AB1365 - CalAccount Program.

Amended IN Assembly April 28, 2025 CALIFORNIA LEGISLATURE— 2025–2026 REGULAR SESSION Assembly Bill No. 1365 Introduced by Assembly Member Garcia February 21, 2025 An act to amend Section 1947.3 of the Civil Code, to repeal and add Title 21.1 (commencing with Section 100100) of to the Government Code, to add Section 90.4 to the Labor Code, and to amend Section 12302.2 of the Welfare and Institutions Code, relating to financial services. LEGISLATIVE COUNSEL'S DIGEST AB 1365, as amended, Garcia. CalAccount Program. Existing law requires the Treasurer to convene the CalAccount Blue Ribbon Commission and requires the commission, on or before July 1, 2024, to conduct a market analysis to determine if it is feasible to implement a CalAccount Program, which, if implemented, would have certain characteristics, including offering Californians access to a voluntary, zero-fee, zero-penalty, federally insured transaction account known as a CalAccount, and related payment services at no cost to accountholders. This bill would repeal those provisions and would establish the CalAccount Program, which would provide every Californian with access to a voluntary, zero-fee, zero-penalty, federally insured transaction account and related payment services at no cost to accountholders. The bill would require the CalAccount Commission, which would continue in existence the former CalAccount Blue Ribbon Commission, to administer the program. The bill would require the commission to, among other things, enter into contracts with financial institutions to ensure access to ATM networkers and locations where accountholders can deposit funds. The bill would require the commission to solicit proposals for and select a financial services network administrator and establish their duties and functions, and establish a mechanism by which an accountholder may deposit funds into or withdraw funds from a CalAccount account. The bill would allow for participation in the program by providers of in-home supportive services, subject to specified requirements. The bill would establish the CalAccount Fund in the State Treasury, and would make moneys in the fund available upon appropriation by the Legislature. The bill would require all employers and hiring entities to maintain a payroll direct deposit arrangement that enables voluntary worker participation in the program, and would require all employers and hiring entities to take specified actions in that regard, including coordinating their payroll process with the CalAccount Program to facilitate payment by direct deposit. The bill would require the commission to submit an annual report by August 1 to the Governor and the Legislature, among other entities, that contains specified information relating to the CalAccount Program. The bill would require the commission to market the program to the residents of the state if funds are available. The bill would require the Labor Commissioner to investigate complaints of employers or hiring entities failing to allow workers to participate in the CalAccount Program, and would impose a civil penalty for a violation. The bill would require those civil penalties to be deposited into the CalAccount Fund. The bill would require the commissioner to reimburse the Labor Commissioner for the costs of enforcement. Existing law provides that if the state or a county makes or provides for a direct payment to a provider chosen by a recipient or to the recipient for the purchase of in-home supportive services, the department is required to perform or ensure the performance of all rights, duties, and obligations of the recipient related to those services as required for, among other things, unemployment compensation, workers’ compensation, and retirement savings accounts. This bill would also require the department under those circumstances to ensure the performance of all rights, duties, and obligations of the recipients related to those services required for payroll direct deposit arrangements offered pursuant to the CalAccount Program. Existing law regulates the hiring of real property and imposes various requirements on landlords relating to the leasing of residential real property. Existing law requires a landlord or their agent to allow a tenant to pay rent and a security deposit by at least one form of payment that is neither cash nor an electronic funds transfer. This bill would also require a landlord to allow a tenant to pay rent and a security deposit by an electronic funds transfer from a CalAccount. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. (a) According The Legislature finds and declares as follows: (1) According to the Federal Deposit Insurance Corporation, nearly one out of five California households is unbanked or underbanked. Millions of people are locked out of the banking system and unable to secure a bank account. Millions more also still have to pay hundreds of dollars annually in check cashing fees and money order fees for the simple right to use their own money. Underbanked households are defined as those that have a bank account, but have used alternative financial services for transactions, including check cashing and money orders, and for credit, including payday loans. (b) (2) Households without full access to affordable financial services are headed disproportionately by women; Black, Latina, and Asian and Pacific Islander households combined make up just over one-half of California’s households, but are nearly 75 percent of California’s unbanked or underbanked households. Nearly one in three Black California households is unbanked or underbanked, as are more than one in four Latina-Latino households. The share of Black California households without a bank account has jumped dramatically in the two years since the data was last collected. More than 10 percent of Black California households are unbanked. That compares to 6.4 percent as of the last survey in 2021. (c) (3) A significant portion of Californians, including individuals who are experiencing homelessness or housing instability, certain immigrant communities, and those who have been or are being subjected to domestic violence, sexual assault, human trafficking, or stalking, also have unique banking needs that have not been adequately met by traditional financial services providers. These Californians are often unbanked or underbanked, and face unique barriers to financial access. (d) (4) The households most likely to be unbanked or underbanked are also those that can least afford it. Households earning $30,000 per year or less comprise nearly three in four unbanked households in California, though representing less than 20 percent of all households. (e) (5) The banking situation has deteriorated for young Californians. The share of underbanked households headed by individuals 25 to 34 years of age rose to nearly 18 percent, up from just over 13 percent in 2021. (f) (6) Lacking access to traditional banking means not only that these Californians pay more for basic financial services, but that they are less able to save and to build credit. (g) (7) The CalAccount Blue Ribbon Commission, convened by the State Treasurer’s Office, recently published a market study that found that a no-fee and no-minimum balance account option is rare in California, with 95 percent of banks charging overdraft fees. (h) (8) As the Legislature responds to increasingly frequent and severe public health and