BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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          |SENATE RULES COMMITTEE            |                  SB 1661|
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                                 THIRD READING


          Bill No:  SB 1661
          Author:   Kuehl (D), et al
          Amended:  5/22/02
          Vote:     21

           
           SENATE LABOR & INDUSTRIAL RELATIONS COMMITTEE :  5-1,  
            5/14/02
          AYES:  Alarcon, Figueroa, Kuehl, Polanco, Romero
          NOES:  McClintock

           SENATE APPROPRIATIONS COMMITTEE  :  6-4, 5/23/02
          AYES:  Alpert, Burton, Escutia, Karnette, Murray, Perata
          NOES:  Battin, Johnson, McPherson, Poochigian

           SENATE APPROPRIATIONS COMMITTEE  :  7-3, 6/3/02
          AYES:  Alpert, Bowen, Escutia, Karnette, Murray, Perata,  
            Speier
          NOES:  Johnson, McPherson, Poochigian


           SUBJECT  :    Disability compensation:  family members

           SOURCE  :     California Labor Federation


           DIGEST :    This bill creates, 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  :    The majority of the State's workers --  
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          approximately 13 million people -- are covered by the state  
          disability insurance (SDI) program, which is financed by a  
          mandatory payroll contribution by employees which is paid  
          into the SDI Fund.

          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.

          3.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, and  
            (2) leave to care for a parent, spouse, or domestic  
            partner who has a serious health condition.

          4.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.

          4.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, subject to a waiting period of seven  
            consecutive days during each temporary family disability  
            benefit period with respect to which waiting period no  
            benefit are payable.








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          5.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.

          6.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.

          7.Provides that 50 percent of the benefits must be provided  
            from the Disability Fund into which the employee's FTDI  
            premium is be deposited.  The Director of the State  
            Employment Development Department (EDD) must increase the  
            rate of worker contributions 0.05 percent to cover the  
            cost of family temporary disability insurance benefits.   
            The director must annually adjust the FTDI premium rate  
            if a change is necessary to support the cost incurred by  
            FTDI benefit payments.  The director is to maintain a  
            separate accounting of the cost of benefits paid pursuant  
            to this program.  Beginning in 2004, the director is to   
            provide an annual accounting of this cost as part of the  
            fund status report submitted to the Legislature each May  
            and October.

          8.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  







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          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.

          Employers who elect to not contribute into the Disability  
          Fund must annually pay a regulatory fee to the department  
          in an amount, as specified, that is necessary to fund the  
          department's administrative costs incurred in administering  
          and monitoring the compliance of those employers with his  
          program.  The regulatory fee may not exceed an amount equal  
          to 14 percent of the total FTDI premium paid by the  
          employer's employees into the fund.

           Disability Insurance Information  

           Disability Insurance  .  California is one of five states to  
          offer a non-occupational SDI.  The other states are Rhode  
          Island, New Jersey, New York and Hawaii. (see Attachment  
          A.)
          The majority of California employees, approximately 12  
          million workers, are covered by the SDI program.  Some  
          employees are exempt from SDI; for example, railroad  
          employees, some employees of non-profit agencies, employees  
          who claim religious exemptions, and most government  
          employees.  Some local government workers, including school  
          employees, may be entitled to SDI benefits as a function of  
          collective bargaining.  Self-employed individuals may  
          elect, under specified conditions, to be covered.
           
          EDD is authorized to pay 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  







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          Director of EDD 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 percent 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  
          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.

          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.







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           Voluntary Plans  .  An employer is permitted to offer  
          employees a voluntary disability plan (VP) in place of SDI  
          coverage.  A VP must provide all the benefits of SDI and at  
          least one benefit that is better than SDI.  VP's are  
          approved by the director and a majority of the employees  
          must consent to the plan.  Neither an employee nor his or  
          her employer is liable for worker contributions to the  
          Disability Fund while the worker is covered by a VP.   
          However, an employer must pay into the Disability Fund an  
          amount equal to 14 percent of the amount employees would  
          have otherwise paid into the fund had they not been covered  
          by a VP. 

          An employer may, but need not, assume all or part of the  
          cost of a VP and may deduct wages for the purpose of  
          providing benefits.  An employee's rate of contribution  
          cannot exceed the amount paid by an employee who is covered  
          by SDI. 
           
           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.

           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  







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          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.
           
           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.

           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  







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          using, or attempting to exercise the right to use, sick  
          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.

           FISCAL EFFECT  :    Appropriation:  Yes   Fiscal Com.:  Yes    
          Local:  No

                          Fiscal Impact (in thousands)

           Major Provisions           2002-03            2003-04           
             2004-05             Fund  

          Programming                                          7,500   
                                            Special*
          Addl. 1st time claims                               9,200    
                       9,200           Special*
          Monitoring                                             
          15,000               15,000          Special*
          Employer FTDI contributions             (55,000)            
          (110,000)        Special*
          Employee FTDI contributions           (109,000)            
          (220,000)        Special*
          FTDI benefits                                        53,500  
                       108,500         Special*

          *SDI Fund

           SUPPORT  :   (Verified  6/4/02)

          California Labor Federation, AFL-CIO (source)
          Alliance for Retired American, Region 9
          American Association of University Women, CA







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          American College of Obstetricians and Gynecologists,  
          District IX
          American Federation of State, County and Municipal  
            Employees (AFSCME), AFL-CIO
          Asian Law Caucus
          Association of California Caregiver Resource Centers
          Breast Cancer Fund
          California Advocates for Social Change
          California Alliance for Pride and Equality 
          California Catholic Conference
          California Child Care Resource & Referral Network
          California Children and Families Commission 
          California Coalition for Youth 
          California Commission on the Status of Women
          California Conference Board of the Amalgamated Transit  
          Union
          California Conference of Machinists
          California Faculty Association
          California Federation of Teachers
          California HIV Advocacy Coalition
          California Independent Public Employees Legislative Council
          California Medical Association
          California National Organization for Women
          California Professional Firefighters
          California School Employees Association
          California State Employees' Association
          California Women's Law Center
          Center for the Child Care Workforce
          Center on Policy Initiatives
          Childcare Health Program
          Congress of California Seniors
          East Bay Community Law Center
          Engineers and Scientist of California
          Equal Rights Advocates
          Family Caregiver Alliance
          Fresno-Madera-Tulare-Kings Central Labor Council
          Gray Panthers
          Hotel Employees, Restaurant Employees International Union
          Jericho
          Labor Project for Working Families
          Legal Aid Society, Employment Law Center
          Older Women's League
          Orfalen Family Foundation
          Planned Parenthood Affiliates of California







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          Teamsters
          United Farm Workers
          United Food & Commercial Workers Region 8 States Council
          UTLA
          Women's Employment Rights Clinic, Golden Gate School of Law

           OPPOSITION  :    (Verified  6/4/02)

          California Association of Health Facilities 
          California  Chamber of Commerce
          California Healthcare Association
          California Independent Grocers Association
          California Manufacturers and Technology Association 
          California Restaurant Association
          Campaign for California Families


          NC:cm  6/5/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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