2 Legislators Seek to Outlaw Sale of Salary Data

Two state senators said Thursday that they will seek to outlaw a controversial plan by the California Employment Development Department to begin selling confidential salary data covering 14 million Californians to private companies.

Responding to an article in Thursday’s Times, the two legislators, Debra Bowen (D-Redondo Beach) and Steve Peace (D-El Cajon) said they would work together to terminate the EDD’s authority to sell the sensitive information, saying that the disclosure of Californians’ annual earnings would be an invasion of their privacy.

“This information was never intended to be public and I hope this never goes into effect,” Bowen said.

Proponents of the program stress that the income information only would be disclosed with the written permission of the individual. They say the program will allow mortgage lenders and other creditors to process applications faster and cheaper.

But Bowen said the potential for misuse is too great.

“What happens if your soon-to-be ex-wife’s attorney gets his hands on the data, or a bill collector?” said Bowen, one of only three state legislators who voted against the little-noticed 1998 bill that allowed the EDD to start selling the data. She said she may seek to outlaw the disclosure by adding an amendment to an existing bill working its way through the legislature.

“It’s a stupid idea,” Peace said. “And the idea that the state is selling the data makes it even worse.”

Peace, who is currently sponsoring a bill to affirm privacy rights in the state Constitution, said he was shocked and embarrassed to discover that he voted in favor of the 1998 law. He said that the bill appears to have been pushed through in the final days of the session.

“Obviously, they slipped this through,” Peace said. “This is the first I’ve heard of it.”

The legislation, AB 604, was carried by then-Assemblyman Steve Kuykendall, who was elected to Congress in November. Kuykendall declined to comment Thursday.

Michael Bernick, the newly appointed director of the EDD, also declined to comment Thursday, saying through a spokeswoman that the state still is studying the issue and has no immediate plans to start selling the data. Previously, Bernick indicated that the EDD would begin selling the data by the end of the year or in early 2000.

The EDD--which collects the income information as part of its administration of unemployment insurance--stands to earn $15 million over 10 years by selling the information to private entities, according to preliminary estimates.

Officials at the Poway-based information company that helped pass the legislation attributed the negative response to a misunderstanding of how the program will work.

“Privacy has been a concern in all the states where we do business,” said William Skowronnek, president of Verification of Income and Employment, or VIE, which is partly owned by Santa Ana-based First American Financial Corp.

“When we sit down with legislators or consumer groups and walk them through it, they understand that this program actually increases privacy because it removes employers from the process of verifying income,” Skowronnek said.

Currently, when a lender or creditor needs to verify a person’s annual income, it writes or calls the applicant’s employer. With the VIE system, the lender can access the information electronically, thereby reducing time and paperwork, Skowronnek said.

Several consumers said Thursday that they would rather wait for a loan approval than allow the state to disclose their salary.

“It boggles my mind that the state of California would pass something like this,” said Christine Chuang, a Torrance real estate researcher. “If I want someone to know how much I make, I’ll tell them. I’ll wait the extra two weeks to get my loan.”

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Times staff writer Edmund Sanders can be reached at edmund.sanders@latimes.com.