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AB-152 Unemployment: Self-Employment Assistance Program.(2013-2014)

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Amended  IN  Assembly  March 21, 2013


Assembly Bill
No. 152

Introduced by Assembly Member Yamada

January 18, 2013

An act to add Article 2.3 (commencing with Section 1301) to Chapter 5 of Part 1 of Division 1 of, and to repeal and add Section 1300 of, the Unemployment Insurance Code, relating to unemployment insurance, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately.


AB 152, as amended, Yamada. Unemployment: Self-Employment Assistance Program.
Existing law provides for the payment of unemployment compensation benefits during the period that a person is unemployed. Existing law imposes various requirements on the payments of benefits, including work search requirements. Existing law also establishes retraining programs for unemployed workers. Prior law, enacted in 1994 and repealed in 2005, established the Self-Employment Assistance Program for displaced workers.
This bill would establish a similar Self-Employment Assistance Program, to be administered by the Director of the Employment Development. The bill would provide for a weekly allowance for participants equal to regular unemployment benefits, subject to various limits, and would impose various eligibility requirements upon participants, and would waive requirements relating to job search and self-employment, as specified.
Since the benefits would be payable from the continuously appropriated Unemployment Fund, the bill would make an appropriation.
This bill would declare that it is to take effect immediately as an urgency statute.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


 Section 1300 of the Unemployment Insurance Code is repealed.

SEC. 2.

 Section 1300 is added to the Unemployment Insurance Code, to read:

 The Legislature finds and declares all of the following:
(a) California and the national economy are recovering from the deepest recession since the Great Depression; recent data indicates that approximately 700,000 Californians are currently claiming unemployment insurance benefits.
(b) The demand for unemployment insurance benefits remains unusually high because more people are staying unemployed longer. Global competition and rapidly evolving technologies have resulted in the dislocation of millions of workers from their jobs, and even with the creation of new jobs, layoffs have become permanent instead of a temporary experience during fluctuation in the business cycle.
(c) As reported in the November 2012 California Labor Market Review, 45.7 percent, or approximately 8887,00 888,700 of those unemployed have been so for 27 weeks or more and approximately 34.6 percent of all unemployed, or 671,000, have been so for one year or more.
(d) Currently, 73 weeks of benefits, regular unemployment insurance combined with federal extensions, is the maximum number of weeks a claimant may collect. As of December 17, 2012, over 923,000 unemployed workers in California have run out of all benefits.
(e) There remains a critical need for California policies that will create faster economic and job growth and support for those struggling to find a job.
(f) In 1993, the federal government created the Self-Employment Assistance Program for a five-year period, based on positive results from experimental self-employment demonstration projects conducted by the United States Department of Labor, in collaboration with state employment agencies. Federal law made the program permanent in 1998.
(g) Prior California law, enacted in 1994 and repealed in 2005, established the state Self-Employment Assistance Program as an alternative use of unemployment insurance. This program was an important component of a broader workforce system strategy to promote entrepreneurship and microbusiness development, both as a reemployment strategy and to support economic development through job creation.
(h) State unemployment insurance programs in Delaware, Maine, New Jersey, New York, and Oregon actively offer unemployed workers the option of reemployment through self-employment assistance programs.


(i) The Middle Class Tax Relief and Job Creation Act of 2012 expanded Self-Employment Assistance Program eligibility, provided funding for states to implement or improve these programs, and directed the Department of Labor and the Small Business Administration to coordinate efforts to help more Americans start and grow small businesses.
(j) The Middle Class Tax Relief and Job Creation Act of 2012 provides thirty-five million dollars ($35,000,000) for Self-Employment Assistance Program grants. Of this amount, California could receive approximately five million three hundred thousand dollars ($5,300,000). Of this amount, four million six hundred thousand dollars ($4,600,000) is available for implementation and administration of the Self-Employment Assistance Program. The remaining seven hundred sixty-nine thousand seven hundred ninety-six dollars ($769,796) is available for the promotion of the Self-Employment Assistance Program.
(k) The Self-Employment Assistance Program is a voluntary state-run program that provides unemployed individuals financial support while they pursue full-time self-employment assistance activities that lead to establishing a business and becoming self-employed.
(l) The California Employment Development Department (EDD) must identify an individual, through a worker profiling system, as likely to exhaust benefits to receive, in lieu of unemployment benefits, a weekly allowance equal to the individual’s weekly unemployment compensation benefit without having to search for full-time wage employment.
(m) The EDD monitors self-employment assistance activities that include entrepreneurial training, business counseling, and business technical assistance. A network of more than 125 organizations throughout the state provides these services.
(n) The Self-Employment Assistance Program is a limited program appropriate to just a small fraction of unemployment insurance benefit claimants. It can help some current unemployment insurance benefit recipients and those who have exhausted their unemployment insurance benefits, probably no more than one or 2 percent.
(o) It is, therefore, the intent of the Legislature to enact legislation that would authorize the establishment of a Self-Employment Assistance Program administered by the Director of Employment Development for the state to become eligible to apply for federal funds by June 30, 2013, to establish, promote, and operate the program.

SEC. 3.

 Article 2.3 (commencing with Section 1301) is added to Chapter 5 of Part 1 of Division 1 of the Unemployment Insurance Code, to read:
Article  2.3. Self-Employment Assistance Program

 As used in this article:
(a) “Full-time basis” shall have the same meaning as is contained in regulations prescribed by the director.
(b) “Regular benefits” means benefits payable to an individual under this part, including benefits payable to federal civilian employees and to ex-service members pursuant to Chapter 85 (commencing with Section 8501) of Title 5 of the United States Code, other than additional and extended benefits.
(c) “Self-employment assistance activities” means activities approved by the director in which an individual, identified through a worker profiling system as likely to exhaust regular benefits, participates for the purpose of establishing a business and becoming self-employed. These activities shall include, but are not limited to, entrepreneurial training, business counseling, and technical assistance.
(d) “Self-employment assistance allowance” means an allowance payable in lieu of regular benefits and from the Unemployment Fund established under Section 1521 to an individual participating in self-employment assistance activities who meets the requirements of this article.
(e) “Self-Employment Assistance Program” means the program that enables an unemployed individual approved under this article to engage in self-employment assistance activities on a full-time basis that will lead to establishing a business and becoming self-employed.

 The weekly allowance payable under this article to an individual shall be equal to the weekly benefit amount for regular benefits otherwise payable under Article 2 (commencing with Section 1275). The sum of the allowance payable under this article and the regular benefits paid under this part with respect to any benefit year shall not exceed the maximum benefit amount as established by Section 1281 with respect to that benefit year.

 The allowance described in Section 1302 shall be payable to an individual at the same interval, on the same terms, and subject to the same conditions as regular benefits under this part, except as follows:
(a) The requirements relating to availability for work, active search for work, and refusal to accept work shall not apply to any week that the individual is in training or engaged in self-employment activities as approved by this article.
(b) Income earned by an individual while engaged in self-employment activities as approved under this article shall not be construed to be wages or compensation for personal services under this division, and benefits payable under this division shall not be denied or reduced because of those payments.
(c) An individual who fails to participate in self-employment assistance activities or who fails to actively engage on a full-time basis in activities, which may include training, relating related to the establishment of a business and becoming self-employed shall be disqualified for the week the failure occurs.

 An individual is eligible to be paid a self-employment assistance allowance if he or she meets all of the following conditions:
(a) Is eligible to receive regular unemployment compensation under state law.
(b) Has been identified pursuant to an automated profiling system as likely to exhaust regular unemployment compensation.
(c) Has been approved for participation in the Self-Employment Assistance Program by the director.
(d) Is engaged on a full-time basis in self-employment assistance activities, which may include, but not be limited to, entrepreneurial training, business counseling, and technical assistance related to establishing a business and becoming self-employed.

 The aggregate number of individuals receiving the allowance under this article at any time shall not exceed 5 percent of the number of individuals receiving regular benefits in the same week. The director shall, through regulations, prescribe those actions necessary to ensure the requirements of this section are met.

 (a) Self-employment assistance allowances paid under this article shall be charged to employers as provided under provisions of this part relating related to the charging of regular benefits. Costs of administering the self-employment assistance allowances are payable from the Self-Employment Assistance Program grant received from the federal Department of Labor, which allocates approximately five million three hundred thousand dollars ($5,300,000) to California for such purposes. Costs of providing self-employment assistance activities, such as business training, business counseling, and technical assistance are payable from federal Workforce Investment Act of 1998 funds and other government and private grants.
(b) For purposes of this article, costs of administering the program include marketing, staff training, review of applications, assessment of applicants, payment of allowances, and relating information technology costs.

 The provisions of this article shall become operative two weeks beginning after the effective date of this article or two weeks beginning after any plan required by the United State Department of Labor relating to a Self-Employment Assistance Program is approved by the United States Department of Labor, whichever date is later. Immediately upon enactment of this article, the director shall develop a Self-Employment Assistance Program plan and seek approval from the United States Department of Labor.

SEC. 4.

 This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are:
In order to ensure that the Employment Development Department postmark a completed application on or before June 30, 2013, in order to receive grants from the United States Department of Labor to develop, enhance, and promote a Self-Employment Assistance Program, it is necessary that this act take effect immediately.