BILL ANALYSIS                                                                                                                                                                                                    



                                                                  SB 1661
                                                                  Page  1

          Date of Hearing: June 26, 2002

                           ASSEMBLY COMMITTEE ON INSURANCE
                              Thomas M. Calderon, Chair
                     SB 1661 (Kuehl) - As Amended:  May 22, 2002
           
          SUBJECT  :   Disability compensation: family members

           SUMMARY  :   Permits 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;  
          and, establishes, 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.  Specifically,  
           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: (a)  
            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; or, (b) 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.









                                                                  SB 1661
                                                                  Page  2

          5)Provides that an individual shall be deemed eligible for  
            "family temporary disability insurance benefits" on any day  
            that he or she is unable to perform his or her regular or  
            customary work because he or she is caring for a new or  
            seriously ill child, parent, spouse, or domestic partner. This  
            eligibility is subject to a waiting period of seven  
            consecutive days during each temporary family disability  
            benefit period with respect to which waiting period no  
            benefits are payable.

          6)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. 

          7)Requires the certificate to establish medical eligibility to  
            contain: (a) the probable duration of the condition; (b) 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, (c) 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.

          8)States that the term "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.

          9)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 deposited.  
            The Director (director) of the Employment Development  
            Department (EDD) must increase the rate of worker  
            contributions 0.05 percent to cover the cost of FTDI benefits.  
             The director must, on or before October 31 of each calendar  
            year, 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.









                                                                  SB 1661
                                                                  Page  3

          10)Provides that the balance of the benefits be provided by the  
            employer to the employee, either directly or by means of  
            insurance procured by the employer. 

          11)Authorizes an employer to elect to contribute an amount equal  
            to the employee's FTDI premium into the Disability Fund. 

          12)Requires employers that do not elect to contribute an amount  
            equal to an employee's FTDI premium into the Disability Fund  
            to secure payment of their obligations by providing the  
            director with the equivalent contribution in the form of: (a)  
            a bond, issued by an admitted surety insurer; (b) a deposit of  
            securities approved by the director; or, (c) an irrevocable  
            letter of credit.

          13)Stipulates that 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 this 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.

          14)Provides that, in no case, shall the total amount of benefits  
            payable be more than the total wages paid to an employee  
            during his or her disability base period.

          EXISTING LAW  :

          1)Provides for the offering of a non-occupational disability  
            insurance program. 

          2)Establishes the State Disability Insurance (SDI) program  
            covering approximately12 million workers in California. Some  
            employees are exempt from SDI (i.e., 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. 

          3)Authorizes EDD to pay SDI benefits as partial wage replacement  
            to employees who are disabled.  








                                                                  SB 1661
                                                                  Page  4


          4)Defines "disability" as any mental or physical illness or  
            injury that 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.) 

          5)Permits an employer to offer employees a voluntary disability  
            plan (VP) in place of SDI coverage. 

          6)Mandates a VP to provide all the benefits of SDI and at least  
            one benefit superior than SDI. Requires director to approve a  
            VP.  Also requires a majority of the employees to 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 in 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 the  
            employee not been in a VP. 

          7)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. (The Fair  
            Employment and Housing Act (FEHA).)

          8)Establishes that it is an unlawful employment practice for any  
            employer to refuse to grant a request by any employee with  
            more than one year of service 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: (a) in  
            connection with the birth or adoption or serious health  
            condition of the employee's child; (b) to care for a parent or  
            spouse who has a serious health condition, or; (c) because of  
            the employee's own serious health condition. This provision  
            applies to an employer who employs 50 or more employees within  
            75 miles of the employee's work-site, the state, and any  
            political or civil subdivision of the state, and cities. (The  
            California Family Rights Act (CFRA).)

          9)Provides that any employer authorizing sick leave for an  
            employee must permit the employee to use, in any calendar  








                                                                  SB 1661
                                                                  Page  5

            year, the employee's accrued and available sick leave  
            entitlement. This sick leave shall be 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.

           FISCAL EFFECT  : Unknown.

           COMMENTS  : It is the intent of the author to create the Family  
          Temporary Disability Insurance Program to help reconcile the  
          demands of work and family.  In recognition of the shared  
          benefit, the program will be implemented through employee  
          contributions and the provision of benefits by employers, and  
          shall be administered in accordance with the policies of the SDI  
          program.

          The United States is one of the few developed countries in the  
          world without a national paid parental leave program. One  
          hundred and thirty countries have leave policies. Just three of  
          those countries - Ethiopia, Australia and the United States -  
          provide only unpaid leave.

          SDI is financed through a mandatory employee payroll  
          contribution that is paid into the Disability Trust Fund. The  
          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 public statement  
          declaring the rate (rounded to the nearest one-tenth of one  
          percent) of worker contributions for the calendar year and  
          promptly notify all employers of covered employees. 

          A claimant employee 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. 

          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  








                                                                  SB 1661
                                                                  Page  6

          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.

           Voluntary Plan
           
          An employer may 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   

          EDD allows 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.








                                                                  SB 1661
                                                                  Page  7


           Pregnancy Disability Leave (PDL)  

          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 leave, the employer must pay  
          an employee on PDL up to six weeks paid leave.  PDL applies to  
          any person that regularly employs 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 of  
          the state, and cities, with specified exceptions.
                     
           Family Care and Medical Leave   

          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.  CFRA leave is unpaid  
          leave.

           Sick Leave 
           
          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. In  
          addition, no employer can 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 leave to attend to an illness of a child, parent, spouse,  
          or domestic partner.
                     
          However, although an employee cannot be discriminated against  
          for taking time off to care for a child, parent spouse, or  
          domestic partner, an employer may have an "absence control  
          policy" that allows the employer to discipline an employee for  
          excessive absenteeism. Therefore, all conditions and  
          restrictions placed by the employer upon the use 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. 









                                                                  SB 1661
                                                                  Page  8

           Coverage
           
          The SDI program and this bill do not cover government employees,  
          with limited exceptions.  

          Local public employers, including public school employers, may  
          elect SDI coverage for employees of a specified bargaining unit,  
          provided the election is the result of a negotiated agreement.

          Employees of the State of California, California State  
          University and the California Legislature are not eligible for  
          the SDI program and, instead, are provided non-occupational  
          disability payments through the Non-Industrial Disability  
          Insurance (NDI) program that is funded through the General Fund.
                     
          The NDI program was created in 1976 and the formula for  
          establishing weekly benefits was tied to the average state  
          employee's salary at the time.  Since 1976, NDI weekly benefits  
          have been increased once, by $10 per week.  The weekly maximum  
          benefit under NDI is $135. Unlike SDI, however, NDI benefits are  
          taxed as income. Further, while SDI benefits continue for 52  
          weeks, NDI benefits are available for only 26 weeks.

          PDL applies to employers with five employees or more. CFRA  
          applies to employers with 50 or more employees within a 75mile  
          radius. These thresholds were established to balance the needs  
          of the employee against undue hardship to the employer caused by  
          the employee's absence.

          SDI covers private sector employees regardless of the size of  
          the establishment within which the employee works.  

           Benefits Period  

          Existing law and the amendments to existing law by this bill  
          apply to benefits payable up to 52 weeks.  The new program  
          created by this bill relating to seriously ill family members  
          limits benefit payment to 12 weeks. 

           Job Security  

          An employer is not required to hold a job for an employee who is  
          receiving SDI benefits.  There are approximately 5,368,000  
          private sector employees who work for enterprises employing less  
          than 50 workers, i.e. not covered by CFRA, and, therefore, do  








                                                                  SB 1661
                                                                  Page  9

          not have job protection for taking sick leave.  

           Financing  

          The new program created by this bill provides that 50 percent 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.  Those  
          employers who can pay the benefit directly or obtain insurance  
          will do so, presumably, because the cost would be less that  
          contributing into the Disability Fund.  In essence, such  
          employers would not be paying their "fair share."  Employers  
          must furnish benefits in excess of SDI.

          SUPPORT ARGUMENTS:  

          SB 1661 helps families to help themselves by expanding the State  
          Disability Insurance Program to provide up to 12 weeks of paid  
          leave to care for a seriously ill family member or new child.  
          This Family Temporary Disability Insurance Program will be fully  
          funded by equal contributions from employees and employers.

          EDD studied the fiscal impact of extending disability benefits  
          to employees granted family care and medical leave. In EDD's  
          June 2000 report to the Legislature, they estimate that  
          providing this expanded benefit would cost a maximum of $46/year  
          per employee, or less than $1 a week. 

          The need for family temporary disability insurance benefits has  
          intensified. This is particularly evident 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.

          FMLA and CFRA entitle eligible employees working for covered  
          employers to take unpaid, job-protected leave for up to 12-work  








                                                                  SB 1661
                                                                  Page  10

          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.

