BILL ANALYSIS Ó AB 55 Page 1 Date of Hearing: April 13, 2011 ASSEMBLY COMMITTEE ON APPROPRIATIONS Felipe Fuentes, Chair AB 55 (Gatto) - As Introduced: December 6, 2010 Policy Committee: InsuranceVote:11 - 0 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This legislation removes the January 1, 2012, sunset date on the law that allows a motion picture payroll services company to serve as the employer of motion picture production workers for purposes of payroll tax reporting and employee benefits pursuant to the unemployment insurance (UI) and state disability insurance (SDI) programs. FISCAL EFFECT Absorbable workload to the Employment Development Department (EDD), to continue reviewing and approving extensions of voluntary benefit plans. COMMENTS 1)Purpose . 2)State Disability Insurance (SDI) is a public disability insurance program funded through premiums and payroll taxes and provides most California employees with cash benefits for disabilities lasting more than seven days that result in partial or total disability. SDI generally pays up to 55% of wages earned before the disability and lasts up to a year. SDI differs from federal Social Security disability benefits. Federal benefits are only provided if a disability lasts more than a year and results in not being able to work in any industry. Under current law, companies may opt to provide disability coverage via a voluntary plan which is also funded with AB 55 Page 2 employee contributions, but provides better benefits than SDI. For large companies like Entertainment Partners, there are challenges of maintaining a dual system, with some employees receiving SDI and some receiving benefits from a voluntary plan. This bill allows Entertainment Partners to increase efficiency by providing uniform disability benefits through a voluntary plan, subject to approval by EDD. Analysis Prepared by : Julie Salley-Gray / APPR. / (916) 319-2081