BILL ANALYSIS Ó
AB 1792
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 1792 (Gomez) - As Amended: April 1, 2014
SUBJECT : Public benefits: report on employers.
SUMMARY : Requires the Employment Development Department (EDD)
to identify and compile a list of employers with employees who
are enrolled in public assistance programs, as specified.
Specifically, this bill :
1)Requires EDD to collaborate with the State Department of
Health Care Services, the State Department of Social Services,
and the State Department of Education to identify and compile
a list of employers of a "beneficiary" of certain public
assistance programs.
2)Defines "employer" to mean an individual or organization that
employs 25 or more persons in this state, as specified.
"Employer" does not include specified public employers.
3)Defines "beneficiary" to mean an individual employed by an
employer and enrolled in a public assistance program (unless
the individual is enrolled by reason of disability of being
over 65 years of age).
4)Defines "public assistance program" to mean the Medi-Cal
program, CalFresh, CalWORKS, and the Women, Infants and
Children program, as specified.
5)Specifies that the list compiled by EDD shall include the
employer's name, address, and the total number of each
employer's employees who are beneficiaries.
6)Requires EDD to provide the list to the Department of Finance.
7)Requires the Department of Finance, in collaboration with EDD,
to determine both of the following:
a) The total cost to the state of the benefits provided to
each identified employer's employees under each public
assistance program.
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b) The total cost to the state of the aggregated benefits
provided to each identified employer's employees.
8)Requires the report to be annually transmitted to the
Legislature and posted on the Department of Finance website no
later than April 15 of each year, and to remain available to
the public for at least five years.
9)Specifies that the list shall not include the names or any
identifying information of any individual beneficiary under a
public assistance program and shall be subject to all state
and federal confidentiality and privacy laws and regulations.
10)Provides that an employer who discharges or discriminates or
retaliates against an employee who enrolls in a public
assistance program or refuses to hire a beneficiary of a
public assistance program would be in violation of specified
provisions of existing law.
11)Makes related and conforming changes.
12)Makes related legislative findings and declarations.
FISCAL EFFECT : Unknown
COMMENTS : This bill proposes to require EDD to identify and
compile a list of employers with employees who are enrolled in
public assistance programs. The legislative findings and
declarations of the measure state that employers that pay low
wages and offer no benefits shift the burden of keeping workers
out of poverty onto taxpayers. The resulting increase in the
numbers of the working poor stretches the state safety net to
the limit and burdens the state budget, programs and services.
Therefore, this bill states that, in order to promote a deeper
understanding of the causes and sources of underemployment,
poverty level wages, and the economic impacts on Californians
and the state budget, it is appropriate for policymakers to
possess a broader set of empirical data with which to make
informed decisions.
Recent Oversight Hearing on Fast Food Workers and Safety Net
Programs
In November 2013, this Committee conducted a joint informational
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hearing with the Senate Committee on Labor and Industrial
Relations that explored concerns over the public cost of low
wage jobs in the fast-food industry and related economic
consequences, specifically the price tag associated with the
increased use of public aid by fast-food workers.
The hearing focused on an October 2013 report<1> published by
the UC Berkeley Labor Center and University of Illinois at
Urbana-Campaign Department of Urban & Regional Planning,
entitled "The Public Cost of Low-Wage Jobs in the Fast-Food
Industry." According to the report, more than half of the
families of front-line fast-food workers are enrolled in one or
more public programs, compared to 25 percent of the workforce as
a whole - costing the public nearly $7 billion per year.
The report used government administrative data and the U.S.
Bureau of Labor's Current Population Survey (CPS) from 2007-2011
to analyze four major public assistance programs including
Medicaid and the Children's Health Insurance Program, the
Federal Earned Income Tax Credit, food stamps, and Temporary
Assistance for Needy Families.
Some of the report's main findings include:
From 2007-2011, California tax payers paid $717 million in
public assistance benefits to fast-food workers.
Nearly 45 percent of the nation's fast food workers live in a
household where at least one member is enrolled in a public
assistance program.
The cost of public assistance to fast food workers and their
families nationwide is nearly $7 billion per year.
One in five families that includes a fast food worker has an
---------------------------
<1> Allegretto, Sylvia et al., "Fast Food, Poverty Wages: The
Public Cost of Low Wage Jobs in the Fast Food Industry." UC
Berkeley Labor Center and University of Illinois at
Urbana-Champaign (October 15, 2013).
http://laborcenter.berkeley.edu/publiccosts/fast_food_poverty_wag
es.pdf
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income below the poverty line.
The families of more than half of the nation's food workers
that work full-time (at least 40 hours per week) are enrolled
in public assistance programs.
Fast food workers and their families are twice as likely as
working families in other industries to enroll in public
assistance programs.
Recent Report on Walmart and Tax Subsidies
Just last week, Americans for Tax Fairness released a report<2>
that concluded that Walmart and the Walton family receive tax
breaks and tax subsidies estimated at more than $7.8 billion per
year. This figure includes a cost of $6.2 billion to taxpayers
for Walmart employees relying on public assistance, $1billion in
federal tax breaks benefiting Walmart, and $70 million in direct
economic development subsidies by state and local governments.
The report also calculated that the $7.8 billion in subsidies,
had it been invested in public education, would have funded an
additional 105,131 teachers.
Similar Reports in Other States
The State of Massachusetts prepares an annual report on
employers with fifty or more employees receiving health services
through one or more of the state's publicly subsidized health
care programs. The most recent report issued in February 2013
describes the requirement under state law as follows:
"Section 304 of Chapter 149 of the Acts of 2004 requires
the Massachusetts Executive Office of Health and Human
Services (EOHHS) to produce an annual report on employers
in the Commonwealth with at least fifty employees using
public health care programs (the Fifty-Plus Report). This
requirement was part of the state's efforts to change how
health care services are paid for in Massachusetts, efforts
that culminated in passage and implementation of Chapter 58
-------------------------
<2> "Walmart on Tax Day: How Taxpayers Subsidize America's
Biggest Employer and Richest Family." Americans for Tax
Fairness (April 2014).
http://www.americansfortaxfairness.org/walmart-on-tax-day/
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of the Acts of 2006 (Massachusetts health care reform law).
The Massachusetts Division of Health Care Finance and
Policy (the Center) is the EOHHS agency responsible for
producing the Fifty-Plus Report.
Initially, the Fifty-Plus Report provided policymakers in
Massachusetts with key data on how employees of large firms
(firms with at least 50 employees) access public health
care programs. Policymakers used data from the Fifty-Plus
Report, among many other sources, to craft a 'shared
responsibility' approach to increasing health coverage,
where individuals, government, and employers are all
required to play a role in providing health insurance
coverage to Massachusetts residents. Today, in addition to
policy-makers, stakeholders such as employers, labor
unions, and researchers rely on the Fifty-Plus Report for
data and analyses on utilization and financing of publicly
subsidized health insurance programs by employees and
dependents of large firms."<3>
In 2007, the State of Missouri passed a law requiring a similar
report requiring disclosures of companies with employees and
dependents enrolled in the state's Medicaid program, known as MO
Healthnet. The report was issued in October 2009.
Numerous other states have issued or developed similar reports,
but it appears that Massachusetts and Missouri are the only two
thus far to have done so by legislation.
AUTHOR'S STATEMENT IN SUPPORT OF THE BILL :
The author states the following in support of this bill:
"The Legislature and Governor made a strong statement for
working Californian families in 2013 by raising the minimum
wage. Yet the debate continues. As policymakers we have an
opportunity to examine the economic decisions impacting
Californians.
[This bill] asks the questions we as Legislators should
know in order to make reasoned and informed decisions
-------------------------
<3> "Employer Who Had Fifty of More Employees Using MassHealth,
Commonwealth Care, or the Health Safety Net in State Fiscal Year
2010." Commonwealth of Massachusetts, Center for Health
Information and Analysis (February 2013).
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regarding economic policy. Does the State underwrite
business finances by means of social spending and
assistance programs? If so, to what extent are taxpayer
resources redirected to backfill those employers?
[This bill] requires the Employment Development Department
to provide this list to the Department of Finance and would
require the Department of Finance to collaborate with the
Employment Development Department to determine the total
cost to the state of the benefits provided to each
identified employer's employees under each public
assistance program and the total cost to the state of the
aggregated benefits provided to each identified employer's
employees. The bill would require the Employment
Development Department to prepare a report with this
information and provide it to the Department of Finance.
This bill does not raise employer costs. This bill does
not place additional burdens on employers. This measure
gives the Legislature more perspective on the workforce and
how our safety net programs are being utilized."
ARGUMENTS IN SUPPORT :
This measure is co-sponsored by the California Labor Federation,
AFL-CIO, the United Food and Commercial Workers Union, and SEIU
Local 1000.
The sponsors state that, after five years of a brutal recession,
California is finally on the road to economic recovery.
However, the state's economic recovery has been fueled by growth
in low wage, part-time jobs that are rapidly replacing middle
class jobs lost during the recession. Companies that pay
low-wages with no benefits force an increasing number of workers
to rely on public assistance just to make ends meet. Even
working full-time, many minimum wage workers still qualify for
public assistance.
The purpose of public assistance programs is to help workers
through tough times, such as the loss of a job. They were not
designed as a permanent subsidy to low-wage employers who do not
provide the wages or benefits necessary for basic necessities.
Work is supposed to lead to self-sufficiency, not permanently
trap workers in taxpayer funded programs. Yet, taxpayers are
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increasingly subsidizing some of the largest and most profitable
corporations in the world that are shifting workers onto public
programs.
The sponsors argue that corporations that shift workers onto
public benefits also put responsible employers at a competitive
disadvantage. Employers that provide health and retirement
benefits and pay living wages have to compete against companies
in the same industries that are profiting by sticking taxpayers
for their workers' health care and food bills. Given that
Medi-Cal is the fastest growing area of public spending,
companies that shift workers onto public benefits put enormous
pressure on the state budget. The more taxpayers subsidize
low-wage employers, the less the state can spend on other budget
priorities, like education, infrastructure, and public safety.