          SDI 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. SDI does 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.

          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 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.   

          The California Medical Association (CMA) states that the program  
          proposed in this bill could offset costs of hospitalization or  
          skilled nursing services for persons that could be cared for at  
          home in a hospitable and less costly setting.  Perhaps, even  
          more importantly, it would promote caring for family members and  
          loved ones by family members and loved ones.

          The California National Organization for Women argues that most  
          people cannot afford to take time off work without pay and are  
          therefore unable to help family members who are in urgent need  
          of care.  Employees who have family responsibilities should not  
          be put in the position of having to choose between a paycheck  
          and a loved one.

           Growing Elder Care Needs
           
          In 1997, one in four Americans had an elderly relative to care  
                                                                  for, and many reduced their work hours or took at least a brief  








                                                                  SB 1661
                                                                  Page  11

          leave to care for that person. In the coming years, the need for  
          this type of family leave will only become more urgent. Nearly  
          two-thirds of American men and women under the age of 60 believe  
          that they will have to care for an older relative in the next  
          decade. 

           Risk to Newborns
            
           With only unpaid leave available, parents of new babies are  
          forced to rush back to work, often leaving their babies in  
          less-than-optimal care. When babies are six or even eight weeks  
          old, it is extremely difficult to find care for them in a  
          licensed center. Most states prohibit centers from taking babies  
          under six weeks old, and for good reason. A young infant's  
          immune system is not yet mature, making babies highly  
          susceptible to infection.

          OPPOSITION ARGUMENTS:

          The California Manufacturers and Technology Association (CMTA)  
          is not opposed to establishing, 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.  

          However, 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.  









                                                                  SB 1661
                                                                  Page  12

          The California Chamber of Commerce opposes this bill because it  
          mandates the establishment of a new paid leave benefit program  
          paid for by new taxes levied on all employers and their workers.  
          The California Chamber strongly opposes SB 1661's establishment  
          of two new taxes to pay for the proposed paid leave benefit  
          program; a proposed increase in the current state disability  
          insurance tax formula; plus the proposed new 14 percent  
          "regulatory fee" to be levied on voluntary employer SDI plans. 

          The Chamber avers that the SDI Trust Fund is nearly bankrupt;  
          and, according to EDD, the SDI Trust Fund reserve adequacy level  
          has dropped

          The Chamber notes that legislation enacted in 1999 permanently  
          linked the level of SDI benefits to workers' compensation  
          benefits.  At the time, EDD advised that the linkage would  
          reduce SDI Trust Fund reserves from a high of 91 percent in 1996  
          to only 54 percent by the end of 2001 and that annual average  
          worker SDI taxes would increase from $191 to $278 (a 53 percent  
          increase).

          In 2000 the administration imposed a two-tier SDI tax increase  
          on all workers to avoid SDI Trust Fund bankruptcy.  The Chamber  
          believes SB 1661 places additional strain on an already stressed  
          program.

          The Chamber argues that earlier EDD cost projections have proved  
          inadequate and far too optimistic. According to the Chamber, new  
          EDD information shows that as of January 1, 2002, the SDI Trust  
          Fund reserves plummeted to only 15.4 (a drop of nearly 70  
          percent). In addition, over the same period, California  
          worker-paid SDI taxes have more than tripled.  Because the  
          legislature recently increased the workers' compensation  
          benefits, SDI benefits must increase to match the increased  
          workers' compensation benefit. Worker taxes will need to  
          increase to meet the demands of the higher benefits.  Proponents  
          of SB 1661 now want to increase the percentage SDI taxes paid by  
          workers; plus impose additional, new taxes on both workers and  
          businesses. 

          Moreover, the Chamber believes that SB 1661's new paid leave  
          benefits, paid for by new mandated taxes is impermissible under  
          federal law.  The Chamber claims that the federal Employment  
          Retirement and Income Security Act (ERISA) forbids states from  
          establishing mandated employee welfare benefits such as those  








                                                                  SB 1661
                                                                  Page  13

          contained in SB 1661.  

          Finally, the Chamber notes that employers are concerned that SB  
          1661 does not contain any size limitation.  The proposed leave  
          program will apply to all employers regardless of size. The  
          Chamber believes that this is unnecessary and will harm small  
          businesses in our state. The Chamber claims that bills like SB  
          1661 make it even more difficult, and certainly much more  
          expensive, to do business in California.

           Committee Comments  

          SB 1661 references the CFRA in its intent section. The intent  
          section may include the public sector.
            
