
determinations and retroactive certifications. EDD’s assessment should take into 
account the relative likelihood that it issued payments to ineligible claimants by 
considering historic overpayment trends as well as the new or altered eligibility 
requirements the federal government adopted in response to the pandemic. If 
necessary, EDD should either partner with another state agency or contract for 
assistance in performing the analysis in support of this assessment. 
EDD Response to Recommendation #6: 
The EDD agrees with the recommendation. Due to the COVID-19 pandemic, California 
experienced an astronomical number of UI claims. Facing an unprecedented and 
rapidly growing workload, EDD took steps to respond to the very real financial hardship 
experienced by many Californians relying on timely payment of their UI benefits, which 
is central to the unemployment insurance program. EDD will perform the recommended 
risk assessment of the workloads that were deferred during this time.   
Recommendation #7 
Develop a workload plan that prioritizes its deferred workloads based on the risk 
assessment and determine the staffing and IT resources needed to accomplish the 
work within expected timeframes. 
EDD Response to Recommendation #7: 
EDD agrees with this recommendation and will develop a workload plan based upon the 
aforementioned risk assessment results from the workgroup on deferred workload. 
Historically, UI staffing and federal funding levels are linked to the state unemployment 
caseload/rates and based on recession data. The EDD will continue to model future 
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economic conditions, potential workload scenarios and the associated risks and staffing 
needs. 
Recommendation #8 
Hire and train staff as necessary in order to carry out the workload plan. 
EDD Response to Recommendation #8: 
The EDD agrees with this recommendation and will hire and train staff to carry out the 
workload plan. As part of the plan, the EDD will deploy cross training of staff to address 
seasonal fluctuations with UI workloads, deferred workloads, implementation of 
legislatively mandated pandemic unemployment programs and future projects or 
initiatives when determining hiring and training needs.      
Recommendation #9 
Using the workload plan, EDD should process the deferred work in alignment with the 
following: the need to pay timely benefits to new or continued claimants, federal 
expectations about the urgency of the deferred work, and any deadlines by which EDD 
may no longer be allowed to recoup inappropriately paid benefits. 
  
EDD Response to Recommendation #9: 
EDD agrees with this recommendation to implement the workload plan in alignment with 
the considerations outlined above. 
Recommendation #10 
To ensure that it is able to take informed steps to provide better customer service 
through improved call center performance, EDD should implement a formal policy by no 
later than May 2021 that establishes a process for tracking and periodically analyzing 
the reasons why UI claimants call for assistance. By no later than October 2021, and 
every six months thereafter, EDD should analyze these data to improve its call center 
by doing the following: 
·    Identifying and resolving weaknesses or problems with the ways in which it 
provides assistance to UI claimants through self-service and non-call center options. 
·    Developing specialized training modules to quickly train its staff on the most 
commonly requested items with which callers want assistance. 
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EDD Response to Recommendation #10: 
EDD agrees with these recommendations. The newly established EDD Unemployment 
Insurance Branch Command Center Division will manage these recommendations and 
other solutions that enhance the customer experience through improved call center 
operations. By May 2021, the EDD will implement a policy to establish a process for 
tracking and analyzing the reasons why UI claimants call for assistance. By October 
2021, the EDD will begin analyzing the resulting data to improve the customer 
experience with specific focus on enhancements to self-service and non-call center 
options that assists customers, and identification of specialized training for staff to better 
assist callers. 
Recommendation #11 
To assess the effectiveness of its call center, by May 2021 EDD should also implement 
a policy for tracking and monitoring its rate of first-call resolution data on at least a 
monthly basis to evaluate whether it is providing effective assistance to callers. 
EDD Response to Recommendation #11: 
The EDD agrees with this recommendation. To align with the recommendation above, 
by May 2021, the EDD will establish a policy to track and monitor first call resolution 
(FCR) data. Between May 2021 and October 2021, the EDD will develop the tools and 
processes to collect FCR data. Beginning October 2021, the EDD will begin evaluating 
whether it is providing effective assistance to callers using FCR data. 
Recommendation #12 
To maximize the number of calls that its staff are able to answer, as soon as possible 
EDD should add the pre-recorded message functionality to its new phone system to 
advise claimants of their rights and responsibilities after they file their claim with an 
agent. 
EDD Response to Recommendation #12: 
The EDD agrees with this recommendation. EDD has been working to reestablish the 
prerecorded message functionality following telephone claim filing. 
Recommendation #13 
To provide a more convenient customer experience, as soon as possible EDD should 
implement features of its new phone system that allow callers to request a call back 
from an agent instead of waiting on hold for assistance.  
