BILL NUMBER: SB 1661 AMENDED BILL TEXT AMENDED IN SENATE APRIL 29, 2002 INTRODUCED BY Senator Kuehl (Coauthors: Senators Escutia, Karnette, and Romero) (Coauthors: Assembly Members Alquist, Aroner, Goldberg, Jackson, Strom-Martin, and Thomson) FEBRUARY 21, 2002 An act to amend Sections 984, 2601, 2613, and 2708 of, and to add Chapter 7 (commencing with Section 3300) to Part 2 of Division 1 of, the Unemployment Insurance Code, relating to disability compensation, and making an appropriation therefor. LEGISLATIVE COUNSEL'S DIGEST SB 1661, as amended, Kuehl. Disability compensation: family temporary disability insurance. Existing law provides for the payment of disability compensation for the wage loss sustained by an individual unemployed because of sickness or injury, and finances that compensation by means of employee contributions to the Disability Fund. This bill instead would provide disability compensation for any individual who is unable to work due to the employee's own sickness or injury, the sickness or injury of a family member, or the birth, adoption, or foster care placement of a new child. This bill would establish, within the state disability insurance program, a family temporary disability insurance program to provide up to 12 weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a new child. This bill would provide the additional benefits through additional employee contributions, and by requiring employers to provide benefits either directly, through private insurance, or by an election to contribute to the Disability Fund. The bill would also make related, conforming changes in provisions relating to disability compensation. By providing for the deposit of additional moneys in the Disability Fund, a continuously appropriated special fund, and for the expenditure of regulatory fee revenues for the administration of certain of its provisions, this bill would make an appropriation. Vote: majority. Appropriation: yes. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 984 of the Unemployment Insurance Code is amended to read: 984. (a) (1) Each worker shall pay worker contributions at the rate determined by the director pursuant to this section with respect to wages, as defined by Sections 926, 927, and 985. On or before October 31 of each calendar year, the director shall prepare a statement, which shall be a public record, declaring the rate of worker contributions for the calendar year and shall notify promptly all employers of employees covered for disability insurance of the rate. (2) (A) Except as provided in paragraph (3), the rate of worker contributions for calendar year 1987 and for each subsequent calendar year shall be 1.45 times the amount disbursed from the Disability Fund during the 12-month period ending September 30 and immediately preceding the calendar year for which the rate is to be effective, less the amount in the Disability Fund on that September 30, with the resulting figure divided by total wages paid pursuant to Sections 926, 927, and 985 during the same 12-month period, and then rounded to the nearest one-tenth of 1 percent. (B) The director shall increase the rate of worker contributions byone-half of 1.05 percent to cover the cost of family temporary disability insurance benefits provided in Chapter 7 (commencing with Section 3300) of Part 2. This additional contribution rate shall be known as the employee's Family Temporary Disability Insurance (FTDI) premium, and shall fund benefits required by Chapter 7 (commencing with Section 3300) of Part 2. The director shall maintain a separate accounting of the cost of benefits paid pursuant to Chapter 7 (commencing with Section 3300) of Part 2. Beginning in 2004, the director shall provide an annual accounting of this cost as part of the fund status report submitted to the Legislature each May and October pursuant to Section 995, and shall annually adjust the FTDI premium rate if a change is necessary to support the cost incurred by FTDI benefit payments. An employer electing to meet its obligation under Chapter 7 (commencing with Section 3300) of Part 2 to provide 50 percent of FTDI benefits by contributing directly into the Disability Fund shall, under that election, contribute an amount equal to the FTDI premium paid by each employee into the Disability Fund. (3) The rate of worker contributions shall not exceed 1.35 percent or be less than 0.1 percent. The rate of worker contributions shall not decrease from the rate in the previous year by more than two-tenths of 1 percent. (b) Worker contributions required under Sections 708 and 708.5 shall be at a rate determined by the director to reimburse the Disability Fund for unemployment compensation disability benefits paid and estimated to be paid to all employers and self-employed individuals covered by those sections. On or before November 30th of each calendar year, the director shall prepare a statement, which shall be a public record, declaring the rate of contributions for the succeeding calendar year for all employers and self-employed individuals covered under Sections 708 and 708.5 and shall notify promptly the employers and self-employed individuals of the rate. The rate shall be determined by