Amended in Senate May 29, 2013

Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly BillNo. 1392


Introduced by Committee on Insurance

March 4, 2013


An act tobegin insert amend,end insert repealbegin insert,end insert and add Section 1279.5 of the Unemployment Insurance Code, relating to unemployment insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1392, as amended, Committee on Insurance. Unemployment insurance: work sharing plans.

Existing law deems an individual unemployed in any week if the individual works less than his or her normal weekly hours of work for the individual’s regular employer as the result of a plan by the employer, in lieu of layoff, to reduce employment and stabilize the work force by work sharing. Existing law requires that plan to have been approved by the Director of Employment Development, pursuant to prescribed requirements. Existing law requires the plan to involve the participation of at least two employees and include not less than 10 percent of the employer’s regular permanent work force, as specified. Existing law requires an approved plan to expire 6 months after its effective date. Existing law provides that employees participating are eligible to receive unemployment compensation benefits in an amount equal to the percentage of reduction of the employee’s wages resulting from an approved plan, as specified.

This bill would revise and recast these provisionsbegin insert commencing July 1, 2014end insert. The bill would define a work sharing plan as a plan submitted by an employer, for approval by the Director of Employment Development, pursuant to which the employer requests the payment of work sharing compensation to employees in an affected unit of the employer in lieu of layoffs and would establish other definitions in this regard. The bill would require that an employer wishing to participate in the work sharing program submit a signed written work sharing plan to the director for approval, and that the director develop an application form that fulfills specified requirements, andbegin delete developend delete an approval process, and designate a work sharing administrator. The employer would be required to make a series of certifications and to provide for notification of employees, as specified. The bill would establish timelines for the approval or disapproval of a plan and authorize its modification pursuant to a specified process. The bill would prescribe requirements for employees to be eligible for work sharing compensation, as defined. The bill would require that work sharing compensation be charged to employers’ experience rating accounts in the same manner as unemployment compensation. Among other things, the bill would prohibit employees from being eligible to receive any benefits pursuant to these provisions unless their employer agrees, in writing, and their bargaining agent agrees, in writing, pursuant to any applicable collective bargaining agreement, to voluntarily participate in the work sharing program.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1begin insert

begin insertSECTION 1.end insert  

end insert

begin insertSection 1279.5 of the end insertbegin insertUnemployment Insurance
2Code
end insert
begin insert is amended to read:end insert

3

1279.5.  

(a) Notwithstanding Section 1252 or 1252.2 or any
4other provision of this part, for the purposes of this section an
5individual is “unemployed” in any week if the individual works
6less than his or her normal weekly hours of work for the
7individual’s regular employer, and the director finds that the regular
8employer has reduced or restricted the individual’s normal hours
9of work, or has rehired an individual previously laid off and
10reduced that individual’s normal hours of work from those
11previously worked, as the result of a plan by the regular employer
12to, in lieu of layoff, reduce employment and stabilize the work
13force by a program of sharing the work remaining after a reduction
P3    1in total hours of work and a corresponding reduction in wages of
2at least 10 percent. The application for approval of a plan shall
3require the employer to briefly describe the circumstances requiring
4the use of work sharing to avoid a layoff. Normal weekly hours
5of work means the number of hours in a week that the employee
6normally would work for the regular employer or 40 hours,
7whichever is less. The plan must involve the participation of at
8least two employees and include not less than 10 percent of the
9employer’s regular permanent work force involved in the affected
10work unit or units in each week, or in at least one week of a
11two-consecutive-week period. A plan approved by the director
12shall expire six months after the effective date of the plan.

13(b) Except as otherwise provided in this section, each individual
14eligible under this chapter who is “unemployed” in any week shall
15be paid with respect to that week a weekly shared work
16unemployment compensation benefit amount equal to the
17percentage of reduction of the individual’s wages resulting from
18an approved plan, rounded to the nearest 5 percent, multiplied by
19the individual’s weekly benefit amount.

20(c) No individual who receives any benefits under this section
21during any benefit year shall receive any benefits pursuant to
22Section 1252 or 1252.2 as a partially unemployed individual with
23respect to any week during such benefit year while in employment
24status with the regular employer who initiated the program of
25sharing work under this section. No benefits under this section
26shall be payable on any type of extended claim.

27(d) Any amount payable under this section shall be reduced by
28the amount of any and all compensation payable for personal
29services whether performed as an employee or an independent
30contractor or as a juror or as a witness, except compensation
31payable by the regular employer under a shared work plan.

32For the purposes of this subdivision, “regular employer” may
33include, pursuant to an approved plan, a labor organization which
34periodically employs individuals in accordance with a collective
35bargaining agreement.

36(e) The benefit payment under this section, if not a multiple of
37one dollar ($1), shall be increased to the next higher multiple of
38one dollar ($1).

39(f)  Sections 1253.5 and 1279 shall not apply to any individual
40eligible for any payment under this section.

P4    1(g) For the purposes of this section, an individual shall not be
2disqualified under subdivision (c) of Section 1253 for any week
3if both of the following conditions exist:

4(1) The individual has not been absent from work without the
5approval of the regular employer.

6(2) The individual accepted all work the regular employer made
7available to the individual during hours scheduled off due to the
8work-sharing plan.

9(h) Except as otherwise provided by or inconsistent with this
10section, all provisions of this division and authorized regulations
11apply to benefits under this section. Authorized regulations may,
12to the extent permitted by federal law, make such distinctions and
13requirements as may be necessary in the procedures and provisions
14applicable to unemployed individuals to carry out the purposes of
15this section, including regulations defining normal hours, days,
16workweek, and wages.

17(i) Employees shall not be eligible to receive any benefits under
18this section unless their employer agrees, in writing, and their
19bargaining agent pursuant to any applicable collective bargaining
20 agreement agrees, in writing, to voluntarily participate in the shared
21work unemployment insurance benefit program created by this
22section.

23(j) Notwithstanding Section 1327, the department shall not be
24required to notify an employer of additional claims which result
25from an approved plan submitted by the employer under which
26benefits are not paid in each week.

27(k) The director may terminate a shared work plan for good
28cause if the plan is not being carried out according to its terms and
29intent.

begin insert

30(l) This section shall remain in effect until July 1, 2014, and as
31of January 1, 2015, is repealed.

end insert
begin delete32

SECTION 1.  

Section 1279.5 of the Unemployment Insurance
33Code
is repealed.

end delete
34

SEC. 2.  

Section 1279.5 is added to the Unemployment
35Insurance Code
, to read:

36

1279.5.  

(a) As used in this section:

37(1) “Affected unit” means a specified plant, department, shift,
38or other definable unit that includes two or more workers and not
39less than 10 percent of the employer’s regular permanent work
40force involved in the affected unit or units in each week, or in at
P5    1least one week of a two-consecutive-week period, to which an
2approved work sharing plan applies.

3(2) “Health and retirement benefits” means employer-provided
4health benefits and retirement benefits under a defined benefit
5pension plan, as defined in Section 414(j) of the Internal Revenue
6Code, or contributions under a defined contribution plan, as defined
7in Section 414(i) ofbegin insert theend insert Internal Revenue Code, that are incidents
8of employment in addition to the cash remuneration earned.

9(3) “Work sharing compensation” means the unemployment
10compensation benefits payable to employees in an affected unit
11under an approved work sharing plan, as distinguished from the
12unemployment compensation benefits otherwise payable under
13this part.

14(4) “Work sharing plan” means a plan submitted by an employer,
15for approval by the director, under which the employer requests
16the payment of work sharing compensation to employees in an
17affected unit of the employer in lieu of layoffs.

18(5) “Work sharing program” means the program described by
19this section.

20(6) “Usual weekly hours of work” means the usual hours of
21work forbegin delete full-timeend deletebegin insert fullend insertbegin insert-end insert or part-time employees in the affected unit
22when that unit is operating on its regular basis, not to exceed 40
23hours and not including hours of overtime work.

24(7) “Unemployment compensation” means the unemployment
25compensation benefits payable under this part other than work
26sharing compensation and includes amounts payable pursuant to
27an agreement under federal law providing for compensation,
28assistance, or allowances with respect to unemployment.

29(b) Notwithstanding Section 1252 or 1252.2 or any other
30provision of this part, for the purposes of this section an employee
31is “unemployed” in any week if the employee works less than his
32or her usual weekly hours of work for the employee’s regular
33employer, as the result of the regular employer’s participation in
34a work sharing plan that meets the requirements of this section
35and has been approved by the director, pursuant to which the
36employer, in lieu of layoff, reduces employment and stabilizes the
37workforce.

38(c) An employer wishing to participate in the work sharing
39programbegin insert, on and after July 1, 2014,end insert shall submit a signed written
40work sharing plan to the director for approval. The director shall
P6    1develop an application form to request approval of a work sharing
2plan and an approval process that meets the requirements of this
3section. The application shall include, but is not limited to, the
4following:

5(1) The affected unit covered by the plan, including the number
6ofbegin delete full-timeend deletebegin insert fullend insertbegin insert-end insert or part-time employees in the unit, the percentage
7of employees in the affected unit covered by the plan, identification
8of each individual employee in the affected unit by name, social
9security number, and the employer’s unemployment tax account
10number and any other information required by the director to
11identify plan participants.

12(2) A description of how employees in the affected unit will be
13notified of the employer’s participation in the work sharing plan
14if the application is approved, including how the employer will
15notify those employees in a collective bargaining unit as well as
16any employees in the affected unit who are not in a collective
17bargaining unit. If the employer does not intend to provide advance
18notice to employees in the affected unit, the employer shall explain
19in a statement in the application why it is not feasible to provide
20that notice.

21(3) A requirement that the employer identify, in the application,
22the usual weekly hours of work for employees in the affected unit
23and the specific percentage by which their hours will be reduced
24during all weeks covered by the plan. The percentage of reduction
25of usual weekly hours of work for which a work sharing plan may
26be approved shall not be less than 10 percent or more than 60
27percent. If the plan includes any week for which the employer
28regularly does not provide work, including, but not limited to,
29incidences due to a holiday or plant closing, then that week shall
30be identified in the application.

31(4) (A) Except as provided in subparagraph (B), certification
32by the employer, if the employer provides health and retirement
33benefits to any employee whose usual weekly hours of work are
34to be reduced under the plan, that the benefits will continue to be
35provided, to the extent permitted by federal law, to employees
36participating in the work sharing plan under the same terms and
37conditions as though the usual weekly hours of work of these
38employees had not been reduced or to the same extent as other
39employees not participating in the work sharing plan. For defined
40benefit retirement plans, to the extent permitted by federal law,
P7    1the hours that are reduced under the work sharing plan shall be
2credited for purposes of participation, vesting, and accrual of
3benefits as though the usual weekly hours of work had not been
4reduced. The dollar amount of employer contributions to a defined
5contribution plan that are based on a percentage of compensation
6may be less due to the reduction in the employee’s compensation.

7(B) If a reduction in health and retirement benefits is scheduled
8to occur during the duration of the plan and those reductions will
9be applied equally to employees who are not participating in the
10work sharing program, then the application shall so certify, and
11those benefits may be reduced for those employees who are
12participating in the work sharing plan.

13(5) Certification by the employer that the aggregate reduction
14in work hours is in lieu of temporary or permanent layoffs, or both.
15The application shall include an estimate of the number of workers
16who would have been laid off in the absence of the work sharing
17plan.

18(6) Agreement by the employer to do all of the following:

19(A) Furnish reports to the director relating to the proper conduct
20of the plan.

21(B) Allow the director or his or her authorized representatives
22access to all records necessary to approve or disapprove the plan
23application.

24(C) After approval of a plan, monitor and evaluate the plan.

25(D) Follow any other directives the director deems necessary
26for the department to implement the plan and that are consistent
27with the requirements for plan applications.

28(7) Certification by the employer that participation in the work
29sharing plan and its implementation is consistent with the
30employer’s obligations under applicable federal and state laws.

31(8) The effective date and duration of the plan, which shall not
32be later than the end of the 12th full calendar month after the
33effective date.

34(9) Any other provision added to the application by the director
35that the United States Secretary of Labor determines to be
36appropriate for purposes of a work sharing plan.

37(d) The director shall approve or disapprove a work sharing
38plan in writing by the close of business no later than 10 working
39days from the date the completed plan is received and communicate
40the decision to the employer. A decision disapproving the plan
P8    1shall clearly identify the reasons for the disapproval. Within 20
2days, the employer may submit a request for review of the
3disapproved work sharing plan to the director’s work sharing
4administrator, whom the director shall designate for this purpose.
5After review, the work sharing administrator’s decision of approval
6or disapproval shall be final. If disapproved, the employer may
7submit a different work sharing plan for approval.

8(e) The director shall work with the employer to determine the
9effective date of a work sharing plan, which shall be specified in
10the notice of approval to the employer. The plan shall expire on
11the date specified in the notice of approval, which shall be either
12the date at the end of the 12th full calendar month after its effective
13date or an earlier date mutually agreed upon by the employer and
14the director. However, if a work sharing plan is revoked by the
15director under subdivision (f) of this section, the plan shall
16terminate on the date specified in the director’s written order of
17revocation. An employer may terminate a work sharing plan at
18any time upon written notice to the director. An employer may
19submit an application to renew the work sharing plan not more
20than 10 days after a previously approved work sharing plan expires.

21(f) The director may revoke approval of a work sharing plan
22for good cause at any time. The revocation order shall be in writing
23and shall specify the reasons for the revocation and the date the
24revocation is effective. The director may periodically review the
25operation of an employer’s work sharing plan to ensure that good
26cause does not exist for revocation of the approval of the plan. For
27purposes of these provisions, good cause includes, but is not limited
28to, failure to comply with the assurances given in the plan,
29unreasonable revision of productivity standards for the affected
30unit, conduct or occurrences tending to defeat the intent and
31effective operation of the work sharing plan, and violation of any
32criteria on which approval of the plan was based.

33(g) An employer may request a modification of an approved
34plan by filing a written request to the director. The request shall
35identify the specific provisions proposed to be modified and
36provide an explanation of why the proposed modification is
37appropriate for the work sharing plan. The director shall approve
38or disapprove the proposed modification in writing by the close
39of business no later than 10 working days from the date the
40proposed modification is received and communicate the decision
P9    1to the employer. The director, in his or her discretion, may approve
2a request for modification of the plan based on conditions that
3have changed since the plan was approved, provided that the
4modification is consistent with and supports the purposes for which
5the plan was initially approved. A modification does not extend
6the expiration date of the original plan, and the director shall
7promptly notify the employer whether the plan modification has
8been approved and, if approved, the effective date of the
9modification, which shall not be earlier than the effective date of
10the original work sharing plan. An employer is not required to
11request approval of a plan modification from the director if the
12change is not substantial, but the employer shall promptly report,
13in writing, every change to the plan to the director. The director
14may terminate an employer’s plan if the employer fails to meet
15this reporting requirement. If the director determines that the
16reported change is substantial, the director shall require the
17employer to request a modification to the plan.

18(h) (1) An employee is eligible to receive work sharing
19compensation with respect to any week only if the employee is
20monetarily eligible for unemployment compensation, not otherwise
21disqualified for unemployment compensation, and both of the
22following are true:

23(A) During the week, the employee is employed as a member
24of an affected unit under an approved work sharing plan, which
25was approved prior to that week, and the plan is in effect with
26respect to the week for which work sharing compensation is
27claimed.

28(B) Notwithstanding any other provisions relating to availability
29for work and actively seeking work, the employee is available for
30the employee’s usual hours of work with the work sharing
31employer, which may include, for purposes of this section,
32participating in training to enhance job skills that is approved by
33the director, such as employer-sponsored training or training funded
34under the federal Workforce Investment Act of 1998 (29 U.S.C.
35Sec. 2801 et seq.).

36(2) Notwithstanding any other provision of law, an employee
37covered by a work sharing plan is deemed unemployed in any
38week during the duration of that plan if the employee’s
39remuneration as an employee in an affected unit is reduced based
P10   1on a reduction of the employee’s usual weekly hours of work under
2 an approved work sharing plan.

3(i) For the purposes of this section, an employee shall not be
4disqualified under subdivision (c) of Section 1253 for any week
5if both of the following conditions exist:

6(1) The employee has not been absent from work without the
7approval of the regular employer.

8(2) The employee accepted all work the regular employer made
9available to the individual during hours scheduled off due to the
10work sharing plan.

11(j) The work sharing weekly compensation amount shall be the
12product of the regular weekly unemployment compensation amount
13for a week of total unemployment multiplied by the percentage of
14reduction in the individual’s usual weekly hours of workbegin delete, rounded
15to the nearest 5 percentend delete
.

16(k) (1) Provisions applicable to unemployment compensation
17shall apply to employees in a work sharing plan to the extent that
18they are not inconsistent with work sharing program provisions.
19An employee who files an initial claim for work sharing
20compensation shall receive a monetary determination. An employee
21may be eligible for work sharing compensation or unemployment
22compensation, as appropriate, except that an employee shall not
23be eligible for combined benefits in any benefit year in an amount
24more than the maximum entitlement established for regular
25unemployment compensation, nor shall an employee be paid work
26sharing benefits for more than 52 weeks under a work sharing
27plan.

28(2) An employee who is not provided any work during a week
29by the work sharing employer, or any other employer, and who is
30otherwise eligible for unemployment compensation, shall be
31eligible for the amount of regular unemployment compensation to
32which he or she would otherwise be eligible.

33(3) An employee who is not provided any work by the work
34sharing employer during a week, but who works for another
35 employer and is otherwise eligible, may be paid unemployment
36compensation for that week subject to the disqualifying income
37and other provisions applicable to claims for regular unemployment
38compensation.

39(4) The work sharing compensation paid to an employee shall
40be deducted from the maximum entitlement amount of regular
P11   1unemployment compensation established for that employee’s
2benefit year.

3(5) An employee who has received all of the work sharing
4compensation or combined unemployment compensation and work
5sharing compensation available in a benefit year shall be considered
6an exhaustee for purposes of extended benefits and, if otherwise
7eligible under those provisions, shall be eligible to receive extended
8benefits.

9(6) No employee who receives any benefits under this section
10during any benefit year shall receive any benefits pursuant to
11Section 1252 or 1252.2 as a partially unemployed individual with
12respect to any week during a benefit year while in employment
13status with the regular employer who initiated the work sharing
14plan under this section.

15(7) Sections 1253.5 and 1279 shall not apply to any individual
16eligible for any payment under this section.

17(l) Any amount payable under this section shall be reduced by
18the amount of any and all compensation payable for personal
19services, whether performed as an employee or an independent
20contractor or as a juror or as a witness, except compensation
21payable by the regular employer under a work sharing plan. For
22the purposes of this subdivision, “regular employer” may include,
23pursuant to an approved plan, a labor organization that periodically
24employs individuals in accordance with a collective bargaining
25agreement.

26(m) Work sharing compensation shall be charged to employers’
27experience rating accounts in the same manner as unemployment
28compensation is charged under this part. Employers liable for
29payments in lieu of contributions shall have work sharing
30compensation attributed to service in their employ in the same
31manner as unemployment compensation is attributed.

32(n) The benefit payment under this section, if not a multiple of
33one dollar ($1), shall be increased to the next higher multiple of
34one dollar ($1).

35(o) Except as otherwise provided by or inconsistent with this
36section, all provisions of this division and authorized regulations
37apply to benefits under this section. Authorized regulations may,
38to the extent permitted by federal law, make those distinctions and
39requirements as may be necessary in the procedures and provisions
40applicable to unemployed individuals to carry out the purposes of
P12   1this section, including, but not limited to, regulations defining
2normal hours, days, workweeks, and wages.

3(p) Employees shall not be eligible to receive any benefits under
4this section unless their employer agrees, in writing, and their
5bargaining agent pursuant to any applicable collective bargaining
6agreement agrees, in writing, to voluntarily participate in the work
7sharing program created by this section.

8(q) Notwithstanding Section 1327, the department shall not be
9required to notify an employer of additional claims that result from
10an approved plan submitted by the employer under which benefits
11are not paid in each week.

begin delete

12(r) (1) This section shall be implemented commencing on
13January 1, 2014, unless the department determines that
14implementation by that date is not feasible, in which case the
15department shall implement this section no later than July 1, 2014.

end delete
begin delete

16(2) A work sharing plan that is in effect when this section is
17implemented shall continue in effect and be subject to the law
18applicable when the plan was approved, but shall not be renewed.
19Upon expiration or termination of the plan, this section shall apply.

end delete
begin insert

20(r) This section shall become operative on July 1, 2014.

end insert


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