          According to EDD the SDI Trust Fund is healthy. EDD estimates  
          that there will be a $768 million balance in the SDI Trust Fund  
          at the end of 2002. EDD estimates the SDI Trust Fund balance at  
          the end of 2003 to be $1.04 billion and $1.36 billion at the end  
          of 2004.

          The SDI Trust Fund has a statutory rate setting mechanism that  
          attempts to achieve at 45% reserve at September 30th of a given  
          year. This level is what is needed to maintain SDI Trust Fund  
          adequacy.  When the SDI Trust Fund balance on September 30th  
          falls beneath 45% (of prior years' disbursements), the tax rate  
          automatically triggers a .1% increase.  When the SDI Trust Fund  
          balance exceeds 45% on September 30th, the tax rate  
          automatically triggers a .1% decrease.  The Director of EDD has  
          limited authority to either increase or decrease the tax rate by  
          an additional .1% in order to maintain an adequate SDI Trust  
          Fund balance.

          Rather than dropping alarmingly, the reserve adequacy level has  
          improved in recent years and will continue to be within adequacy  
          levels under EDD estimates either with or without SB 1661.  

          Figures comparing the mid-year SDI Trust Fund balance with the  
          year-end SDI Trust Fund balance may be misleading.   
          Historically, SDI Trust Fund balance and adequacy levels drop  
          during the last quarter of the calendar because while benefits  
          are generally paid out at the same rate throughout a calendar  
          year, revenue into the SDI Trust Fund falls once workers reach  
          their taxable wage ceiling.  
           








                                                                  SB 1661
                                                                  Page  14

          Did the administration impose an unprecedented two-tier SDI tax  
          increase on workers to avoid SDI Trust Fund bankruptcy in 2002? 

          To correct an error in establishing the 2000-contribution rate,  
          a mid-year increase did occur in 2000.

          This correction was necessary because, when the Director of EDD  
          established the SDI contribution rate on September 30, 1999, he  
          used his discretion to decrease the contribution rate - even  
          though the September 30th balance would have required an  
          increase in contributions.  By setting the rate at .5% instead  
          of at the higher rate necessitated by the formula (which may  
          have been as high as .8%), fund solvency was jeopardized in the  
          year 2000 until a mid-year increase to .7% was implemented to  
          correct the inappropriate use of the Director's discretion.

          SB 1661's new paid leave benefits are permissible under ERISA.  
          Section 1003 of ERISA specifies that ERISA provisions do not  
          apply to employee benefits plans maintained for the purpose of  
          disability insurance laws.   

           Prior Related Legislation
           
          AB 109 (Knox), Chapter 164, Statutes of 1999, stipulates 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. ("Domestic partner" was added by AB 25 (Migden),  
          Chapter 893, Statutes of 2001.)

          AB 2815 (Kuehl), allowing employees of the State of California,  
          the California Legislature and the California State University  
          to be covered by the State Disability Insurance program, was  
          vetoed by the Governor. The Governor stated in his veto message,  
          "To the best of my knowledge, this bill conveys no new rights or  
          benefits to employees.  Whether or not this bill becomes law,  
          employees have the very same rights to negotiate at the  
          bargaining table for these benefits."

          SB 118 (Hayden), providing that an employee may take family care  
          and medical leave to care for a grandparent or sibling, or  
          domestic partner, as defined, as well as an adult child, who has  








                                                                  SB 1661
                                                                  Page  15

          a serious health condition or to care for an individual who  
          depends on the employee for immediate care and support, who  
          shares a common residence with the employee and who has a  
          serious health condition was vetoed by the Governor.  In his  
          veto message, the Governor stated: "This measure, while  
          well-intentioned, extends the right (to take time off) far  
          beyond what any other state has permitted to a relationship  
          outside the family - specifically, to individuals who live  
          together to share expenses if one of those individuals  
          subsequently becomes seriously ill."

          SB 1149 (Speier), providing that the CFRA applies to employers  
          who employ 20 or more employees within 75 miles of the work-site  
          where that employee is employed. 
                    
          SB 1149 (Hayden), vetoed by the Governor, was essentially the  
          same as SB 118 (supra), providing that an employee may take  
          family care and medical leave to care for a grandparent or  
          sibling, or domestic partner, as defined, as well as an adult  
          child, who has a serious health condition, but does not include  
          the provision relating to caring for an individual who depends  
          on the employee for immediate care and support, who shares a  
          common residence with the employee and who has a serious health  
          condition. The Governor stated in his veto message: "As I said  
          when I vetoed an earlier bill by this author [i.e. SB 118], I  
          would be pleased to consider reasonable changes to the Domestic  
          Partner Act next year."
                    