dividing the estimated benefits and administrative costs paid in the prior year by the product of the annual remuneration deemed to have been received under Sections 708 and 708.5 and the estimated number of persons who were covered at any time in the prior year. The resulting rate shall be rounded to the next higher one-hundredth percentage point. The rate may also be reduced or increased by a factor estimated to maintain as nearly as practicable a cumulative zero balance in the funds contributed pursuant to Sections 708 and 708.5. Estimates made pursuant to this subdivision may be made on the basis of statistical sampling, or another method determined by the director. (c) The director's action in determining a rate under this section shall not constitute an authorized regulation. (d) Notwithstanding subdivision (a), the director may, at his or her discretion, increase or decrease, by not to exceed 0.1 percent, the rate of worker contributions determined pursuant to subdivision (a), up to a maximum worker contribution rate of 1.35 percent, if he or she determines the adjustment is necessary to reimburse the Disability Fund for disability benefits paid or estimated to be paid to individuals covered by this section or to prevent the accumulation of funds in excess of those needed to maintain an adequate fund balance. SEC. 2. Section 2601 of the Unemployment Insurance Code is amended to read: 2601. The purpose of this part is to compensate in part for the wage loss sustained by any individual who is unable to work due to the employee's own sickness or injury, the sickness or injury of a family member, or the birth, adoption, or foster care placement of a new child, and to reduce to a minimum the suffering caused by unemployment resulting therefrom. This part shall be construed liberally in aid of its declared purpose to mitigate the evils and burdens which fall on the unemployed and disabled worker and his or her family. SEC. 3. Section 2613 of the Unemployment Insurance Code is amended to read: 2613. The Director of Employment Development shall develop and maintain a program of education concerning disability insurance rights and benefits. The director shall provide to each employer of employees subject to this part a notice informing workers of their disability insurance rights and benefits due to the employee's own sickness, injury, or pregnancy, or the employee's need to provide care for any sick or injured family member or new child who is unable to care for himself or herself. The notice shall be given by every employer to each new employee hired on or after January 1, 2003, and to each employee leaving work due to pregnancy or nonoccupational sickness or injury on or after January 1, 2003. SEC. 4. Section 2708 of the Unemployment Insurance Code is amended to read: 2708. (a) In accordance with the director's authorized regulations, and except as provided in Sections 2708.1 and 2709, a claimant shall establish medical eligibility for each uninterrupted period of disability by filing a first claim for disability benefits supported by the certificate of a treating physician or practitioner that establishes the sickness, injury, or pregnancy of the employee, or the condition of the family member that warrants the care of the employee. For subsequent periods of uninterrupted disability after the period covered by the initial certificate or any preceding continued claim, a claimant shall file a continued claim for those benefits supported by the certificate of a treating physician or practitioner. A certificate filed to establish medical eligibility for the employee's own sickness, injury, or pregnancy shall contain a diagnosis and diagnostic code prescribed in the International Classification of Diseases, or, where no diagnosis has yet been obtained, a detailed statement of symptoms. A certificate filed to establish medical eligibility of the employee's own sickness, injury, or pregnancy shall also contain a statement of medical facts including secondary diagnoses when applicable, within the physician's or practitioner's knowledge, based on a physical examination and a documented medical history of the claimant by the physician or practitioner, indicating his or her conclusion as to the claimant's disability, and a statement of his or her opinion as to the expected duration of the disability. (b) A certificate filed to establish medical eligibility of the serious health condition of the family member that warrants the care of the employee need not identify the serious health condition involved, but shall contain: (1) The date, if known, on which the condition commenced. (2) The probable duration of the condition. (3) An estimate of the amount of time that the physician or practitioner believes the employee is needed to care for the child, parent, spouse, or domestic partner. (4) A statement that the serious health condition warrants the participation of the employee to provide care for his or her child, parent, spouse, or domestic partner. "Warrants the participation of the employee" includes, but is not limited to, providing psychological comfort, and arranging "third party" care for the child, parent, spouse, or domestic partner, as well as directly