BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | SB 1661| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ UNFINISHED BUSINESS Bill No: SB 1661 Author: Kuehl (D), et al Amended: 8/23/02 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 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 CONTINUED SB 1661 Page 2 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 Page 3 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. 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 commenced. 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 SB 1661 Page 4 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 benefits. 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 CFRA. 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 SB 1661 Page 5 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 fund. 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 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 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 Page 6 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 Page 7 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 Page 8 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 SB 1661 Page 9 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 Union California Conference of Machinists California Faculty Association California Federation of Teachers California HIV Advocacy Coalition SB 1661 Page 10 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 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) (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, SB 1661 Page 11 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 **** END ****