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EDD Response to Recommendation #13: 
The EDD agrees with this recommendation. EDD has been working to reestablish the 
call back feature on the Virtual Call Center platform. 
 
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COMMENTS
CALIFORNIA STATE AUDITOR’S COMMENTS ON THE RESPONSE 
FROM THE EMPLOYMENT DEVELOPMENT DEPARTMENT
To provide clarity and perspective, we are commenting on EDD’s 
response to our audit. The numbers below correspond to the 
numbers we have placed in the margin of EDD’s response.
EDD is partially correct that we recommend it continue using the 
temporary measures it employed during the pandemic to automate 
claim filing. However, as we note on page 19, some of the changes 
EDD made to automatically file claims are not sustainable in the 
long term. Accordingly, we recommend on page 23 that EDD 
should determine the automation modifications achieved through 
its emergency processing tool that it can retain and make those a 
permanent feature of its UI Online application.
EDD’s assertion does not account for claims that have been added 
to the backlog since September 2020. On page 9 we note that EDD 
reported 1.6 million claims were in its backlog as of September 2020—
a figure it determined using the strike team’s methods. Further, the 
assertion does not acknowledge important work on claims received 
between March 2020 and September 2020 that EDD has yet to 
perform. As we note on page 28, EDD faces an impending workload 
of deferred eligibility determinations, many of which originate from 
claims submitted before September 2020. Therefore, EDD’s statement 
that it will eliminate the backlog of work related to these claims is an 
incomplete picture of the work it still needs to perform and for which 
it has no clear plan to address. As such, EDD’s assertion that it will 
eliminate the backlog by January 27, 2021, is unrealistic. Finally, as we 
note on page 28, the impending work also threatens EDD’s ability to 
pay new and continuing claims in a timely fashion. 
EDD highlights the number of fraudulent attempts to file a claim 
that were prevented by ID.me. Although that success is a positive 
effect of implementing ID.me, on page 17 we note that among 
the estimated number of legitimate claimants who attempted 
to validate their identities, about 20 percent—or just under 
144,000 individuals—were unable to successfully validate their 
identity. Therefore, we have recommended, on page 23, that EDD 
determine the causes of these failed identity verification attempts 
and work with the vendor to resolve these issues.
Although EDD public dashboards provided more information to 
the public, the information it presented is unclear. We note, starting 
on page 11, that information on the backlog dashboards that EDD 
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has posted to its website does not represent the number of claims 
awaiting payment. Specifically, as of December 15, 2020, EDD 
reported a backlog of 685,700 claims when only fewer than 20,000 
of those claims were waiting for payment. Accordingly, to provide 
a more transparent picture of backlogged claims, we recommend 
on page 23 that EDD refine its dashboards to clearly explain the 
number of claims waiting for payment for longer than 21 days due 
to pending work that EDD has not resolved.
EDD is correct that it adopted the burndown chart—which we describe 
beginning on page 16 as a “workload tool”—as a workload management 
tool. However, as we describe on pages 20 through 22, it has not used 
available data about the expected number of upcoming claims to 
model various scenarios and plan its staffing allocations accordingly. 
As a result, EDD has risked improperly deploying its staff and being 
unable to deploy those staff to quickly address spikes in its workload 
and issue timely payments to Californians in need of assistance.
We disagree with EDD’s assertion that the implementation of the 
VCC phone system improved the customer experience. As we 
discuss on page 47 of our report, when EDD quickly implemented the 
preliminary, minimal version of the new VCC system in April 2020, 
it lost valuable functionality featured in the old phone system for 
improving claimant call experience, such as the ability for callers to 
have the next available agent call them back or to schedule a specific 
time for callback from an EDD agent. Additionally, we note on 
pages 39 and 40 of our report that even after the implementation of 
the VCC system, EDD failed to meaningfully improve its call answer 
rates or customer service.
EDD’s statement too narrowly summarizes our recommendation. 
We discuss the two claim categories EDD raises in its response only 
as examples of claims it included in its backlog calculation that do 
not represent claimants waiting on payments. To fully implement 
our recommendation EDD will need to clearly display the number 
of claims that have waited longer than 21 days for payment because 
EDD has not yet resolved pending work on the claim. Taking that 
action will require EDD to remove additional claims from its backlog 
calculation. Finally, EDD must consider the value of the more inclusive 
backlog calculation that we describe on page 14. Implementing our 
recommendation does not preclude EDD from continuing to publicly 
share other information about its workloads so that the public and 
policy makers can continue to understand the full scope of its work. 
EDD did not share its plans for the establishment of its UI Branch 
Command Center Division with us before submitting its response. 
Since this division was launched in January 2021, we look forward to 
reviewing the way this new division addresses recommendations from 
our report during our follow up process.
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