BILL ANALYSIS SB 1661 Page 1 Date of Hearing: August 14, 2002 ASSEMBLY COMMITTEE ON APPROPRIATIONS Darrell Steinberg, Chair SB 1661 (Kuehl) - As Amended: August 8, 2002 Policy Committee: InsuranceVote:11-7 Urgency: No State Mandated Local Program: Yes Reimbursable: No SUMMARY This bill creates, within the state disability insurance (SDI) program, a family temporary disability insurance (FTDI) 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)Provides that 50 percent of the benefits must be provided from the employee's FTDI contribution to the Disability Fund. 4)Provides that the balance of the benefits be provided by the employer, either directly or by means of insurance procured by the employer. 5)Requires the Director of the Employment Development Department (EDD) to increase the rate of worker contributions by 0.05 percent for the 2004 and 2005 calendar years to cover the cost of FTDI benefits. SB 1661 Page 2 FISCAL EFFECT EDD estimates the following fiscal impact ($ in thousands, all costs would be paid from the Disability Fund): ----------------------------------------------------------------- |Provision |2003-04 |2004-05 | |---------------------+---------------------+---------------------| |Programming | $7,500 | | |---------------------+---------------------+---------------------| |Addl. 1st time | $9,200 |$9,200 | |claims | | | |---------------------+---------------------+---------------------| | Subtotal EDD |$16,700 |$9,200 | |Admin Costs | | | ----------------------------------------------------------------- ----------------------------------------------------------------- |Employer FTDI |($55,000) |($110,000) | |contributions | | | |---------------------+---------------------+---------------------| |Employee FTDI |($110,000) |($220,000) | |contributions | | | |---------------------+---------------------+---------------------| |FTDI Benefit | $53,500 | $108,500 | |Payments | | | |---------------------+---------------------+---------------------| | Net Disability |($56,500) |($221,500) | |Fund Change | | | ----------------------------------------------------------------- EDD's estimates that one-half of the state's 800,000 employers would choose to contribute 0.05 of payroll to the FTDI program (up to the taxable wage ceiling of $68,829 in 2004), rather than opting through private insurance. Employers would contribute $110 million to the SDI Fund in 2004 and 2005. Employee payroll contributions of 0.05 percent of payroll (up to the taxable wage ceiling) would generate $220 million in 2004 and 2005. The employee and employer contributions would increase the Disability Fund surplus by $56.5 million in 2003-04 and by $221.5 million in 2004-05. SB 1661 Page 3 COMMENTS 1)Background . 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. The current SDI program 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. The current contribution rate is 0.9 percent of wages not to exceed $46,327 per year (i.e. the worker's contribution is about $417). In 2003, the wage base will increase to $56,916, and in 2004, to $68,829. The maximum contribution rate cannot exceed 1.3 percent. EDD allows up to four weeks pre-partum and six weeks post-partum SDI 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. The California Family Rights Act (CFRA) 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 unpaid 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. 2)Purpose . It is the intent of the author to create the FTDI 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. SB 1661 Page 4 Analysis Prepared by : Stephen Shea / APPR. / (916) 319-2081