climate-related disasters, there is a pressing need to ensure that adequate financial infrastructure is in place to reliably deliver financial assistance to every Californian, regardless of banking status. (i) (b) It is the intent of the Legislature to establish the CalAccount Program in the State Treasurer’s Office, which will build on successful state financial services programs to partner with a commercial bank that will offer all Californians the option for a fee-free, zero-penalty debit account and debit card account that will offer new opportunities for depositing earnings and income and will endeavor to meet the unique needs of Californians most often left out of the banking system. SEC. 2. Section 1947.3 of the Civil Code is amended to read: 1947.3. (a) (1) (A) Except as provided in paragraph (2), a landlord or a landlord’s agent shall allow a tenant to pay rent and deposit of security by at least one form of payment that is neither cash nor an electronic funds transfer and shall also allow a tenant to pay rent and deposit of security by an electronic funds transfer from a CalAccount, as defined in Section 100100 of the Government Code. (B) A landlord’s or landlord’s agent’s receipt of payment from a CalAccount pursuant to this section shall not be considered a waiver of any right the landlord or landlord’s agent may otherwise have to establish the base rent on, or to raise rent for, the rental unit. (2) A landlord or a landlord’s agent may demand or require cash as the exclusive form of payment of rent or deposit of security if the tenant has previously attempted to pay the landlord or landlord’s agent with a check drawn on insufficient funds or the tenant has instructed the drawee to stop payment on a check, draft, or order for the payment of money. The landlord may demand or require cash as the exclusive form of payment only for a period not exceeding three months following an attempt to pay with a check on insufficient funds or following a tenant’s instruction to stop payment. If the landlord chooses to demand or require cash payment under these circumstances, the landlord shall give the tenant a written notice stating that the payment instrument was dishonored and informing the tenant that the tenant shall pay in cash for a period determined by the landlord, not to exceed three months, and attach a copy of the dishonored instrument to the notice. The notice shall comply with Section 827 if demanding or requiring payment in cash constitutes a change in the terms of the lease. (3) Subject to the limitations below, a landlord or a landlord’s agent shall allow a tenant to pay rent through a third party. (A) A landlord or landlord’s agent is not required to accept the rent payment tendered by a third party unless the third party has provided to the landlord or landlord’s agent a signed acknowledgment stating that they are not currently a tenant of the premises for which the rent payment is being made and that acceptance of the rent payment does not create a new tenancy with the third party. (B) Failure by a third party to provide the signed acknowledgment to the landlord or landlord’s agent shall void the obligation of a landlord or landlord’s agent to accept a tenant’s rent tendered by a third party. (C) The landlord or landlord’s agent may, but is not required to, provide a form acknowledgment to be used by third parties, as provided for in subparagraph (A), provided however that a landlord shall accept as sufficient for compliance with subparagraph (A) an acknowledgment in substantially the following form: I, [insert name of third party], state as follows: I am not currently a tenant of the premises located at [insert address of premises]. I acknowledge that acceptance of the rent payment I am offering for the premises does not create a new tenancy. (signature of third party) _____ (date) (D) A landlord or landlord’s agent may require a signed acknowledgment for each rent payment made by the third party. A landlord or landlord’s agent and the third party may agree that one acknowledgment shall be sufficient for when the third party makes more than one rent payment during a period of time. (E) Nothing in this paragraph shall be construed to require a landlord or landlord’s agent to enter into a contract in connection with a federal, state, or local housing assistance program, including, but not limited to, the federal housing assistance voucher programs under Section 8 of the United States Housing Act of 1937 (42 U.S.C. Sec. 1437f). (4) Paragraphs (2) and (3) do not enlarge or diminish a landlord’s or landlord’s agent’s legal right to terminate a tenancy. Nothing in paragraph (3) is intended to extend the due date for any rent payment or require a landlord or landlord’s agent to accept tender of rent beyond the expiration of the period stated in paragraph (2) of Section 1161 of the Code of Civil Procedure. (b) A landlord or its agent shall not charge a tenant any fee for payment by check for rent or security deposit as described in this section. (c) For the purposes of this section, the issuance of a money order or a cashier’s check is direct evidence only that the instrument was issued. (d) For purposes of this section, “electronic funds transfer” means any transfer of funds, other than a transaction originated by check, draft, or similar paper instrument, that is initiated through an electronic terminal, telephonic instrument, computer, or magnetic tape so as to order, instruct, or authorize a financial institution to debit or credit an account. “Electronic funds transfer” includes, but is not limited to, point-of-sale transfers, direct deposits or withdrawals of funds, transfers initiated by telephone, transfers via an automated clearinghouse, transfers initiated electronically that deliver a paper instrument, and transfers authorized in advance to recur at substantially regular intervals. (e) Nothing in this section shall be construed to prohibit the tenant and landlord or agent to mutually agree that rent payments may be made in cash or by electronic funds transfer, so long as another form of payment is also authorized, subject to the requirements of subdivision (a). (f) A waiver of the provisions of this section is contrary to public policy, and is void and unenforceable. SEC. 3. Title 21.1 (commencing with Section 100100) of the Government Code is repealed. SEC. 4. Title 21.1 (commencing with Section 100100) is added to the Government Code, to read: TITLE 21.1. CalAccount Program 100100. As used in this title: (a) “Accountholder” means an individual who has a CalAccount account. (b) “CalAccount” means a federally insured transaction account held as part of the program. (c) “CalAccount Program” or “program” means the program established pursuant to this title through which an individual may open a no-fee, no-penalty transaction account with an associated debit card. (d) “Commission” means the CalAccount Commission established pursuant to Section 100102. (e) “Domestic violence” has the same meaning as defined in Section 6211 of the Family Code. (f) “Electronic fund transfer” has the same meaning as defined in Section 1693a of Title 15 of the United States Code. (g) “Employee” means an individual who is employed by an employer. “Employee” does not include an employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151) or an employee engaged in interstate commerce so a [Text truncated for display. Full text available on Congress.gov.]