California Legislature—2015–16 Second Extraordinary Session

Assembly BillNo. 3


Introduced by Assembly Member Chu

(Coauthor: Assembly Member Roger Hernández)

July 16, 2015


An act to amend Sections 4681.6, 4691.6, and 4691.9 of the Welfare and Institutions Code, relating to developmental services.

LEGISLATIVE COUNSEL’S DIGEST

AB 3, as introduced, Chu. Developmental services: provider rates: minimum wage.

Existing law, the Lanterman Developmental Disabilities Services Act, requires the State Department of Developmental Services to contract with regional centers to provide services and supports to individuals with developmental disabilities and their families. Existing law requires the department to enter into contracts with private nonprofit corporations to operate regional centers that provide community services and support for consumers and their families, including, but not limited to, residential placement.

Existing law sets forth the department’s and the regional center’s authority to negotiate and set provider rates, and sets forth certain limitations. Existing law authorizes prescribed provider rate increases and prohibits others. Existing law, commencing July 1, 2014, increases the state minimum wage to no less than $9 per hour, and commencing January 1, 2016, increases the state minimum wage to no less than $10 per hour. Existing law authorizes an adjustment in prescribed provider rates commencing July 1, 2014, as necessary to adjust employee wages to meet that state minimum wage.

This bill would instead authorize an adjustment in prescribed provider rates as necessary to adjust employee wages to meet the state minimum wage law.

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

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

P2    1

SECTION 1.  

Section 4681.6 of the Welfare and Institutions
2Code
is amended to read:

3

4681.6.  

(a) Notwithstanding any other law or regulation,
4commencing July 1, 2008:

5(1) A regional center shall not pay an existing residential service
6provider, for services where rates are determined through a
7negotiation between the regional center and the provider, a rate
8higher than the rate in effect on June 30, 2008, unless the increase
9is required by a contract between the regional center and the vendor
10that is in effect on June 30, 2008, or the regional center
11demonstrates that the approval is necessary to protect the
12consumer’s health or safety and the department has granted prior
13written authorization.

14(2) A regional center shall not negotiate a rate with a new
15residential service provider, for services where rates are determined
16through a negotiation between the regional center and the provider,
17that is higher than the regional center’s median rate for the same
18service code and unit of service, or the statewide median rate for
19the same service code and unit of service, whichever is lower. The
20unit of service designation shall conform with an existing regional
21center designation or, if none exists, a designation used to calculate
22the statewide median rate for the same service. The regional center
23shall annually certify to the department its median rate for each
24negotiated rate service code, by designated unit of service. This
25certification shall be subject to verification through the
26department’s biennial fiscal audit of the regional center.

27(b) Notwithstanding subdivision (a), commencing July 1, 2014,
28regional centers may negotiate a rate adjustment with residential
29service providers regarding rates that are otherwise restricted
30 pursuant to subdivision (a), if the adjustment is necessary in order
31to pay employees no less than the minimum wage as established
32by Section 1182.12 of the Labor Code,begin delete as amended by Chapter
P3    1351 of the Statutes of 2013,end delete
and only for the purpose of adjusting
2payroll costs associated with the minimum wage increase. The
3rate adjustment shall be specific to the unit of service designation
4that is affected by the increased minimum wage, shall be specific
5to payroll costs associated with any increase necessary to adjust
6employee pay only to the extent necessary to bring pay into
7compliance with the increased state minimum wage, and shall not
8be used as a general wage enhancement for employees paid above
9the minimum wage. Regional centers shall maintain documentation
10on the process to determine, and the rationale for granting, any
11rate adjustment associated with the minimum wage increase.

12(c) Notwithstanding subdivision (a), commencing July 1, 2015,
13regional centers may negotiate a rate adjustment with residential
14service providers regarding rates that are otherwise restricted
15pursuant to subdivision (a), if the adjustment is necessary to
16implement Article 1.5 (commencing with Section 245) of Chapter
171 of Part 1 of Division 2 of the Labor Code, as added by Chapter
18317 of the Statutes of 2014. The rate adjustment may be applied
19only if a minimum of 24 hours or three days of paid sick leave per
20year was not a benefit provided to employees as of June 30, 2015,
21and shall be specific to payroll costs associated with any increase
22necessary to compensate an employee up to a maximum of 24
23hours or three days of paid sick leave in each year of employment.

