BILL ANALYSIS Ó
AB 2659
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2659 (Blumenfield) - As Introduced: February 24, 2012
SUBJECT : Shared Work Program
SUMMARY : Requires the Employment Development Department (EDD)
to develop and implement an outreach plan to provide information
to employers about the shared work unemployment benefits
program. Specifically, this bill :
1)Requires EDD to develop and implement an outreach plan
designed to provide information and inform employers of the
shared work unemployment compensation benefit program.
2)Requires the plan to include outreach to statewide and local
chambers of commerce, employer advisory councils, and small
business advisory councils.
EXISTING LAW
1)Provides that an unemployed person is eligible for
unemployment insurance (UI) benefits if he or she becomes
unemployed through no fault of their own, has worked in
UI-covered employment, is able and available to work, and is
totally or partially unemployed during the week for which a
claim is filed.
2)Provides that a person is eligible for "shared work
unemployment compensation benefits" under the following
circumstances:
a) The person works less than his or her normal weekly
hours of work for his or her regular employer during a
particular week;
b) The EDD Director finds that the regular employer has
reduced or restricted the person's normal hours of work or
has rehired a person previously laid off and reduced that
person's normal hours of work from those previously worked;
c) The employer has a plan to, in lieu of layoff, reduce
employment and stabilize the work force by a program of
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sharing the work remaining after a reduction of total hours
of work and a corresponding reduction in wages of at least
10 percent; and
d) The employer must reduce the hours worked of at least
two employees and at least 10 percent of the employer's
regular permanent work force.
3)Provides that a person who is eligible for a shared work
unemployment benefit during any week of partial unemployment
shall be paid a benefit equal to the percentage of reduction
of the person's wages resulting from the approved plan and
multiplied by the person's weekly benefit amount.
4)Specifies that a plan for shared work unemployment benefits
shall expire in six months.
FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose. According to the Author, the bill is intended to
increase awareness among employers of this important program
in order to reduce unemployment and stretch dollars further in
the Unemployment Insurance Fund. Shared work programs, which
help prevent devastating and often debilitating layoffs, can
be an effective solution to California's high unemployment
rate.
2)Shared Work Programs. Current law allows employers to
participate in the shared work unemployment compensation
benefits program which makes employees eligible to receive a
reduced amount of unemployment compensation benefits if their
work hours are reduced by more than ten percent. For example,
a company with 100 employees may need to lay off 20 percent of
its workforce as business slows. When it chooses to
participate in a shared work program, the company keeps its
full workforce but moves to a four-day work week. That allows
the employer to achieve the same 20 percent savings in payroll
costs but without layoffs. Employees not only keep their jobs
but they also receive unemployment insurance benefits to make
up for part of their reduced wages.
A 2004 study of the shared work program in California found
that participating companies tended to be larger, older,
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unionized manufacturers with higher paid employees.
Participation in the shared work program has increased
dramatically during the recession. Initial shared work
compensation claims rose from 45,276 in 2007 to a peak of
219,580 in 2009. Claims have declined to 111,347 in 2011.
3)Prior Legislation. In 2010, identical legislation was vetoed
(SB 1472 (Leno)). The Governor's veto message provided:
"This bill would duplicate existing efforts of the
Employment Development Department by requiring additional
marketing of the Work Sharing Program. This program has
already experienced a significant increase in participation
by California employers as a means to retain an experienced
workforce during this severe recession. Therefore, this
bill is unnecessary at this time."
4)EDD Outreach. EDD provides information to the employer
community regarding the shared work program through its
ongoing outreach efforts. These efforts include:
a. Direct communication with the California
Employer Advisory Council and the Small Business
Advisory Council
b. Posting information on the EDD website.
c. Periodically including information on the
program in its newsletters.
d. Including information on the program in the
California Employer's Guide published by EDD.
REGISTERED SUPPORT / OPPOSITION :
Support
None Received
Opposition
None Received
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
AB 2659
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