BILL ANALYSIS                                                                                                                                                                                                    


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                              UNFINISHED BUSINESS

          Bill No:  SB 1661
          Author:   Kuehl (D), et al
          Amended:  8/23/02
          Vote:     21

          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,  
          NOES:  Johnson, McPherson, Poochigian

           SENATE FLOOR  :  22-15, 6/10/02
          AYES:  Alarcon, Alpert, Bowen, Burton, Chesbro, Dunn,  
            Escutia, Figueroa, Karnette, Kuehl, Machado, Murray,  
            O'Connell, Ortiz, Perata, Romero, Scott, Sher, Soto,  
            Speier, Torlakson, Vasconcellos
          NOES:  Ackerman, Battin, Brulte, Costa, Haynes,  
            Johannessen, Johnson, Knight, Margett, McClintock,  
            McPherson, Monteith, Morrow, Oller, Poochigian

           ASSEMBLY FLOOR  :  46-31, 8/27/02 - See last page for vote

           SUBJECT  :    Disability compensation:  family members



                                                               SB 1661

           SOURCE :     California Labor Federation

           DIGEST  :    This bill creates, within the state disability  
          insurance program, a family temporary disability insurance  
          program to provide up to six 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.

           Assembly Amendments  make numerous clarifying, technical and  
          substantive changes without altering the bill's intent.   
          The amendments reduce the weeks offered from 12 to six.

           ANALYSIS  :    The majority of the State's workers --  
          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 six 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,  


                                                               SB 1661

             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  

           5.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.

           6.Requires the certificate to establish medical  
             eligibility to contain the following:

             A.    aAdiagnosis and diagnostic code prescribed in the  
                International Classification of Diseases, or, where  
                no diagnosis, has yet been obtained, a detailed  
                statement of symptoms.

             B.    The date, if known, on which the condition  

             C.    The probable duration of the condition.

             D.    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.

             E.    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.

           7.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  


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            medical care.

           8.Makes it unlawful to falsely certify the medical  
            condition of any person in order to obtain FTDI benefits,  
            to knowingly present or cause to be presented any false  
            or fraudulent statement in support of any claim for FTDI  
            benefits, or to  knowingly solicit or receive any payment  
            for soliciting a claimant to apply for FTDI benefits.

           9.Requires the Director of the State Department of  
            Employment Development (EDD) to increase the rate of  
            worker contributions by .08% for the 2004 and 2005  
            calendar years to cover the initial cost of FTDI  

          10.Provides that the maximum amount payable to an  
            individual during any disability benefit period for FTDI  
            shall be six times his or her "weekly benefit amount,"  
            but 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.

          11.Provides that no more than six weeks of FTDI benefits  
            shall be paid within any 12-month period.

          12.Provides that an individual is not eligible for FTDI  
            benefits with respect to any day that another family  
            member is able and available for the same period of time  
            that the individual is providing the required care.

          13.Specifies that an individual who is entitled to leave  
            under the federal Family and Medical Leave Act (FMLA) and  
            California's Family Rights Act (CFRA) must take FTDI  
            leave concurrent with leave taken under the FMLA and the  

          14.Specifies that as a condition of an employee's initial  
            receipt of FTDI benefits during any 12-month period in  
            which an employee is eligible for these benefits, an  
            employer may require an employee to take up to two weeks  
            of earned but unused vacation leave prior to the  
            employee's initial receipt of these benefits.

          15.Provides that if the director finds that any individual  


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            falsely certifies the medical condition of any person in  
            order to obtain FTDI benefits, with the intent to  
            defraud, the director shall assess a penalty against the  
            individual in the amount of 25% of the benefits paid as a  
            result of the false certification.  Specifies that  
            penalties collected shall be deposited in the contingent  

          Comments and Background
           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  
          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  
          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  


                                                               SB 1661

          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.

           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  


                                                               SB 1661

          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  
          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.


                                                               SB 1661

           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  
          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  


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          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

          EDD estimates this bill will result in costs of $73.2  
          million in 2003-04 and $117.7 million in 2004-05 from the  
          Disability Fund; offset by rate revenues.

           SUPPORT  :   (Verified  6/4/02) (Unable to reverify at time  
          of writing)

          California Labor Federation, AFL-CIO (source)
          Alliance for Retired American, Region 9
          American Association of University Women, CA
          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  
          California Conference of Machinists
          California Faculty Association
          California Federation of Teachers
          California HIV Advocacy Coalition


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          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
          Labor Project for Working Families
          Legal Aid Society, Employment Law Center
          Older Women's League
          Orfalen Family Foundation
          Planned Parenthood Affiliates of California
          United Farm Workers
          United Food & Commercial Workers Region 8 States Council
          Women's Employment Rights Clinic, Golden Gate School of Law

           OPPOSITION  :    (Verified  6/4/02) (Unable to reverify at  
          time of writing)

          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

           ASSEMBLY FLOOR  : 
          AYES:  Alquist, Aroner, Calderon, Canciamilla, Cardenas,  


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            Cardoza, Cedillo, Chan, Chavez, Chu, Cohn, Corbett, Diaz,  
            Dutra, Firebaugh, Florez, Frommer, Goldberg, Hertzberg,  
            Horton, Jackson, Keeley, Kehoe, Koretz, Liu, Longville,  
            Lowenthal, Matthews, Migden, Nation, Negrete McLeod,  
            Oropeza, Pavley, Reyes, Salinas, Shelley, Simitian,  
            Steinberg, Strom-Martin, Thomson, Vargas, Washington,  
            Wayne, Wiggins, Wright, Wesson
          NOES:  Aanestad, Ashburn, Bates, Bogh, Briggs, Bill  
            Campbell, John Campbell, Cogdill, Cox, Daucher,  
            Dickerson, Harman, Havice, Hollingsworth, Kelley, La  
            Suer, Leach, Leonard, Leslie, Maddox, Maldonado,  
            Mountjoy, Robert Pacheco, Rod Pacheco, Pescetti, Richman,  
            Runner, Strickland, Wyland, Wyman, Zettel

          NC:cm  8/28/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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