24(d) For purposes of this section, “residential service provider”
25includes Adult Residential Facilities for Persons with Special
26Health Care Needs, as described in Section 4684.50.

27(e) This section shall not apply to those services for which rates
28are determined by the State Department of Health Care Services,
29or the State Department of Developmental Services, or are usual
30and customary.

31

SEC. 2.  

Section 4691.6 of the Welfare and Institutions Code
32 is amended to read:

33

4691.6.  

(a) Notwithstanding any other law or regulation,
34commencing July 1, 2006, the community-based day program,
35work activity program, and in-home respite service agency rate
36schedules authorized by the department and in operation June 30,
372006, shall be increased by 3 percent, subject to funds specifically
38appropriated for this increase in the Budget Act of 2006. The
39increase shall be applied as a percentage, and the percentage shall
40be the same for all providers. Any subsequent increase shall be
P4    1governed by subdivisions (b), (c), (d), (e), (f), (g), (h), (i), and (j),
2and Section 4691.9.

3(b) Notwithstanding any other law or regulation, the department
4shall not establish any permanent payment rate for a
5community-based day program or in-home respite service agency
6 provider that has a temporary payment rate in effect on June 30,
72008, if the permanent payment rate would be greater than the
8temporary payment rate in effect on or after June 30, 2008, unless
9the regional center demonstrates to the department that the
10permanent payment rate is necessary to protect the consumers’
11health or safety.

12(c) Notwithstanding any other law or regulation, neither the
13department nor any regional center shall approve any program
14design modification or revendorization for a community-based
15day program or in-home respite service agency provider that would
16result in an increase in the rate to be paid to the vendor from the
17rate that is in effect on or after June 30, 2008, unless the regional
18center demonstrates that the program design modification or
19revendorization is necessary to protect the consumers’ health or
20safety and the department has granted prior written authorization.

21(d) Notwithstanding any other law or regulation, the department
22shall not approve an anticipated rate adjustment for a
23community-based day program or in-home respite service agency
24provider that would result in an increase in the rate to be paid to
25the vendor from the rate that is in effect on or after June 30, 2008,
26unless the regional center demonstrates that the anticipated rate
27adjustment is necessary to protect the consumers’ health or safety.

28(e) Notwithstanding any other law or regulation, except as set
29forth in subdivisions (f) and (i), the department shall not approve
30any rate adjustment for a work activity program that would result
31in an increase in the rate to be paid to the vendor from the rate that
32is in effect on or after June 30, 2008, unless the regional center
33demonstrates that the rate adjustment is necessary to protect the
34consumers’ health and safety and the department has granted prior
35written authorization.

36(f) Notwithstanding any other law or regulation, commencing
37July 1, 2014, the department may approve rate adjustments for a
38work activity program that demonstrates to the department that
39the rate adjustment is necessary in order to pay employees who,
40prior to July 1, 2014, were being compensated at a wage that is
P5    1less than the minimum wage established on and after July 1, 2014,
2by Section 1182.12 of the Laborbegin delete Code, as amended by Chapter
3351 of the Statutes of 2013.end delete
begin insert Code.end insert The rate adjustment pursuant
4to this subdivision shall be specific to payroll costs associated with
5any increase necessary to adjust employee pay only to the extent
6necessary to bring pay into compliance with the increased state
7minimum wage, and shall not constitute a general wage
8enhancement for employees paid above the increased minimum
9wage.

10(g) Notwithstanding any other law or regulation, commencing
11July 1, 2014, community-based day program and in-home respite
12services agency providers with temporary payment rates set by
13the department may seek unanticipated rate adjustments from the
14department due to the impacts of the increased minimum wage as
15established by Section 1182.12 of the Laborbegin delete Code, as amended by
16Chapter 351 of the Statutes of 2013.end delete
begin insert Code.end insert The rate adjustment
17shall be specific to payroll costs associated with any increase
18necessary to adjust employee pay only to the extent necessary to
19bring pay into compliance with the increased state minimum wage,
20and shall not constitute a general wage enhancement for employees
21paid above the increased minimum wage.

