The state's top labor official ordered the Employment Development Department to immediately issue payments to 124,000 Californians whose benefit checks have been delayed by a computer glitch.
Marty Morgenstern, secretary of labor and workforce development, said the backlog of claims building up at the EDD were "unacceptable." He directed the agency to forgo verifying the claimants' eligibility and push payments through — the equivalent of pay now, ask questions later.
The EDD has been contending with a huge backlog of unemployment claims after an upgrade of its 30-year-old computer system malfunctioned over Labor Day weekend. Since then, the agency has been hand-processing claims, which has delayed some payments by weeks.
Hundreds of state employees have been working overtime to reduce the backlog, which has snared about 15% of ongoing claims since the new system went live.
Morgenstern said despite these efforts, "it is unlikely that the claims backlog will be reduced quickly enough to respond to the very real financial hardship now being experienced by too many of our residents relying on timely payment of their UI benefits."
Unemployment insurance recipients said they've fallen behind on rent, car payments and other bills because of the late payments. Some reported they're already facing eviction.
Keion Morgan, 35, is among those struggling without his unemployment benefits.
The North Hollywood resident, laid off from a job in late May as a program coordinator for a university, said he had no idea there was a problem until he read media reports. He is owed about $1,100.
"It's been very frustrating from the communication aspect," Morgan said.
Morgan could see some of his claims paid as early as Thursday, EDD spokeswoman Loree Levy said. She said the agency would later go back and review the claims to determine eligibility, and seek reimbursement in case of overpayment.
The computer snafu is the latest problem to hit the EDD, which has been forced to reduce services in recent months because of federal budget cuts. The agency no longer answers its unemployment benefits hotline in the afternoons, and its regional jobs centers have lost some funding.
Levy told The Times on Monday that officials expected some hiccups with the system upgrade "but we didn't know it'd be to this magnitude."
The agency on Tuesday also confirmed that the contractor behind the upgrade, New York consultant Deloitte, is the same firm that upgraded Massachusetts' unemployment benefits system. That state has also faced similar delays in benefit payments.
Massachusetts and California labor officials have repeatedly stressed that their systems are working since the upgrade, and that problems affect only a small portion of claimants.
A spokesman for Deloitte defended the computer upgrades in both states and said in a statement that the company is working to help resolve issues as quickly as possible.
"Although there have been some challenges with a small percentage of claimant accounts — which is not unusual for new systems this large and complex — there have been far more successes," the statement said.
Legislators around California, who are on recess, said their offices have been fielding calls and emails from residents who are not getting unemployment payments.
Assemblyman Richard Hershel Bloom (D-Santa Monica) said the order by Morgenstern was a bold and appropriate move "because it deals with an emergency and gets money into people's hands so they can deal with their immediate financial need."
Bloom said he expects there will be oversight hearings to determine what exactly happened and how to avoid similar problems in the future. He took issue with how the EDD communicated the problem not just to the public but to state lawmakers.
"There were some issues with notification, even to the Legislature," he said. "The flow of information was not what it should be."
Jason Maloni, a crisis communications expert at Levick, a Washington, D.C.-based public relations firm, said the problem is a classic example of not anticipating potential problems ahead of a big computer upgrade.
He said that when the agency first discovered the problem, it should have communicated the issue more broadly and focused on finding a solution.
"Today's society demands instant answers when a problem occurs," he said. "It certainly doesn't reflect well on government authorities."