Defining an Omni-Shambles: California's Unemployment Agency

How any organization approaches the public is almost always a direct window into how they privately feel about the public - in this case, it's depraved indifference.

Thank you to the California Policy Center for running an updated (I told you the EDD would keep ramming the iceberg) version of this piece.

You can view it here - https://californiapolicycenter.org - and do check out the rest of their opinion items and policy papers.

How Not to Crisis Communicate:

A Look at California’s Employment Development Department

On January 1, 2021, 1.4 million Californians woke up with something much worse than a hangover.

They woke up to find a surprise email from the state’s Employment Development Department (EDD for short and it’s in charge of dispensing unemployment benefits) telling them that their unemployment claim was flagged for suspected fraudulent activity and any and all payments were suspended until, well, whenever-ish.

Clearly California has a major unemployment fraud problem, with estimates ranging up to $30 BILLION stolen by a whole slew of different people, from foreign nationals to gang members to former EDD employees to state prisoners.  On a good day, the unemployment system is an outdated creaky mess; add in the massive unemployment jump due to the pandemic and the equally massive amount of federal dollars flowing through the system in COVID relief money and something bad was most assuredly going to happen.  And EDD somehow made it worse.

The first rule of crisis communications is pretty simple – don’t do anything that could land you in a situation where you need crisis communications help.  If you’re in the financial services industry, don’t run a Ponzi scheme.  If you’re a manufacturer, don’t bury your toxic waste next to an elementary school.  If you’re a politician, don’t get caught.  If you’re a social media influencer, stick to being unaccountably cool for that exact moment in time and just keep shilling for products.  If you’re a ship captain, don’t hit the iceberg.

But if you happen to hit the iceberg, do not just back that ship up and hit it again.  And again.  And again.  And again.  And that’s what EDD did, is doing now, and will most assuredly continue to do until – they seem to hope - the iceberg just disappears (or at the very least the stunned onlookers in the other boat will stop laughing, get bored, and go away).

The litany of EDD missteps – on every front from technical to financial to public relations to customer service – is far too long to go into each and every specific case here.  Suffice to say that the term “omni-shambles” pretty much covers it (if you are an interested masochist feel free to type Cal EDD into your search engine of choice for the details and, as I do not plan to update this every four days, you will probably find yet another example).

So, to simplify, let’s do this in bullet list format to learn exactly what not to do in a crisis moment.

·         When facing an impending disaster, don’t just hit the send button and pray. 

In response to the epidemic and in conjunction with the federal support dollars, the EDD essentially created a new category of claimants – gig workers, the self-employed, business owners and such would be allowed to access benefits.  As part of this effort, the EDD put in place identity and employment status verification requirements that were, well, lax at best.  Let’s rephrase that – they were nonexistent to the point that one could drive a $30 billion bus through.  And people – prisoners, gang members, garden variety international fraudsters, etc. – did.  EDD’s answer to the first hints of fraud last spring?  Terminate its contract with its identity verification/fraud detection vendor claiming a lack of funds. 

The crisis communications lesson here? Understand that there are people who will take advantage of you in the world and do everything you can to make sure that doesn’t happen while continuing to assist those rightfully entitled people in need (in other words, even if you’re evil at least be competent).

·         Social media matters.

This is actually true.  While eventually he was arrested for felony stupid, someone made and posted a rap video that pretty much laid out the steps on how to defraud the EDD system.  It was up for weeks. 

Being careful with what your organization posts is equally, if not more, important.  The EDD, astonishingly, posted on their Twitter feed a request stating that “We believe online conversations should remain respectful & courteous to everyone.”  Suffice to say the reaction from the people who actually followed EDD’s feed -most of whom it appears were people caught up in the incompetence and desperate for any shred of information - was rather less than respectful and courteous, with reactions ranging from angry to very angry to heartbreakingly infuriated.

Twitter blow-ups are pretty much pointless teacup storms, but this incident goes a bit deeper.

Here is an omni-shambles agency that has managed to pay out billions to criminals while simultaneously driving deserving taxpayers into homelessness deciding it would be a good idea to demand that those same taxpayers be nice to them - that's almost pathologically vicious.

In the grand scheme of things, considering everything else that has gone staggeringly wrong, it may seem yet another PR fiasco is pretty minor and par for the course.  PR departments are there to spin, lipstick the pig, etc. but how they conduct themselves is a fairly accurate window into the culture, the internal worldview, of the entire organization and what they think about their customers/clients/etc.  This was beyond mere incompetence - it clearly showed that EDD's agency mindset is one of depraved indifference.

The crisis communications lesson here?  While going through tough times – whether self-inflicted as in EDD’s case or otherwise – constantly monitor social media and react accordingly.  Sure, it will mostly be people posting angry messages and such about how bad you are but, as the cliché goes, even a broken clock is right twice a day and important information is probably out there waiting to be found.  And never ever ever ask the internet to stop being mean to you, especially if you are the problem.

·         If you set a deadline for an action on your part and announce it publicly, stick to it.

On December 31, EDD sent an email (kind of – they sent messages to claimants online account inboxes and then a day or so later sent people actual emails telling them to check their inbox – by the way, don’t do that either) to 1.4 million people saying their account had been suspended for possible fraudulent activity.  The message said they would be given more information on January 6 (note they did not say what kind of information would be forthcoming or why the account had been flagged).  Over the course of the week, the situation got noticed by the media and state legislators as tens of thousands of panicked people called everyone and anyone they could think of to get more information.

EDD’s response?  To send out another message on January 8, not the sixth, informing people they were coming up with a plan to remedy the situation that would involve verifying identities and such.  It did not say what that plan was or when it would be put into action. 

The completion of the lumbering identity verification/reestablishment of benefits process moved forward, but hundreds of thousands of legitimate claimants did not see a restoration of payments until the end of January and some are still left out in the cold.

The crisis communications lesson here?  The simplest way to put the lesson would be: Arrggghhh!!!  But to expand upon that, do not set deadlines you cannot meet; do not plan to release information you don’t have; do not promise solutions when you have not strictly defined the problem.

Finally, communicate directly with impacted clients.  EDD, for example, has everyone’s email address (and a separate internal messaging system) but still releases update information through press releases and on Twitter without sending the new info to claimants.  Putting aside the debate of whether or not elected or staff officials should be allowed within 100 miles of Twitter (actually, that debate appears to be settled – see above), having those resources at hand to communicate with people and NOT using them is, yet another, astonishing self-inflicted failure.

·         If you are going to do something that could be negatively received by the public, be prepared and if you throw a Hail Mary and try to distract the public make sure that that distraction is big.

In situations that are basically your fault there is the temptation to try to somehow cover it with something else or finesse the timing, hence the classic DC “Friday night document dump” strategy.  Understand that it can backfire – badly – unless the “covering” event is large enough to overwhelm your bad news.  For example, a former congressional candidate once decided to enter his “no contest” plea - it involved engaging in sex with an underage boy - on Election Day some years ago, presumably thinking that it would get lost in the shuffle of that day’s news.  It didn’t because he and his team entered the plea in the morning and the west coast news stations – which went live early to cover east coast election-related stories – had literally no other local news to report (every 11 minutes, all afternoon) than his plea. 

In an attempt to “justify” the New Year’s Eve suspension of 1.4 million accounts, the EDD said it was trying to adjust and/or clean the system so it could properly distribute the extra $300 per week the feds approved in late December.  Even if the public noticed that claim amid the torrent of bad press and genuine confusion, it didn’t believe it. 

The crisis communications lesson here?  There are a couple.  First, don’t get cute with timing issues.  Unless you can guarantee a declaration of war next Tuesday you probably don’t have to wait until Wednesday to announce your problem.  Second, if you do try to smother the story like EDD did, make the distraction is both reasonable and exponentially more important than the bad thing you did (Run over your neighbor’s dog? Buy them a new house - that kind of thing).

·         Do not aggravate your (real and/or potential) allies and supporters or your business partners and vendors.

While it is unclear exactly when the EDD decided to essentially lay off 1.4 million people who had already been laid off, it is clear that they told no one what they were planning.  Members of the state legislature – you know, the EDD’s penultimate bosses – were not informed of the plan and only learned of it when thousands of furious and vulnerable constituents started calling them.  In response to the legislators’ ire, the EDD pretty much only said tell people to check the website or call the toll-free line, a line which was answering about 4 percent - at best - of its calls on a daily basis. (It is unknown exactly what and when the Governor knew – or knows – of the issue.  His public statements on the matter have been his usual gravelly-voiced incomprehensible ramble of jargon salad, though the impending recall - in part, according to public polling data, caused by the EDD mess - may change his tune.)

