BILL ANALYSIS
AB 1814
Page 1
Date of Hearing: April 6, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
AB 1814 (Buchanan) - As Introduced: February 11, 2010
PROPOSED CONSENT (As Proposed to be Amended)
SUBJECT : AGE DISCRIMINATION: RETIREE HEALTH BENEFITS
KEY ISSUE : SHOULD STATE EMPLOYMENT DISCRIMINATION LAW BE
CLARIFIED TO MAKE IT UNMISTAKABLY CONSISTENT WITH FEDERAL LAW
THAT EMPLOYERS ARE NOT LIABLE FOR PROVIDING RETIREE HEALTH
BENEFITS THAT ARE REDUCED OR ELIMINATED WHEN RETIREES BECOME
ELIGIBLE FOR MEDICARE HEALTH BENEFITS?
FISCAL EFFECT : As currently in print this bill is keyed fiscal.
SYNOPSIS
This non-controversial bill clarifies state age discrimination
law regarding the provision of health benefits to retirees. It
would make state law expressly consistent with federal law that
the state prohibition against age discrimination in employment
does not prohibit an employer from providing health benefits or
health care reimbursement plans to retired persons that are
altered, reduced, or eliminated when the person becomes eligible
for Medicare health benefits.
SUMMARY : Clarifies state age discrimination law regarding the
provision of health benefits to retirees. Specifically, this
bill provides that the age discrimination prohibitions of the
Fair Employment and Housing Act do not prohibit an employer from
providing health benefits or health care reimbursement plans to
retired persons that are altered, reduced, or eliminated when
the person becomes eligible for Medicare health benefits.
EXISTING LAW :
1)Under state law, generally prohibits discrimination in
employment on the basis of age with respect to persons aged 40
years and older. (Government Code section 12940.)
2)Under the federal Age Discrimination in Employment Act,
likewise generally prohibits discrimination in employment on
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the basis of age with respect to persons aged 40 years and
older. (29 U.S.C. section 621 et seq.)
3)Under federal law, exempts from the prohibition against age
discrimination the provision of health benefits for retired
participants that are altered, reduced or eliminated when the
participant is eligible for Medicare health benefits whether
or not the participant actually enrolls in the other benefit
program. (29 C.F.R. section 1625.32.)
COMMENTS : In support of the bill the author states: "Thousands
of California employers, both public and private sector, provide
some type of continued medical benefits for certain qualified
employee who retire before they are eligible to receive
Medicare. These are so-called 'bridge plans.' In 2007 the
Equal Employment Opportunity Commission enacted a regulation
that specifically permits these "bridge plans" by exempting them
from the prohibition of the federal Age Discrimination in
Employment Act. This bill, would clarify that these bridge
plans would also be permitted under California's Fair Employment
and Housing Act (FEHA)."
According to the author, the bill responds to litigation
commenced in 2009 against the Acalanes Union High School
District and the Acalanes Education Association by a retiree who
left her employment after she was eligible for Medicare. The
employer and employee organization had reportedly negotiated a
collective bargaining agreement nearly 20 years ago that
provides retiree health benefits to certain qualified employees
who retired after the age of age 55. Those benefits were to be
paid to the retiree up to a specified monthly amount for up to
five years or to age 65, when the retiree would be eligible for
Medicare. This plaintiff in that case was apparently denied the
contractual benefit because she retired after she was eligible
for Medicare and the benefit was intended to be a bridge to
Medicare. She initiated a law suit against both the school
district employer and the employee organization claiming age
discrimination. The District subsequently filed a cross
complaint for declaratory relief against the employee
organization and twenty-four retirees, threatening to recoup
benefits already paid to those retirees and to cease paying
future benefits if the collective bargaining agreement that
provided the retiree health benefits was found to be illegal.
The author argues that if this type of litigation proliferates
under the FEHA, California employers will be discouraged from
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offering these modest retiree health benefits, which currently
enable employees to be covered by medical insurance should they
choose to retire before they are Medicare eligible.
As the author indicates, this bill is intended to make state law
consistent with federal law with respect to age discrimination
regarding specified employee benefit plans covered by federal
retirement law. It would exempt employers from liability for
age discrimination under the Fair Employment and Housing Act
when and to the extent they are exempt from comparable liability
under regulations adopted pursuant to federal law. Like federal
law, the bill applies only to retiree benefits; differential
treatment of medical benefits for current employees raises much
different policy issues, and the law in that area would not be
changed.
Author's proposed amendments . In order to better capture the
intent of the measure, the author appropriately proposes the
following amendments:
(B) The provisions of this part relating to discrimination on
account of age shall does not prohibit an employer from
providing health benefits or health care reimbursement plans to
retired persons that are altered, reduced, or eliminated when
the person becomes eligible for Medicare health benefits. This
subparagraph is declaratory of existing law and applies to all
retiree health benefit plans and contractual provisions or
practices concerning retiree health benefits and reimbursement
plans in effect on January 1, 2011. the effective date of the
statute that enacted this subparagraph.
REGISTERED SUPPORT / OPPOSITION :
Support
California Teachers Association (sponsor)
League of California Cities
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334