Overview of 2020‑21 Labor and Employment Programs

The 2020‑21 Governor’s Budget includes 18 budget proposals related to labor and employment programs. This post provides a high-level overview of these proposals. Our office plans to evaluate several of these proposals more closely in the coming weeks.

Background

California’s major labor and employment programs provide work-related services and benefits to its residents, enforce its employment laws, oversee its workers’ compensation system, and regulate its workplace safety and health. Many of the work-related services and benefits are funded or required by the federal government, including unemployment insurance benefits and federal workforce training programs. The labor and employment programs are administered at the state level by the Employment Development Department (EDD), the Department of Industrial Relations (DIR), the California Workforce Development Board (CWDB), and the Agricultural Labor Relations Board (ALRB). The state’s Labor and Workforce Development Agency oversees these entities and works to set policy and coordinate programs.

Labor and Employment Program Budget. As shown in Figure 1, the Governor’s budget proposes a total of $1 billion in state funding for labor and employment programs, including $148 million from the General Fund and $887 million from various state special funds.

Figure 1

Labor and Employment Departmental Budget Summary

2020‑21 Governor’s Budget, General Fund and Special Funds (In Millions)

Program	2019‑20 Estimated	2020‑21 Proposed	Change
Program	2019‑20 Estimated	2020‑21 Proposed	Amount	Percent
Labor and Workforce Development Agency	$3	$4	$2	77%
Employment Development Department	97	121	25	26
California Workforce Development Board	52	12	‑40	‑76
Department of Industrial Relations	12	—	‑12	—
Agricultural Labor Relations Board	10	10	—	—
Totals, General Fund	$173	$148	‑$25	‑15%
Labor and Workforce Development Agency	$3	$12	$9	290%
Employment Development Department	280	298	17	6
California Workforce Development Board	102	50	‑52	‑51
Department of Industrial Relations	629	664	35	6
Agricultural Labor Relations Board	11	12	1	5
Totals, All State Funds	$1,025	$1,035	$10	1%

Labor and Employment Budget Proposals

As shown in Figure 2, the budget proposes a total of $127 million in new funding and 407 new staff positions within various labor and employment programs. Most of the proposed funding and positions are within EDD and DIR, the two largest labor and employment departments. In addition, most of the proposals are either ongoing program augmentations or three-year proposals. Overall funding for these proposals comes from a variety of sources, as shown in Figure 3, including $40 million from the General Fund, $26 million in disability program payroll taxes paid by employees, $25 million in increased workers’ compensation insurance assessments paid by employers, and $20 million in proceeds from Private Attorneys General Act lawsuit settlements.

Figure 2

2020‑21 Governor’s Budget Labor and Employment Proposals

Proposal	Positions	Cost (In Millions)	Fund Source	Duration
Labor and Workforce Development Agency
Create “Department of Better Jobs and Higher Wages”	10	$2.4	General Fund	One time
Labor Agency Strategic Outreach	24	20.0	Private Attorneys General Act settlementsa	Three years
	34	$22.4
Department of Industrial Relations
Worker Status—AB 5 Implementation	104	$17.5	Workers’ Comp assessmentsb	Three years
Wage Claim Adjudication Staff	15	2.3	Workers’ Comp assessments	Three years
Victims of Wage Theft	—	—	No funding—Awaiting Trailer Bill	Unknown
Financial and Administrative Compliance	33	8.7	Various	Three years
Health and Safety Legal Workload	7	1.2	Workers’ Comp assessments	Ongoing
Increased Office Security	—	2.3	Workers’ Comp assessments	Ongoing
Amusement Ride Inspections	3	0.6	Workers’ Comp assessments	Ongoing
Implementation of Recent Legislation	16	3.3	Various	Ongoing
Update Workers’ Compensation Case Management	2	0.9	Workers’ Comp assessments	Ongoing
Safety and Health Appeals Board Staff	2	0.5	Workers’ Comp assessments	Ongoing
	181	$37.2
Employment Development Department
Benefit Systems Modernization (Information Technology)	148	$46.0	General Fund and Disability Fundc	Ongoing project
Worker Status—AB 5 Implementation	24	3.4	General Fund	Three years
Accounting and Business Services	14	3.0	Disability Fund	Ongoing
Paid Family Leave Small Business Grants	—	1.0	General Fund	Ongoing
Implementation of Proposition 64: Cannabis	7	3.6	Cannabis Tax Fund	Ongoing
	193	$57.0
California Workforce Development Board
Entrepreneurship Pathways Grant Program	—	$10.0	General Fund	One time
Total, Labor and Employment Proposals	407	$127.0
aThe Private Attorneys General Act allows employees to recovery penalties for labor code violations. The state collects a portion of these settlements. bAnnual assessments paid by businesses based on a percentage of their workers’ compensation insurance premium cost. cUnemployment Compensation Disability Fund, the fund used to finance the state’s temporary disability and paid family leave benefits.

Figure 3

Funding Sources—Labor and Employment Proposals

2020‑21 Proposals (Dollars in Millions)

Fund	Amount	Share
General Fund	$40	32%
Unemployment Compensation Disability Fund	26	21
Workers’ Compensation premium assessments	25	20
Private Attorneys General Act settlement funds	20	16
Various mixed funding	12	9
Cannabis Tax Fund	4	3
Totals	$127	100%