providing, or participating in, the medical care. (c) The department shall develop a certification form for an employee taking leave for reason of the birth of a child of the employee or the employee's domestic partner, or the placement of a child who is unable to care for himself or herself with the employee in connection with the adoption or foster care of the child by the employee or domestic partner. (d) The first and any continuing claim of an individual who obtains care and treatment outside this state, shall be supported by a certificate of a treating physician or practitioner duly licensed or certified by the state or foreign country in which the claimant is receiving the care and treatment. If a physician or practitioner licensed by and practicing in a foreign country is under investigation by the department for filing false claims and the department does not have legal remedies to conduct a criminal investigation or prosecution in that country, the department may suspend the processing of all further certifications until the physician or practitioner fully cooperates, and continues to cooperate with the investigation. A physician or practitioner licensed by and practicing in a foreign country who has been convicted of filing false claims with the department may not file a certificate in support of a claim for disability benefits for a period of five years. (e) For purposes of this part, the term "physician" has the same meaning as it does in Section 3209.3 of the Labor Code. For purposes of this part, "practitioner" means a person duly licensed or certified in California acting within the scope of his or her license or certification who is a dentist, podiatrist, or as to normal pregnancy or childbirth, a midwife, nurse midwife, or nurse practitioner. (f) For a claimant who is hospitalized in or under the authority of a county hospital in this state, a certificate of initial and continuing medical disability, if any, shall satisfy the requirements of this section if the disability is shown by the claimant's hospital chart, and the certificate is signed by the hospital's registrar. For a claimant hospitalized in or under the care of a medical facility of the United States government, a certificate of initial and continuing medical disability, if any, shall satisfy the requirements of this section if the disability is shown by the claimant's hospital chart, and the certificate is signed by a medical officer of the facility duly authorized to do so. (g) Nothing in this section shall be construed to preclude the department from requesting additional medical evidence to supplement the first or any continued claim if the additional evidence can be procured without additional cost to the claimant. The department may require that the additional evidence include identification of diagnoses, symptoms, or a statement as to the facts of the claimant's disability by the physician or practitioner treating the claimant, by the registrar, authorized medical officer, or other duly authorized official of the hospital or health facility treating the claimant, or by an examining physician or other representative of the department. SEC. 5. Chapter 7 (commencing with Section 3300) is added to Part 2 of Division 1 of the Unemployment Insurance Code, to read: CHAPTER 7. PAID FAMILY CARE LEAVE 3300. The Legislature finds and declares all of the following: (a) It is in the public benefit to provide family temporary disability insurance benefits to workers to care for their family members. The need for family temporary disability insurance benefits has intensified as both parent's participation in the workforce has increased, and the number of single parents in the workforce has grown. The need for partial wage replacement for workers taking family care leave will be exacerbated as the population of those needing care, both children and parents of workers, increases in relation to the number of working age adults. (b) Developing systems that help families adapt to the competing interests of work and home not only benefits workers, but also benefits employers by increasing worker productivity and reducing employee turnover. (c) The federal Family and Medical Leave Act (FMLA) and California' s Family Rights Act (CFRA) entitle eligible employees working for covered employers to take unpaid, job-protected leave for up to 12 workweeks in a 12-month period. Under the FMLA and the CFRA, unpaid leave may be taken for the birth, adoption, or foster placement of a new child; to care for a seriously ill child, parent, or spouse; or for the employee's own serious health condition. (d) State disability insurance benefits currently provide wage replacement for workers who need time off due to their own non-work-related injuries, illnesses, or conditions, including pregnancy, that prevent them from working, but do not cover leave to care for a sick or injured child, spouse, parent, domestic partner, or leave to bond with a new child. (e) The majority of workers in this state are unable to take family care leave because they are unable to afford leave without pay. When workers do not receive some form of wage replacement during family care leave, families suffer from the