          SB 656 (Solis), Chapter 973, Statutes of 1999, Increases the  
          maximum disability benefit from $336 to $490 per week, making  
          SDI benefits equal to weekly benefits for workers' compensation  
          temporary disability and indexes SDI levels to future workers'  
          compensation temporary disability increases. Also requires EDD  
          to conduct a cost study and report to the Legislature by July 1,  
          2000, on expanding the definition of "disabled" for the purpose  
          of qualifying for SDI benefits individuals on leave pursuant to  
          the Family Rights Act (FRA). 

          AB 1844 (Washington), allowing a pregnant woman to be eligible  
          for disability benefits for a period of 10 weeks, as specified,  
          died in the Senate Appropriations Committee (2000).
           
          SB 1197 (Romero), prohibiting a public or private employer from  
          adopting an absence control policy that disciplines employees  
          for use of sick leave to attend to an illness of an employee's  








                                                                  SB 1661
                                                                  Page  16

          child, parent, or spouse was vetoed by the Governor. In his veto  
          message, the Governor stated: "I agree employees should have a  
          right to use one half of their paid sick leave to attend to a  
          sick child, parent or spouse.  That is why I signed those  
          provisions into law in 1999 (AB 109 Knox)."

          SB 1471 (Romero), prohibits a public or private employer from  
          adopting an absence control policy that disciplines employees  
          for use of sick leave to attend to an illness of an employee's  
          child, parent, or spouse.  

           REGISTERED SUPPORT / OPPOSITION  :   

           Support 

           AFSCME
          Alliance for Retired Americans, Region 9
          American Association of University Women
          American College of Obstetricians and Gynecologists
          Asian Law Caucus
          Association of California Caregiver Resource Centers
          Banana's
          Breast Cancer Fund
          California Advocates for Social Change
          California Alliance for Pride and Equality
          California Association for the Education of Young Children
          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 Employees Legislative Council
          California Labor Federation (sponsor)
          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 Community Change








                                                                  SB 1661
                                                                  Page  17

          Center for the Child Care Workforce
          Center on Policy Initiatives
          Childcare Health Program
          Childcare Law Center
          Children NOW
          Coalition of Labor Union Women, Capitol Chapter
          Coalition of Labor Union Women, East Bay Chapter
          Communication Workers of America, District 9
          Communication Workers of America, Local 9400 
          Congress of California Seniors
          Compassion in Dying Federation
          East Bay Community Law Center
          Engineers and Scientists of California
          Equal Rights Advocates
          Family Caregiver Alliance
          Fresno-Madera-Tulare-Kings Central Labor Council
          Gray Panthers
          Hotel Employees, Restaurant Employees International Union
          Jericho
          Latino Coalition for a Health Family
          Labor Project for Working Families
          Lambda Letters Project
          Legal Aid Society, Employment Law Center
          National Multiple Sclerosis Society
          Older Women's League
          Orfalen Family Foundation
          Planned Parenthood Affiliates of California
          Sacramento Central Labor Council
          San Mateo County Central Labor Council
          Teamsters
          United Farm Workers
          United Food & Commercial Workers Region 8 States Council
          United Food & Commercial Workers Local 870
          United Nurses Association/Union of Health Care Professionals
          UTLA
          Women's Employment Rights Clinic, Golden Gate School of Law
          Women's Cancer Resource Center

           Opposition 
           
          Agricultural Council of California
          Auto Repair Coalition
          California Association of Health Facilities (CAHF)
          California Association of Sheet Metal and Air Conditioning  
          Contractors








                                                                  SB 1661
                                                                  Page  18

          California Chamber of Commerce
          California Farm Bureau Federation
          California Healthcare Association
          California Healthcare Association (CHA)
          California Hotel and Lodging Association
          California Independent Grocers Association
          California Manufacturers and Technology Association (CMTA)
          California Milk Producers Council
          California Restaurant Association
          California Restaurant Association
          California Retailers Association
          California Taxpayers Association
          Campaign for California Families
          Employers Group
          Karl Storz Imaging
          Lumber Association of California and Nevada
          Solar Turbines, Inc.
          TOC Management Services
           
          Analysis Prepared by  : Michael Mattoch / INS. / (916) 319-2086