Toward an inclusive unemployment insurance fund: reimagining income replacement in California

• Author: Cole Waldhauser
• Position: J.D., UCLA School of Law, 2022; B.A., University of Minnesota ? Twin Cities, 2017
• Pages: 431-459

TOWARD AN INCLUSIVE UNEMPLOYMENT

INSURANCE FUND: REIMAGINING INCOME

REPLACEMENT IN CALIFORNIA

COLE WALDHAUSER*

ABSTRACT

Unemployment Insurance (UI)—ordinarily an unimposing social policy—

emerges in times of crisis as the boogeyman of financial dependence. Yet the

program has become a foundational benefit of the COVID-19 pandemic and

remains a vital safety net for crises to come. It is therefore imperative that UI

broaden its reach to all who face the economic precarity of unemployment. To

that end, this Note advocates for the creation of a state UI fund capable of servic-

ing workers without documentation and provides the legal framework to do so.

It first reflects on the eligibility boundaries of relief programs and the history of

exclusionary benefit regimes. It then examines UI’s legal and financial mechan-

ics, looking backward at the program’s formation, and forward toward the con-

sequences of California’s insolvency crisis. This analysis exposes UI’s greatest

limitations, all products of its technical design.

As its core contribution, this Note charts the course for an inclusive income

replacement scheme with the reinforcement to withstand both privacy and pre-

emption implications. The proposal designates a percentage of income taxes to-

ward a separate revenue pool that operates entirely independent of, but

mechanically comparable to, the existing infrastructure. To prevent the fund

from transforming into a registry, the proposal contemplates a secure means of

data-sharing, insulated from nefarious inquiries and probes. The Note analyzes

sanctuary laws through the lens of federal preemption to propose new state pol-

icy that can further protect immigration data. It also explores litigation channels

by applying the Tenth Amendment’s anti-commandeering doctrine to existing

federal immigration law. After making the case for legal viability, this Note con-

cludes by emphasizing the growing political appetite for such a proposal, as

demonstrated by New York’s Excluded Workers Fund.

* Cole Waldhauser, J.D., UCLA School of Law, 2022; B.A., University of Minnesota – Twin Cities,

2017. I am grateful for Professors Jasleen Kohli and Victor Narro for their supervision and feedback, for

Professor Scott Cummings’ incisive comments and brainstorming, for Dana Hadl and Joe Meeker at Bet

Tzedek for their guidance, for Jennifer Lentz and her research expertise, and for Karina Silva for her

steadfast support. Finally, I thank the editors of the Georgetown Immigration Law Journal for their dili-

gent and thoughtful work. All errors are my own. © 2021, Cole Waldhauser.

431

TABLE OF CONTENTS

INTRODUCTION ......................................... 433

I. THE ORIGINS OF BENEFITS EXCLUSION AND THE COVID-19 LABOR

MARKET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 436

A. A History of Race- and Ethnicity-Based Exclusion from

Public Benefits in the United States . . . . . . . . . . . . . . . . . 436

B. Job Precarity in the COVID-19 Labor Market: The

Disparate Impact on Undocumented Immigrants. . . . . . . . 439

II. THE LEGAL AND FINANCIAL MECHANICS OF UNEMPLOYMENT

INSURANCE ....................................... 440

A. The History and Mechanics of Unemployment Insurance in

the United States. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 440

B. California’s Unemployment Insurance Insolvency Crisis . . 442

III. DEVISING A NEW SYSTEM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444

A. Information-Sharing: Tapping into the Existing

Infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 444

B. Data Privacy for ITIN Filers Under a New Unemployment

Insurance Regime . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 445

C. Federal Preemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . 447

1. Sanctuary Policies: “Don’t Ask?” or “Don’t Tell?”. . . 448

2. Section 6103 versus Section 1373: A Clash of Federal

Statutes .................................. 450

3. Modeling New Policy . . . . . . . . . . . . . . . . . . . . . . . . 452

D. Constitutional Law: Applying the Tenth Amendment’s Anti-

Commandeering Doctrine ........................ 453

1. Litigation Challenging § 1373, and Related Doctrinal

Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 454

2. Federalism in the Amy Coney Barret Era: Deference to

Whom? .................................. 456

IV. EXTRATERRITORIAL SAFETY NETS AND THE POLITICAL FIGHT . . . . . . 457

CLOSING ............................................. 459

432 GEORGETOWN IMMIGRATION LAW JOURNAL [Vol. 36:431