worker's loss of income, increasing the demand on the state unemployment insurance system and dependence on the state's welfare system. (f) It is the intent of the Legislature to create a family temporary disability insurance program to help reconcile the demands of work and family. In recognition of the shared benefit of this program, the family temporary disability insurance program shall be implemented through employee contributions and the provision of benefits by employers, and shall be administered in accordance with the policies of the state disability insurance program created pursuant to this part. 3301. The purpose of this chapter is to establish, within the state disability insurance program, a family temporary disability insurance program to provide up to 12 weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, domestic partner, or to bond with a new child. 3302. For purposes of this section: (a) "Child" means a biological, adopted, or foster son or daughter, a stepson or stepdaughter, a legal ward, a son or daughter of a domestic partner, or a son or daughter of an employee who stands in loco parentis to that child. (b) "Family care leave" means any of the following: (1) Leave for reason of the birth of a child of the employee or the employee's domestic partner, the placement of a child with an employee in connection with the adoption or foster care of the child by the employee or domestic partner, or the serious health condition of a child of the employee, spouse or domestic partner. (2) Leave to care for a parent, spouse, or domestic partner who has a serious health condition. (c) "Parent" means a biological, foster, or adoptive parent, a stepparent, a legal guardian, or other person who stood in loco parentis to the employee or domestic partner when the employee or domestic partner was a child. (d) "Domestic partner" has the same meaning as defined in Section 297 of the Family Code. (e) "Family member" means child, parent, spouse, or domestic partner as defined in this section. (f) "Serious health condition" means an illness, injury, impairment, or physical or mental condition that involves inpatient care in a hospital, hospice, or residential health care facility, or continuing treatment or continuing supervision by a health care provider, as defined in Section 12945.2 of the Government Code. 3303. An individual shall be deemed eligible for family temporary disability insurance benefits on any day in which he or she is unable to perform his or her regular or customary work because he or she is caring for a new child or a seriously ill child, parent, spouse, or domestic partner. 3304. Eligible workers shall receive benefits in accordance with provisions established under this division. Fifty percent of the benefits shall be provided from the Disability Fund into which the employee'sfamily temporary disability insuranceFamily Temporary Disability Insurance (FTDI) premium shall be deposited. The balance of those benefits shall be provided by the employer to the employee, either directly or by means of insurance procured by the employer, pursuant to regulations to be promulgated by the department, or from the Disability Fund pursuant to the employer's election to contribute an amount equal to the employee's FTDI premium into the Disability Fund. 3305. (a) Employers, other than those electing to contribute into the Disability Fund an amount equal to the employee'sFTDIFamily Temporary Disability Insurance (FTDI) premium required by Section 984, shall, as applicable, provide for the assumption by an admitted disability insurer of the liability of the employer to pay benefits under this chapter, file with the director a bond of an admitted surety insurer conditioned on the payment by the employer of its obligations under this section, deposit with the director securities approved by the director to secure the payment of obligations, or deposit with the director an irrevocable letter of credit. (b) Each employer subject to subdivision (a) shall, for each calendar year, pay a regulatory fee to the department in an amount, as limited by this subdivision, that is necessary to fund the department's administrative costs incurred in administering and monitoring the compliance of those employers with that subdivision. In no event may the amount of the regulatory fee charged pursuant to this subdivision exceed 14 percent of the product of the rate of the FTDI premium, as determined in Section 984, and the amount of the taxable wages paid by the employer during the calendar year to employees eligible under this chapter for temporary disability insurance benefits. Fee payments made pursuant to this subdivision shall be deposited in the FTDI Private Option Administration Account, which is hereby created in the Disability Fund. Notwithstanding Section 13340 of the Government Code, moneys in that account are hereby continuously appropriated, without regard to fiscal year, for the exclusive purpose of funding the department's administrative costs incurred in administering and monitoring the compliance of employers with subdivision (a). No fee paid pursuant to this subdivision constitutes payment of any part of an employer's FTDI benefit obligation.