BILL ANALYSIS �
AB 1082
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Date of Hearing: May 8, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1082 (Williams) - As Amended: March 21, 2013
Policy Committee: Labor and
Employment Vote: 5-2
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires an employer who employs 50 or more full-time
equivalent employees to report specified information to the
Employment Development Department (EDD) on or before, July 1 of
each year. Specifically, this bill:
1)Requires employers to report the following information to EDD:
a) The employer's name and address.
b) The number of employees employed by the employer on
January 1 of the year the report is due.
c) The average number of hours each employee worked per
week for the calendar year before the report is due.
d) Whether each employee described in the prior calendar
year was enrolled in minimum essential coverage under an
eligible employer-sponsored health care plan.
2)Requires the employer report due on July 1, 2014 to include
the above information for the 2013 and 2014 calendar years.
3)Defines employer to include any subsidiaries at all locations
within the state.
4)Defines minimum essential coverage to have the same meaning as
defined under the federal health care law.
FISCAL EFFECT
One-time GF costs, likely in excess of $1 million, to EDD to
establish a reporting mechanism and maintain the data, plus
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annual, on-going GF costs of approximately $300,000 to maintain
this system. EDD estimates there are 8.5 million employees in
the state.
COMMENTS
1)Background . In 2010, Congress passed the Patient Protection
and Affordable Care Act (ACA). According to the National
Conference of State Legislators, ACA "is intended to expand
access to insurance, increase consumer protections, emphasize
prevention and wellness, improve quality and system
performance, expand the health workforce, and curb rising
health care costs."
Specifically, the ACA requires large employers (defined as
having 50 or more full-time employees) that do not provide
health insurance to their employees to pay a fine to the
federal government, beginning in 2014, if their employees
receive premium tax credits to buy their own insurance. The
fine for a large employer that does not offer health coverage
will be $2,000 per full-time employee (works 30 hours or more
per week) beyond the company's first 30 workers. This fine is
meant to offset the cost of the employee tax credit.
According to The Congressional Research Service (April 2013),
employers will pay $150 billion in penalty payments over a
10-year period.
2)Purpose . The author cites press reports indicating large
employers are reducing their employee's hours to move them
from full-time to part-time status in order to mitigate the
impacts of the ACA. Specifically, the author cites
information that Darden Restaurants (owners of Olive Garden
and Red Lobster), Wendy's, and Papa John's have significantly
reduced the number of full-time employees it employs.
According to the author, "This is a troubling trend and
clearly needs to be documented. The purpose of this bill is
to determine which large employers in California are evading
the federal mandate to provide health insurance by decreasing
the number of hours their employees are permitted to work.
This tactic shifts the responsibility to provide health care
coverage from employers to state taxpayers who fund both the
premium tax credits in the Exchange and the Medi-Cal system."
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3)Duplicative reporting requirements ? The federal ACA requires
employers to annually report specified information to the
Internal Revenue Service (IRS) regarding minimum essential
coverage. Specifically, the employer is required to report
the number of full-time employees for each month in the
calendar year; the name and address of each full-time
employee; and any other information the IRS may require.
These requirements overlap with the ones proposed in this
measure; therefore, employers will be sending similar
information to both the federal government and EDD. The
committee may wish to consider whether the federal reporting
requirement is sufficient.
4)What is EDD do with this information ? This measure requires
employers to report specified information to EDD. However,
there is not any requirement or specificity as to what EDD
does with this information. Presumably, EDD would have to
establish a common reporting mechanism for employers to
provide this information and this mechanism would likely also
be used to store the information. Also, this bill does not
provide EDD with enforcement power, which leads to potential
compliance issues.
Analysis Prepared by : Kimberly Rodriguez / APPR. / (916)
319-2081