BILL ANALYSIS
Senate Committee on Labor and Industrial Relations
Richard Alarcon, Chair
Date of Hearing: April 10, 2002 2001-2002 Regular
Session
Consultant: Stephen Holloway Fiscal: Yes
Urgency:No
Bill No: SB 1661
Author: Kuehl
Version: As Proposed to be Amended
Subject: Disability Insurance: Family Members
Purpose:
To permit 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, as
defined, or the birth, adoption, or foster care placement
of a new child.
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.
Analysis:
Disability Insurance. California is one of five states
to offer a non-occupational disability insurance program.
The other states are Rhode Island, New Jersey, New York and
Hawaii.
The Employment Development Department (EDD) is authorized
to pay state disability insurance (SDI) benefits as partial
wage replacement to employees who are disabled. Disability
is defined as any mental or physical illness or injury
which prevents an employee from performing his or her
regular or customary work. This includes elective surgery
and illness or injury resulting from pregnancy, childbirth
or related conditions. A claimant establishes 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.
SDI is financed through a mandatory payroll contribution by
employees which is paid into the Disability Fund. The
Director of Employment Development determines the
contribution rate, based upon a statutory formula. On or
before October 31 of each calendar year the director is
required to prepare a statement, which is a public record,
declaring the rate (rounded to the nearest one-tenth of one
percent) of worker contributions for the calendar year and
notify promptly all employers of employees covered for
disability insurance of the rate.
The current contribution rate is 0.9 percent of wages not
to exceed approximately $46,300 per year (i.e. the worker's
contribution is about $ 417) In 2003, the wage base will
increase to about $56,900. The maximum contribution rate
cannot exceed 1.3 percent.
The weekly benefits replace 55% of base period earnings,
from $50 per week to a maximum of $490. Future SDI benefit
increases are tied to the level of workers' compensation
temporary disability benefits for work-related injuries.
Workers' compensation temporary disability benefits are
scheduled to increase from $490 to $602 for injuries
occurring on and after January 1, 2003, to $728 for
injuries occurring on or after January 1, 2004, and to $840
for injuries occurring on or after January 1, 2005.
Commencing January 1, 2006, and each January 1 thereafter,
the maximum and minimum benefit is increased by an amount
equal to the percentage increase in the "state average
weekly wage" as compared to the prior year.
Every claim is assessed a seven-day non-payable waiting
period. Benefits may be collected for up to 52 weeks.
An employer is not required to hold a job simply because an
employee is receiving SDI benefits. An employee does have
Hearing Date: April 10, 2002 SB
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Senate Committee on Labor and Industrial Relations
the right to return to his or her job if the employee is
covered by mandatory leave laws such as pregnancy leave or
family care and medical leave (see #3 and #4, infra).
For 2001, total first claims paid for disability insurance
equaled 656,400. Of these claims, 145,700 were for
pregnancy-related first claims.
The average duration for a claim in 2001 was 13.87 weeks.
The average weekly benefit amount was $292.60 in 2001.
2) EDD Pregnancy Disability Policy. Historically, EDD
has allowed up to four weeks pre-partum and six weeks
post-partum disability leave without requiring the worker
to obtain additional information from her treating
physician beyond stating that the disability is for a
normal pregnancy. EDD has based this policy on established
medical guidelines for medical disabilities and accepted
practice in the medical community to allow four weeks
pre-partum and six weeks post-partum leave.
3) Pregnancy Disability Leave (PDL). The Fair
employment and Housing Act makes it an unlawful employment
practice for an employer to refuse to allow a female
employee affected by pregnancy, childbirth, or related
medical condition to take a leave on account of pregnancy
for a reasonable period of time, not to exceed four months.
"Reasonable period of time" means the amount of time the
female employee is disabled on account of
pregnancy, childbirth, or related medical condition.
An employer is not required to pay an employee on PDL
unless the employer pays for other types of disability
leave. If an employer pays for other disability leaves,
the employer must pay an employee on PDL up to six weeks
paid leave. PDL applies to any person regularly employing
five or more persons, or any person acting as an agent of
an employer, directly or indirectly, the state or any
political or civil subdivision or the state, and cities,
with specified exceptions.
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4) Family Care and Medical Leave. The California Family
Rights Act (CFRA) makes it an unlawful employment practice
for any employer to refuse to grant a request by any
employee with more than one year of service with the
employer and who has worked at least 1,250 hours during the
previous 12-month period, to take family care and medical
leave for up to 12 workweeks: 1) in connection with the
birth or adoption or serious health condition of the
employee's child; 2) to care for a parent or spouse who has
a serious health condition, or; 3) because of the
employee's own serious health condition. This provision
applies to employer who employs 50 or more employees within
75 miles of the employee's worksite, the state and any
political or civil subdivision of the state and cities.
Under the CFRA, an employee's pregnancy is not considered a
serious health condition that would allow her to take CFRA
leave. However, the employee can take CFRA leave for
reason of the birth of a child of the employee, i.e., leave
for "baby bonding." CFRA leave is unpaid leave.
5) Sick Leave. Existing law provides that any employer who
provides sick leave for employees must permit an employee
to use in any calendar year the employee's accrued and
available sick leave entitlement, in an amount not less
than the sick leave that would be accrued during six months
at the employee's then current rate of entitlement, to
attend to an illness of a child, parent, spouse, or
domestic partner of the employee.
