BILL ANALYSIS Senate Appropriations Committee Fiscal Summary Senator Christine Kehoe, Chair 2055 (De La Torre) Hearing Date: 8/2/2010 Amended: 4/13/2010 Consultant: Bob Franzoia Policy Vote: L&IR 4-1 _________________________________________________________________ ____ BILL SUMMARY: AB 2055 would clarify provisions governing eligibility for benefits and employer's reserve accounts, in order that "domestic partner" also includes a person to whom domestic partnership is imminent. Because the bill would provide for additional amounts payable for unemployment insurance (UI) benefits from the Unemployment Fund, a continuously fund, the bill would make an appropriation. _________________________________________________________________ ____ Fiscal Impact (in thousands) Major Provisions 2010-11 2011-12 2012-13 Fund Domestic partner eligibility Minor, absorbable costs annually Special* for UI benefits * Unemployment Fund _________________________________________________________________ ____ STAFF COMMENTS: Current law provides that a person may be deemed to have left his or her most recent work with good cause if he or she left the employer's employ to accompany his or her spouse or domestic partner to a place from which it is impractical to commute to the employment and specifies that "spouse" includes a person to whom marriage is imminent. Current law also provides that if a person left the employer's employ under certain circumstances, including, among others, if he or she left employment to accompany his or her spouse or domestic partner to a place from which it is impractical to commute to the employment, the UI benefits paid to the person are not charged to the employer's reserve account. Thus, if an employer has an employee who qualifies for this UI benefit, the employer's UI tax rate does not change to account for the cost of the increased UI benefit payment. Instead, the good cause costs are spread amongst all employers. Under this bill, a person may receive up to 26 weeks of UI benefits, the same amount any person determined eligible for UI could potentially collect. "Imminent" is determined when EDD is determining eligibility for benefits. Under this bill (and in current law when marriage is imminent), an individual who quits his or her job to relocate with a significant other and the two people are in the process of becoming registered domestic partners (imminent), that individual may be eligible for UI benefits provided all other requirements, including demonstrating all reasonable attempts to preserve the employment relationship are met. Expanding UI eligibility to include persons who are in the process of becoming registered domestic partners would likely affect a very small group and have a minimal impact to the Unemployment Fund. Approximately 0.78 percent of all UI benefit Page 2 AB 2055 (De La Torre) eligibility issues adjudicated involve a person who quit due to domestic reasons, which includes quitting work to attend to an ill family member, a lack of child care, a spousal move, etc. This bill would only impact a sub-set of the 0.78 percent of all eligibility issues involving a quit for domestic reasons, so the potential number of persons who would benefit from this bill likely would be very few. California Code of Regulation Title 22, Section 1256-12 provides: In some cases a claimant may quit well in advance of the intended marriage. In such cases, good cause will be dependent upon why the claimant quit at the time. As to how many days prior to the marriage a claimant may quit and still have good cause, no arbitrary rule can be established. Rather, this is dependent upon the nature and extent of advance preparations that were to be made, and whether or not these arrangements could have been accomplished without leaving work that soon. Occasionally, the marriage is delayed due to circumstances beyond the claimant's control. As long as the marriage was imminent at the time of the quit and the claimant could not have foreseen the delay, good cause will still exist. As of March 30, 2010, the California Secretary of State reported that there were 57,286 registered domestic partners. However, eligibility created by imminent domestic partnership should occur infrequently since the time to process a domestic partnership registration is only five to ten days. UI tax rates are assigned to employers based on "experience rating." Essentially, the more layoffs and benefits paid to former employees, the higher the tax rate for the employer. This is meant to encourage employers to maintain a stable workforce with fewer layoffs. However, socialized costs are also included when calculating an employer's UI tax rate and therefore have the potential to increase an employer's tax rate although the charges are unrelated to the individual employer's use of the UI system. Currently, the average UI benefit is $304 per week. If an average benefit was paid for one week, more than 493 persons would need to avail themselves of this benefit annually to incur costs of more than $150,000.