California Department of Social Services - State Hearings
Division
Notes from the Training Bureau - September 29, 1996
| Item 96-09-02C Interest Awards -- Administrative Law Judges (ALJ) May Not Award Interest in State Hearings |
In American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) v. Unemployment Insurance Appeals Board (UIAB), 96 Daily Journal D.A.R. 10627, the California Supreme Court reversed the Court of Appeals, and held that Unemployment Insurance Appeals Board (UIAB) ALJs may not award interest in state administrative hearings. The court also specifically "disapproved" Knight v. McMahon (1994) 26 Cal. App. 4th 747 to the extent it held that ALJs have the authority to award interest. (Since Knight was not before the court, it could not overrule Knight.)
The majority noted there was no California statute (Unemployment Insurance Code) that authorized UIAB ALJs to award interest. The court further determined that no implied power allowed the UIAB to award interest at any time during the administrative review process.
The court added that only a court may award prejudgment interest pursuant to California Civil Code §3287(a) following a claimant’s successful mandamus action challenging the UIAB’s wrongful withholding of benefits.
The court stated:
In so holding, we abide by the settled principle that administrative law judges, like the agencies authorized to appoint them, may not act as superior court judges, and in excess of their statutory powers, to award interest in administrative eligibility and benefit matters.
The dissent argued that Civil Code §3287(a) implies an administrative agency may award interest and that it is inefficient to require an applicant to proceed to court, at considerable time and expense, to seek an interest award from a judge.
The court’s decision became final on September 29, 1996. CDSS Judges may not award interest in any decision adopted after that date.