Little, if any, information about the scope of the problem, the tech issues related, the reason behind the suspensions (EDD claimed it used a tested formula to determine risky accounts, which is laughable on its face), what the plan was to fix it,and when it was going to be fixed was offered.  The legislators were not amused.

It is also unclear if and/or when EDD told its new(ish) identity verification vendor ID.me that it was, overnight, going to get an influx of 1.4 million new discrete tasks to complete immediately.  If ID.me was informed in a timely manner, then the blame for the overloading of the identity system is a shared blame; if not, as can be assumed, the EDD completely and publicly clustered the company they hired to de-cluster the problem.

The crisis communications lesson here?  Do not hide information from people you will need to defend your position because if you do your erstwhile allies will be out on the street desperately looking for a bus to throw you under (or in front of).  And do not throw your partners under the bus because they will simply bide their time and release unflattering information at the most inopportune time.  Payback is a revenge best served publicly.

·         Do not make the public feel stupid.

Throughout this debacle, EDD has consistently managed to somehow make things worse at every step of the way.  A claimant, after a 25 hour (yes, 25 hours) wait on hold to verify their identity (see above), then found out that well, yes, the claim is active and we will tell you when you might be able to access your funds later which should be in about six weeks. Probably.

After the initial suspension email went out, EDD astonishingly sent out a message reminding recipients that they have to pay taxes on unemployment income and they should make sure to check the proper form online.  When they checked, the form stated they had earned $00000.00 in unemployment insurance.  EDD had not bothered to populate the forms with any information beyond a person’s name.

And recently, the EDD website featured a new button to click on called “re-open claim.”  Needless to say, many many people who are/were still in limbo did so leading them to nothing.  In a press release – not on the website or in a message to the desperate and confused unemployed – the EDD said it was a glitch and no one should click on it.  It was up for days.

The crisis communications lesson here?  Learn everything you can about your client’s systems and actions and weaknesses so that you stop them from doing stupid stuff over and over again.  It makes the job much easier.

If you feel you need to hire a crisis communications expert, you probably do.  But remember that they are the professionals in the room now and need to be treated as such.  You dug the hole – it is their job to lift you out of it and fill it in so be honest with them and – most importantly if your organization is at fault – with yourself. 

To put it another way, while lying in a hospital bed you can keep telling everyone around you that no one ever told you that smoking eight packs a day was all that bad but no one around you will believe you and everyone around you will really start to dislike you.

That being said, there are occasions when your organization is not at fault and/or only tangentially involved.  For example, the boss is arrested for, say, cannibalism while in vacation.  Obviously a bad story that the organization will have to deal with but one that can be pretty much put wholly on the individual in question.  You still need help, but the tone and tenor of that help will differ widely and should involve a very aggressive “we didn’t do it” and “cannibalism is bad” narrative (lawyers hate it when organizations say anything on the record, but ignore them; it’s your organization that wants to frame the story in the public’s mind and that cannot be done with a series of “no comments”).  One note on this analogy – if the boss had a habit of bringing a special, private lunch box with him wherever he went and never ate anything else there may be a legitimate public concern that someone in the organization should have at least guessed something odd was going on but that’s another topic.

For you folks in crisis management remember you are not the client’s lawyer or doctor or teacher or rabbi or painfully honest friend – you are all of these.  Remember that you are probably encountering people or agencies or companies at one of the worse – if not worst – times in their existence.  That means they are probably not at their best – the client is stressed, panicked, fidgety, wondering when – or even if – all this bad stuff will stop happening, and experiencing that sinking dread of facing the reality that they themselves may be stupid or evil or both (which, if the damage is self-inflicted, is almost assuredly going to be true for at least one of those two things).

To counter this effectively, first be as understanding as possible.  Second, be absolutely honest – to a point.  For example, when it becomes clear that your client’s company is about to go bankrupt you do not have to mention to her that those shoes really don’t go with that dress.  Third, be decisive.  Remember that you are the expert in the situation and make sure the client (and their preening lawyers and self-impressed accountants, etc. who almost assuredly were part of the problem in the first place) understand that as well. 

And fourth – be perfectly willing to walk away.  No matter what the client is paying in extra fees (there is a reason firms bill out “crisis hours” at double and triple the standard rate) if they are not cooperating and if they are not being honest with you and themselves just leave before they drag you down, too. 

There are easier ways to make money, and someone is probably horribly mismanaging a government agency or running a Ponzi scheme or burying toxic waste next to an elementary school or ramming a ship into an iceberg right now, so there will always be another client.