Bill Text: CA SB1284 | 2011-2012 | Regular Session | Amended
Bill Title: Unemployment insurance: disclosure of information.
Sponsorship: Partisan Bill (Democrat 1)
Status: (Introduced - Dead) 2012-04-18 - Set, first hearing. Hearing canceled at the request of author. [SB1284 Detail]
Download: California-2011-SB1284-Amended.html
BILL NUMBER: SB 1284 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 29, 2012
INTRODUCED BY Senator Lieu
FEBRUARY 23, 2012
An act relating to residential mortgage lending.
to amend Section 1094 of, and to add Section 1094.5
to, the Unemployment Insurance Code, relating to disclosure of
information.
LEGISLATIVE COUNSEL'S DIGEST
SB 1284, as amended, Lieu. Residential mortgage lending:
compliance with federal law. Unemployment insurance:
disclosure of information.
Existing law provides that information obtained in the
administration of the Unemployment Insurance Code is confidential and
is for the exclusive use and information of the director in the
discharge of his or her duties. Existing law authorizes an employee
to receive his or her wage information upon written request by the
employee. Existing law provides that a person who knowingly accesses,
uses, or discloses confidential information without authorization is
guilty of a misdemeanor.
This bill would allow the Director of Employment Development to
electronically transmit wage information of an employee to a
creditor, upon the execution of a release by an employee, if
specified requirements are met. By expanding the crime of knowingly
and wrongfully accessing, using, or disclosing specified information,
this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Existing law provides for the licensure and regulation of mortgage
loan originators, as defined, by the Commissioner of Corporations
under the California Finance Lenders Law and the California
Residential Mortgage Lending Act. Existing law exempts from the
provisions of the California Finance Lenders Law specified persons
and entities, including any person doing business under any law of
any state or of the United States relating to banks, trust companies,
savings and loan associations, and insurance premium finance
agencies.
This bill would declare the intent of the Legislature to enact
legislation that would enhance compliance with specified federal
verification requirements for residential mortgage lending.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all
of the following:
(a) Existing state law allows a person employed in California
access to his or her wage information for any purpose at no cost upon
written request.
(b) The time, inconvenience, and cost to the state of providing
this access are prohibitive and unnecessary given the capabilities of
secure electronic access methods currently available.
(c) The mortgage and subprime credit crises have brought to the
forefront the problems associated with the lack of reliable,
comprehensive, secure, convenient, and cost-effective solutions to
accurately and fairly determine the credit capacity of consumers by
verifying income and employment. As a result, the following occur:
(1) Consumer credit has tightened dramatically thus adding to the
problems with the stagnating and retracting economy. In the previous
four recessions, outstanding consumer credit had never declined by
more than 2 percent. In 2008, this figure was an unprecedented 5.4
percent. American consumers lost nearly $14 trillion in assets in
2008 alone because of the credit crisis.
(2) Credit is denied to an individual that understates his or her
income. Creditors attempting to verify income rely on frequently
inaccurate estimators that are routinely misstated by $10,000 to
$15,000, inclusive, on annual wages. Given that 75 percent of working
Americans earn $50,000 per annum or less, these inaccuracies can
have serious consequences.
(3) Credit is denied to the approximately 35 to 54 million
Americans who have no, little, or borderline credit histories.
Supplementing credit history with wage and employment history gives
creditors greater confidence in a borrower's ability to repay a debt
obligation, and may even offset derogatory information.
(4) Credit is granted to an individual who overstates his or her
income, possibly resulting in overextensions, collections,
repossessions, or bankruptcy. As the recent mortgage meltdown and
ensuing global financial crisis underscore, consumers can be
substantially and materially harmed if they are able to access more
credit than they can afford. Verifying income and employment history
offers a consumer protection as it would dramatically reduce the
frequency of over extension.
(5) Credit, mortgage, and identification theft losses exceed many
billions of dollars annually in the United States. Requiring a
prospective borrower to provide employment and income information
provides another data point to use in efforts to prevent identity
fraud.
(d) The federal government responded to the mortgage meltdown and
financial crisis with the Dodd-Frank Financial Reform and Consumer
Protection Act (Public Law 111-203) and Regulation Z (Section 226.1
et seq. of Part 226 of Subchapter A of Chapter II of Title 12 of the
Code of Federal Regulations), requiring income verification on all
home mortgages, and the Credit Card Accountability Responsibility and
Disclosure Act of 2009 (Public Law 111-24), requiring credit card
issuers to assess the ability of a consumer to repay a new credit
transaction.
(e) Access to secure, reliable, comprehensive, convenient, and
cost-effective solutions has not been available. Current solutions
either are inaccurate, costly, or have limited workforce coverage.
Creditors still struggle to comply with new federal requirements.