The sponsors state that 24 states have already released similar
reports and Massachusetts produced an annual report on employers
with workers on public health care programs. The report
proposed by this bill will help inform proposals by lawmakers
and advocates to make decisions about budget priorities and
public assistance funding and to address the trend toward
employers shifting the cost of providing benefits onto
taxpayers.
ARGUMENTS IN OPPOSITION :
A coalition of groups, including the California Chamber of
Commerce, opposes this bill and argues that, instead of enacting
policies to help low-income workers or provide the Legislature
with valuable information about how to help employers compete
while providing better wages and health care, this bill creates
a "list of shame" that would expose California employers to
liability, targeted media attacks and protests.
Opponents list a number of factors that they allege influence
use of public assistance progams, but contend that this bill
examines none of them. Instead, they argue that this bill, by
looking only at the number of employees in a given business who
utilize these programs, implies that it is the greed of
corporate executives that leads them to pay lower wages and not
offer health benefits. In asking for a report to highlight those
employers that "create the greatest burden on the state," the
measure also ignores the fact that even employers who pay lower
wages and do not provide health benefits still contribute
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greatly to the state economy and keep millions of Californians
from being completely dependent on public assistance.
Finally, opponents argue that this bill creates new grounds for
litigation by prohibiting retaliation or discrimination against
an employee who enrolls in a public assistance program or
refuses to hire an individual because he or she is enrolled in a
public assistance program. Therefore, they argue that the
measure exposes an employer to costly litigation for alleged
discrimination or retaliation each time it makes an adverse
employment decision that impacts an employee who has enrolled in
one of the four referenced public assistance programs.
California employers are already overwhelmed with employment
litigation.
Opponents conclude that, while they understand the concern that
some employers pay low wages and/or do not provide health care
benefits, this bill will do nothing to drive up wages, make
health care more affordable, or otherwise improve the lives of
workers. At the same time, the bill will actually make it
harder for some employers to provide good wages and benefits by
exposing them to new litigation costs.
Western Center on Law and Poverty: "Concerns"
The Western Center on Law and Poverty (Western Center) writes
that it supports the effort to bring sunshine by requiring the
disclosure of employers who have employees receiving public
assistance, but does have several concerns with this bill.
Primarily, Western Center argues that this bill should be
amended to exclude employees hired through CalWORKs subsidized
employment. They note that subsidized employment is a CalWORKs
Welfare-to-Work activity in which a participant's employer is
partially or wholly reimbursed for wages and/or training costs.
They contend that, without carving out the subsidized employees
from the list of employees that count toward the publically
disclosed number of employees on public assistance, this
proposal carries the danger of discouraging participation by
employers. Instead, Western Center would like to see this bill
establish a separate report of the employers participating in
the subsidized employment program as a way to improve
information the Legislature has about this program.
In addition, Western Center states that, while this bill takes
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important steps to protect workers from retaliation in cases
where disclosure of receipt of public benefits could result in
discrimination of an employee, they are concerned that these
protections are not strong enough.
PRIOR RELATED LEGISLATION :
Previous legislation proposed similar reports focused on the
state fiscal impact of employers with employees enrolled in
public healthcare programs.
For example, AB 1840 (Jerome Horton) from 2006 would have
required the Department of Health Services and the Managed Risk
Medical Insurance Board to collaborate in preparing a report
that identifies all employers who employ 25 or more persons who
are beneficiaries, or who support beneficiaries, enrolled in the
Medi-Cal, Healthy Families, and Access for Infants and Mothers
(AIM) programs. AB 1840 was vetoed by Governor Schwarzenegger.
AB 89 (Jerome Horton) from 2005 was substantially similar to AB
1840, and was similarly vetoed by Governor Schwarzenegger.
REGISTERED SUPPORT / OPPOSITION :
Support
American Federation of State, County and Municipal Employees
California Conference of Machinists
California Conference of the Amalgamated Transit Union
California Labor Federation, AFL-CIO (Sponsor)
California Nurses Association
California Professional Firefighters
California Teamsters Public Affairs Council
Communications Workers of America, District 9
Engineers & Scientists, Local 20
International Longshore and Warehouse Union, Coast Division
Professional & Technical Engineers, Local 21
Service Employees International Union, Local 1000
UNITE HERE
United Food and Commercial Workers, Western States Council
Utility Workers Union of America, Local 132
Concern
Western Center on Law and Poverty
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Opposition
California Chamber of Commerce
California Farm Bureau Federation
California Grocers Association
California Manufacturers & Technology Association
California Restaurant Association
California Retailers Association
Simi Valley Chamber of Commerce
Southwest California Legislative Council
United Ag
Western Growers
Analysis Prepared by : Ben Ebbink / L. & E. / (916) 319-2091