American Federation of Labor & Congress of Industrial Organizations v. Unemployment Insurance Appeals Board

We granted review to decide a narrow question of first impression: whether an administrative law judge may award interest on a payment of retroactive unemployment insurance benefits. Administrative law judges, acting on behalf of the Unemployment Insurance Appeals Board (the Board), sit by authority granted under Unemployment Insurance Code section 100 et *1022 seq. The code limits these judges to reviewing the action of the Employment Development Department (EDD) in its ministerial determination of unemployment benefit eligibility. (Unemp. Ins. Code, § 1334.) Nowhere does the Unemployment Insurance Code grant the administrative law judges, or the Board, the express authority to award interest on an administrative benefit award.

By contrast, pursuant to Civil Code section 3287, subdivision (a) (§ 3287(a)), courts have awarded prejudgment interest on a trial court judgment following a successful administrative mandamus action to recover wrongfully withheld benefits. (Aguilar v. Unemployment Ins. Appeals Bd. (1990) 223 Cal.App.3d 239, 246 [ 272 Cal.Rptr. 696 ] (Aguilar) [trial court properly ordered EDD to pay interest on unemployment benefits wrongfully withheld]; see…

I dissent. The majority holds that the state need not pay interest on retroactive unemployment compensation when an erroneous determination of noneligibility is reversed on administrative appeal. To justify this holding, the majority has seized on a phrase from this court’s opinion in Tripp v. Swoap (1976) 17 Cal.3d 671 [ 131 Cal.Rptr. 789 , 552 P.2d 749 ], invested it with a meaning the Tripp court never intended it to have, and by this means invented a new requirement for recovering interest under Civil Code section 3287, subdivision (a) (hereafter section 3287(a)). In the process, the majority decides an issue that was uncontested and unbriefed in this litigation.

*1047 The right to receive unemployment compensation vests when the claimant proves facts establishing eligibility. (Aguilar v. Unemployment Ins. Appeals Bd. (1990) 223 Cal.App.3d 239, 245 [ 272 Cal.Rptr. 696 ].) If, despite the claimant’s proof of eligibility, the California Employment Development Department (EDD) erroneously denies the claim, the claimant may take an administrative appeal and, if unsuccessful there, obtain judicial review. Once the EDO’s error in denying eligibility has been acknowledged and…

The “overriding legislative objective” (Gibson v. Unemployment Ins. Appeals Bd. (1973) 9 Cal.3d 494, 498 [ 108 Cal.Rptr. 1 , 509 P.2d 945 ]) of the unemployment insurance law is to establish “a system of unemployment insurance providing benefits for persons unemployed through no fault of their own, and to reduce involuntary unemployment and the suffering caused thereby to a minimum.” (Unemp. Ins. Code, § 100.) Accordingly, we have held that “[t]he provisions of the Unemployment Insurance Code must be liberally construed to further the legislative objective of reducing the hardship of unemployment.” (Gibson, supra, 9 Cal.3d at p. 499.) We should do likewise with the Civil Code. Instead, today’s decision undermines the principle stated in Gibson because it “defeats the legislative objective of providing prompt administrative adjudication of claims for unemployment benefits without recourse to technical and formal requirements.” (Id. at p. 496.) I therefore dissent.

When the state wrongfully refuses to pay unemployment benefits, the applicant is entitled to interest on them. (Aguilar v. Unemployment Ins. Appeals Bd. (1990) 223 Cal.App.3d 239 [ 272 Cal.Rptr. 696 ].) “Civil Code…