SEC. 2. Section 1094 of the
Unemployment Insurance Code is amended to read:
1094. (a) Except as otherwise specifically provided in this code,
the information obtained in the administration of this code is
confidential, not open to the public, and shall be for the exclusive
use and information of the director in discharge of his or her
duties.
(b) The information released to authorized entities pursuant to
other provisions of the code shall not be admissible in evidence in
any action or special proceeding, other than one arising out of the
provisions of this code or one described in Section 1095.
(c) The information may be tabulated and published in statistical
form for use by federal, state, and local governmental departments
and agencies, and the public, except that the name of the employing
unit or of any worker shall never be divulged in the course of the
tabulation or publication.
(d) Wages as defined by Section 13009 and amounts required to be
deducted and withheld under Section 13020 shall not be disclosed
except as provided in Article 2 (commencing with Section 19542) of
Chapter 7 of Part 10.2 of Division 2 of the Revenue and Taxation
Code.
(e) (1) Any An
employee or his or her representative may receive his or her wage
information upon written request by the employee. The information
shall be provided without charge.
(2) In order to provide an employee with expedited access to his
or her wage information, the director may allow, upon an employee
providing a release as described in Section 1094.5, the electronic
transmission of wage information to a creditor for the purpose of a
credit transaction specified in the release.
(f) Any A person who knowingly
accesses, uses, or discloses any confidential information without
authorization is in violation of this section and is guilty of a
misdemeanor.
SEC. 3. Section 1094.5 is added to the
Unemployment Insurance Code , to read:
1094.5. If the director allows the conveyance of wage information
pursuant to paragraph (2) of subdivision (e) of Section 1094, all of
the following shall apply:
(a) The information provided shall only be used to verify the
accuracy of wage information provided to the creditor by an employee
in connection with a specific credit transaction.
(b) All state and federal privacy laws shall be met.
(c) The information shall only be used to satisfy standard
underwriting requirements imposed by the creditor for that specific
credit transaction.
(d) (1) An employee's wage information shall only leave a
department database on an individual inquiry basis and shall not be
grouped together with other employee's wage information.
(2) Data removed from the dedicated department database shall be
encrypted at the field level, and shall not contain any personal
identifying information.
(3) The department's database shall not leave the physical
premises of the Employment Development Department.
(e) The information shall only be transmitted as an individual
record and shall not be transmitted with additional data.
(f) A copy of the information and an explanation of the purpose
for which the information was furnished shall be provided to the
employee.
(g) The form of release made by an employee pursuant to paragraph
(2) of subdivision (e) of Section 1094 shall comply with Section
603.5(d)(2) of Part 603 of Chapter V of Title 20 of the Code of
Federal Regulations and additionally include the following
information:
(1) The employee's consent to disclose is voluntary and not
required by law.
(2) The employee's refusal to consent to disclosure of this wage
information shall not be the basis for denial of credit.
(3) If the employee's release is provided, the department shall
release, the wage information of the employee.
(4) The release shall be only for the credit transaction
identified by the employee on the release.
(5) The length of time the consent shall be valid following the
execution of the release by the employee.
(6) A statement indicating the person or persons that are
authorized to receive the information released.
(h) The director shall establish audit and security requirements
deemed necessary or appropriate by the director to safeguard the
confidentiality of the information released.
(i) Prior to implementing paragraph (2) of subdivision (e) of
Section 1094, the director shall evaluate the best practices and
system weaknesses of similar programs in other states.
(j) The director may convene a group consisting of representatives
from consumer privacy groups, creditors, and employee and employer
organizations to advise him or her and the department on the best
practices and weaknesses of a program of this nature.
(k) (1) The director may enter into a contract with a consumer
reporting agency to implement this section. The director may require
reimbursement for all costs incurred in providing information
specified in this section.
(2) An employee shall not be charged for submitting the release
for the costs of transmitting his or her information directly to a
creditor for the purpose of a credit transaction.
(l) The department may promulgate regulations as necessary or
appropriate to implement this section.
(m) (1) A person who knowingly and wrongfully accesses, uses, or
discloses information under this section is guilty of a misdemeanor.
(2) A person injured by a violation of this section may bring a
civil action to recover damages, attorney's fees, and costs of
litigation.
(n) For purposes of this section:
(1) "Consumer reporting agency" has the same meaning as set forth
in the federal Fair Credit Reporting Act (15 U.S.C. Sec. 1681a(f)).
(2) "Creditor" has the same meaning as set forth in the federal
Fair Debt Collection Practices Act (15 U.S.C. Sec. 1691a(e)).
SEC. 4. No reimbursement is required by this act
pursuant to Section 6 of Article XIII B of the California
Constitution because the only costs that may be incurred by a local
agency or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, within the meaning of
Section 17556 of the Government Code, or changes the definition of a
crime within the meaning of Section 6 of Article XIII B of the
California Constitution.
SECTION 1. It is the intent of the Legislature
to enact legislation that would enhance compliance with income and
employment verification requirements for residential mortgage
lending.