All conditions and restrictions placed by the employer upon
the use by an employee of sick leave also apply to the use
by an employee of sick leave to attend to an illness of his
or her child, parent, spouse, or domestic partner.
No employer can deny an employee the right to use sick
leave or discharge, threaten to discharge, demote, suspend,
or in any manner discriminate against an employee for
using, or attempting to exercise the right to use, sick
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leave to attend to an illness of a child, parent, spouse,
or domestic partner of the employee.
Thus, under existing law, an employer may have an "absence
control policy" which allows the employer to discipline an
employee for excessive absenteeism. But, an employee cannot
be discriminated against for taking time off to care for a
child, parent spouse, or domestic partner. However, since
"all conditions and restrictions placed by the employer
upon the use by an employee of sick leave also apply to the
use by an employee of sick leave to attend to an illness of
his or her child, parent, spouse, or domestic partner" an
employer may use these latter absences as part of an
absence control policy.
This Bill:
1) Expands disability insurance rights and benefits due to
an employee's need to provide care for any sick or injured
family member, as defined, or the birth, adoption, or
foster care placement of a new child.
2) Creates 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.
Defines "Family care leave" to mean 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
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health condition.
Defines "Serious health condition" to mean 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.
Provides that 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.
Provides that the 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 must
contain specified information, including: 1) The probable
duration of the condition; 2) 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; and, 3) 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.
States that "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.
Provides that fifty percent of the benefits must be
provided from the Disability Fund into which the employee's
family temporary disability insurance (FTDI) premium is be
deposited. The director must increase the rate of worker
contributions 0.05 percent to cover the cost of family
temporary disability insurance benefits. The director must
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Senate Committee on Labor and Industrial Relations
annually adjust the FTDI premium rate if a change is
necessary to support the cost incurred by FTDI benefit
payments.
Provides that the balance of the benefits are to be
provided by the employer to the employee, either directly
or by means of insurance procured by the employer.
An employer may elect to contribute an amount equal to the
employee's FTDI premium into the Disability Fund.
Employers, other than those electing to contribute into the
Disability Fund must, as applicable, provide for the
assumption by an admitted disability insurer of the
liability of the employer, file with the director a bond of
an admitted surety insurer conditioned on the payment by
the employer of its obligations, 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.
Comments:
Proponents :
This measure finds and declare that 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 parents 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.
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.
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Senate Committee on Labor and Industrial Relations
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 work weeks 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.
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.
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.
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.
The California Labor Federation, the sponsor of this
bill, states that while federal and state laws guarantee
unpaid family and medical leave for childbirth or family
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Senate Committee on Labor and Industrial Relations
illness, many families simply cannot afford to take time
off. This is a family values issue. This legislation
will go a long way in supporting working families in
their efforts to cope with work and family.
3. Opponents :
The California Manufacturers and Technology Association
(CMTA) is opposed to SB 1661.
CMTA states that SB 1661 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. CMTA is
not opposed to this provision.
The bill also proposes to pay for 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. CMTA is opposed to
the mandate on employers to provide these additional
benefits in any form except on a voluntary basis. Our
past experiences with proposals similar to SB 1661 have
all indicated that it is an expensive program that may be
greatly expanded by aggressive utilization.
The state disability insurance program is an employee
paid program through payroll deductions. If employees
are interested in adding dependent coverage, I don't
believe CMTA would oppose it even though it would add
more administrative costs and disruptions of work due to
more employee absences. However, along with making the
decision to add dependent coverage, employees should
expect to have to pay more for the coverage.
While CMTA takes no position on the proposal to expand
the state disability insurance program to cover
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Senate Committee on Labor and Industrial Relations
dependents at this time, we may have to change our
position after our members have fully evaluated it. CMTA
is opposed to the mandate of employer contributions to
the proposal and request this provision be removed from
the bill.
3. Prior Legislation :
AB 1844 (Washington) 2001, relating to pregnancy leave.
Died, Senate Appropriations Committee
Support:
California Labor Federation, AFL-CIO (Sponsor)
Alliance for Retired American, Region 9
American College of Obstetricians and Gynecologists,
District IX
American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO
California Advocates for Social Change
California Alliance for Pride and Equality (CAPE)
California Catholic Conference
California Child Care Resource & Referral Network
California Coalition for Youth (CCYFC)
California Commission on the Status of Women
California Conference Board of the Amalgamated Transit
Union
California Conference of Machinists
California Faculty Association
California Independent Public Employees Legislative Council
California National Organization for Women
California State Employees' Association
California Women's Law Center
Center for the Child Care Workforce
Childcare Health Program
Congress of California Seniors
East Bay Community Law Center
Engineers and Scientist of California
Equal Rights Advocates
Hearing Date: April 10, 2002 SB
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Senate Committee on Labor and Industrial Relations
Hotel Employees, Restaurant Employees International Union
Legal Aid Society, Employment Law Center
Orfalen Family Foundation
Teamsters
United Food & Commercial Workers Region 8 States Council
UTLA
Women's Employment Rights Clinic, Golden Gate School of Law
Opposition:
California Chamber of Commerce
California Healthcare Association
California Manufacturers and Technology Association (CMTA)
California Restaurant Association
* * *
Hearing Date: April 10, 2002 SB
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Consultant: Steven Holloway
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Senate Committee on Labor and Industrial Relations