BILL ANALYSIS Ó Senate Committee on Labor and Industrial Relations Ted Lieu, Chair Date of Hearing: March 23, 2011 2009-2010 Regular Session Consultant: Alma Perez Fiscal:Yes Urgency: No Bill No: SB 299 Author: Evans Version: As introduced February 14, 2011 SUBJECT Employment: pregnancy or childbirth leave KEY ISSUE Should the Legislature require that employers provide health insurance coverage when an employee is out on Pregnancy Disability Leave? Should a pregnant employee of a small business have the same right to covered health insurance during their pregnancy leave as employees of larger employers do? PURPOSE To declare that an employer's refusal to maintain and pay for health coverage during an employee's Pregnancy Disability Leave is an unlawful employment practice. ANALYSIS Existing law provides employees options for leave for various reasons including pregnancy. The existing federal Family and Medical Leave Act (FMLA) requires all employers with 50 or more employees within a 75 mile radius of the work site to grant leave to eligible employees. FMLA entitles eligible employees to take up to 12 workweeks of unpaid, job-protected leave in a 12-month period for specified family and medical reasons, including for the birth and care of a newborn child of the employee. Under FMLA , among other things, a covered employer is required to: Maintain group health insurance coverage for an employee on FMLA leave whenever such insurance was provided before the leave was taken and on the same terms as if the employee had continued to work. If applicable, make arrangements for employees to pay their share of health insurance premiums while on leave. In some instances, the employer may recover premiums it paid to maintain health coverage for an employee who fails to return to work from FMLA leave. The existing California Family Rights Act (CFRA) requires all employers with 50 or more employees within a 75 mile radius of the work site to grant leave to eligible employees. CFRA was established ensure secure unpaid, job-protected, leave rights for the birth of a child for purposes of bonding, placement of a child in the employee's family for adoption or foster care, for the serious health condition of the employee's child, parent or spouse, or for the employee's own serious health condition. An employer is not required to pay an employee during a CFRA leave, except when an eligible employee elects, or the employer requires, the employee to use any accrued vacation time or other accumulated paid leave other than accrued sick leave. Under CFRA , among other things, a covered employer is required to: Continue providing health care coverage for employees during their CFRA leave. If the employer provides health benefits under any group health plan, the employer has an obligation to continue providing such benefits during an employee's CFRA leave. Continue providing health care coverage for the duration of the leave(s), up to a maximum of 12 work weeks in a 12-month period. In addition, during the period of CFRA leave, the employee is entitled to participate in employee benefit plans, including pension and retirement plans to the same extent and under the same conditions as would Hearing Date: March 23, 2011 SB 299 Consultant: Alma Perez Page 2 Senate Committee on Labor and Industrial Relations apply to any other leave granted by the employer for any reason other than CFRA leave. The existing Pregnancy Disability Leave (PDL), under the Fair Employment and Housing Act, requires all employers with five or more employees to provide job-protected leave for pregnancy disability for a period of up to four months, as needed, for the period(s) of time a woman is actually disabled by pregnancy. There is no length of service requirement before an employee disabled by pregnancy is entitled to a pregnancy disability leave. An employer is not required to pay an employee during a pregnancy disability leave, except in certain specified instances. During any part of the pregnancy disability leave, if it runs concurrently with FMLA leave and if the employer provides health benefits under any "group health plan," the employer may have an FMLA obligation to continue providing such benefits. However, for employers with 50 or fewer employees, FMLA does not cover its employees and only PDL is applied. Under existing law, PDL does not require employers to continue providing group health coverage during the employees pregnancy disability leave. This Bill would make it an unlawful practice for an employer to refuse to maintain and pay for coverage under a group health plan for an employee who takes Pregnancy Disability Leave, as specified. Specifically, this bill would: Prohibit an employer from refusing to maintain and pay for health care coverage, not to exceed four months over the course of a 12-mont period, at the level and under the conditions that coverage would have been provided if the employee had continued in employment continuously for the duration of the leave. Allow an employer to recover from the employee the premium that the employer paid for maintaining coverage for the employee under the group health plan if both of the following conditions occur: o The employee fails to return to work after the Hearing Date: March 23, 2011 SB 299 Consultant: Alma Perez Page 3 Senate Committee on Labor and Industrial Relations period of leave has expired. o The employee's failure to return to work is for a reason other than one of the following: § The employee taking leave under the Moore-Brown-Roberti Family Rights Act (also known as CFRA). § The continuation, recurrence, or onset of a health condition that entitles the employee to leave under PDL or other circumstance beyond the control of the employee. COMMENTS 1. Need for this bill? Current law provides employees with options for paid and unpaid leave through programs such as the PDL, FMLA, and CFRA. In general, FMLA and CFRA contain similar provisions and run concurrently for all purposes other than disabilities due to pregnancy or pregnancy-related conditions. A California employee who is disabled due to pregnancy or a condition related to pregnancy is entitled to disability leave under PDL. After the baby is born, she is entitled to additional leave under CFRA for baby bonding. Under existing law, both FMLA and CFRA requires employers to continue health care coverage for employees while they are on leave, however, both have strict eligibility requirements and CFRA is only available for bonding once the child is born. Although FMLA and PDL can run concurrently, thus requiring the employer to cover an employee's health coverage during leave, the problem is that both FMLA and CFRA only cover women working for an employer with 50 or more employees. For employers with 50 or fewer employees, PDL is the only leave required for employees disabled by pregnancy or pregnancy-related conditions and employers are not required to continue health insurance coverage during the disability leave. Leave under FMLA does not apply. Hearing Date: March 23, 2011 SB 299 Consultant: Alma Perez Page 4 Senate Committee on Labor and Industrial Relations This bill would extend the right to health insurance coverage for eligible female employees on Pregnancy Disability Leave by requiring that employers of 50 or fewer employees maintain and pay for health coverage during their leave. 2. Proponent Arguments : According to the author, while the PDL provides leave for pregnancy-related conditions, the law does not require employers to continue group health insurance coverage for an employee during leave. Proponents argue that this lack of maternity coverage assurance discourages and prevents women from taking pregnancy leave despite their health needs and the needs of their baby. In addition, the author argues that forced to pay out-of-pocket costs for health coverage, many women will delay or cut short their leave despite well-documented benefits to maternal and child health. According to the author, almost four-fifths of workers report being unable to take leave because they could not afford it. Proponents argue that although, other federal and state leave laws require employers to continue health care for employees on leave, the FMLA has strict eligibility requirements and only 47% of the workforce is included and CFRA excludes leave for pregnancy-related conditions. Proponents argue that due to these gaps in coverage, an estimated 50% of the workforce is not afforded the continued health insurance coverage guaranteed by the FMLA and CFRA. According to proponents, the current gap in the law puts the health and well-being of women and their infants at risk. The author argues that this inequitable coverage under the law effectively penalizes women for taking maternity leave. Proponents argue that health care benefits for women who are pregnant or have just given birth should not be terminated at a time when they're needed most. The author believes that meaningful access to leave - including the maintenance of health insurance coverage - is essential to protecting the health and economic security of working women and their families. This bill seeks to close the gap in health insurance for women on maternity leave by bringing PDL in line with health coverage provisions of related state and federal Hearing Date: March 23, 2011 SB 299 Consultant: Alma Perez Page 5 Senate Committee on Labor and Industrial Relations family and medical leave laws. 3. Opponent Arguments : None received. SUPPORT 9 to 5 California, National Association of Working Women American Civil Liberties Union California Commission on the Status of Women (Sponsor) California Employment Lawyers Association California Labor Federation, ALF-CIO California National Organization for Women California Nurse Midwives Association California Nurses Association California Women's Law Center Service Employees International Union St. John's Well Child & Family Center United Steelworkers, Local 675 Women's Employment Rights Clinic of Golden Gate University OPPOSITION None received Hearing Date: March 23, 2011 SB 299 Consultant: Alma Perez Page 6 Senate Committee on Labor and Industrial Relations