BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1814| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ CONSENT Bill No: AB 1814 Author: Buchanan (D) Amended: 4/13/10 in Assembly Vote: 21 SENATE JUDICIARY COMMITTEE : 5-0, 6/10/10 AYES: Corbett, Harman, Hancock, Leno, Walters SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8 ASSEMBLY FLOOR : 74-0, 4/29/10 - See last page for vote SUBJECT : Discrimination in employment SOURCE : California Teachers Association DIGEST : 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. ANALYSIS : Existing state law, the Fair Employment and Housing Act, generally prohibits discrimination in employment on the basis of age with respect to persons aged 40 years and older. (Gov. Code Sec. 12940.) Existing federal law, the Age Discrimination in Employment Act, likewise generally prohibits discrimination in CONTINUED AB 1814 Page 2 employment on the basis of age with respect to persons aged 40 years and older. (29 U.S.C. Sec. 621 et seq.) Existing federal law contains an exemption from the prohibition against age discrimination for 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. Sec. 1625.32.) This bill provides that the prohibition on age discrimination provided for in the Fair Employment and Housing Act 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. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: No SUPPORT : (Verified 6/29/10) California Teachers Association (source) ARGUMENTS IN SUPPORT : According to the author's office, this bill responds to litigation brought by a retiree against a school district in Contra Costa County. The plaintiff in that case was apparently denied a 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 under the FEHA. The District subsequently filed a cross complaint for declaratory relief against the employee organization and 24 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. CONTINUED AB 1814 Page 3 The author's office argues that if this type of litigation proliferates under the FEHA, California employers will be discouraged from offering these modest retiree health benefits, which currently enable employees to be covered by medical insurance if they choose to retire before they are Medicare eligible. In support of this bill, the California Teachers Association writes, "The importance of having access to health care is paramount for a teacher moving into retirement, particularly as more and more school districts are no longer offering retiree health benefits (over 70 percent offer no retiree health benefits). AB 1814 simply codifies what is already permissible at the federal level to ensure local entities clearly understand that a "bridge" to retiree health benefits is permissible." ASSEMBLY FLOOR : AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield, Bradford, Brownley, Buchanan, Charles Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon, DeVore, Emmerson, Eng, Evans, Feuer, Fletcher, Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber, Huffman, Jeffries, Knight, Lieu, Logue, Ma, Mendoza, Miller, Monning, Nava, Nestande, Niello, Nielsen, Norby, V. Manuel Perez, Portantino, Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio, Audra Strickland, Swanson, Torlakson, Torres, Tran, Villines, Yamada, John A. Perez NO VOTE RECORDED: Bass, Caballero, Jones, Bonnie Lowenthal, Torrico, Vacancy RJG:do 6/29/10 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED