BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1661| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 -- CONTINUED SB 1661 Page 2 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. SB 1661 Page 3 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 SB 1661 Page 4 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 SB 1661 Page 5 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. SB 1661 Page 6 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 SB 1661 Page 7 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 SB 1661 Page 8 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 SB 1661 Page 9 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 SB 1661 Page 10 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 **** END ****