22(h) Notwithstanding any other law or regulation, commencing
23January 1, 2015, the in-home respite service agency rate schedule
24authorized by the department and in operation December 31, 2014,
25shall be increased by 5.82 percent, subject to funds specifically
26appropriated for this increase for costs due to changes in federal
27regulations implementing the federal Fair Labor Standards Act of
281938 (29 U.S.C. Sec. 201 et seq.). The increase shall be applied
29as a percentage, and the percentage shall be the same for all
30applicable providers.

31(i) Notwithstanding any other law or regulation, commencing
32July 1, 2015, the department may approve rate adjustments for a
33work activity program that demonstrates to the department that
34the rate adjustment is necessary to implement Article 1.5
35(commencing with Section 245) of Chapter 1 of Part 1 of Division
362 of the Labor Code, as added by Chapter 317 of the Statutes of
372014. The rate adjustment may be applied only if a minimum of
3824 hours or three days of paid sick leave per year was not a benefit
39provided to employees as of June 30, 2015, and shall be specific
40to payroll costs associated with any increase necessary to
P6    1compensate an employee up to a maximum of 24 hours or three
2days of paid sick leave in each year of employment.

3(j) Notwithstanding any other law or regulation, commencing
4July 1, 2015, community-based day program and in-home respite
5services agency providers with temporary payment rates set by
6the department may seek unanticipated rate adjustments from the
7department if the adjustment is necessary to implement Article 1.5
8(commencing with Section 245) of Chapter 1 of Part 1 of Division
92 of the Labor Code, as added by Chapter 317 of the Statutes of
102014. The rate adjustment may be applied only if a minimum of
1124 hours or three days of paid sick leave per year was not a benefit
12provided to employees as of June 30, 2015, and shall be specific
13to payroll costs associated with any increase necessary to
14compensate an employee up to a maximum of 24 hours or three
15days of paid sick leave in each year of employment.

16

SEC. 3.  

Section 4691.9 of the Welfare and Institutions Code
17 is amended to read:

18

4691.9.  

(a) Notwithstanding any other law or regulation,
19commencing July 1, 2008:

20(1) A regional center shall not pay an existing service provider,
21for services where rates are determined through a negotiation
22between the regional center and the provider, a rate higher than
23the rate in effect on June 30, 2008, unless the increase is required
24by a contract between the regional center and the vendor that is in
25effect on June 30, 2008, or the regional center demonstrates that
26the approval is necessary to protect the consumer’s health or safety
27and the department has granted prior written authorization.

28(2) A regional center shall not negotiate a rate with a new service
29provider, for services where rates are determined through a
30negotiation between the regional center and the provider, that is
31higher than the regional center’s median rate for the same service
32code and unit of service, or the statewide median rate for the same
33service code and unit of service, whichever is lower. The unit of
34service designation shall conform with an existing regional center
35designation or, if none exists, a designation used to calculate the
36statewide median rate for the same service. The regional center
37shall annually certify to the State Department of Developmental
38Services its median rate for each negotiated rate service code, by
39designated unit of service. This certification shall be subject to
P7    1verification through the department’s biennial fiscal audit of the
2regional center.

3(b) Notwithstanding subdivision (a), commencing July 1, 2014,
4regional centers may negotiate a rate adjustment with providers
5regarding rates if the adjustment is necessary in order to pay
6 employees no less than the minimum wage as established by
7Section 1182.12 of the Labor Code,begin delete as amended by Chapter 351
8of the Statutes of 2013,end delete
and only for the purpose of adjusting
9payroll costs associated with the minimum wage increase. The
10rate adjustment shall be specific to the unit of service designation
11that is affected by the increased minimum wage, shall be specific
12to payroll costs associated with any increase necessary to adjust
13employee pay only to the extent necessary to bring pay into
14compliance with the increased state minimum wage, and shall not
15be used as a general wage enhancement for employees paid above
16the increased minimum wage. Regional centers shall maintain
17documentation on the process to determine, and the rationale for
18granting, any rate adjustment associated with the minimum wage
19increase.

20(c) Notwithstanding any other law or regulation, commencing
21January 1, 2015, rates for personal assistance and supported living
22services in effect on December 31, 2014, shall be increased by
235.82 percent, subject to funds specifically appropriated for this
24increase for costs due to changes in federal regulations
25implementing the federal Fair Labor Standards Act of 1938 (29
26U.S.C. Sec. 201 et seq.). The increase shall be applied as a
27percentage, and the percentage shall be the same for all applicable
28providers. As used in this subdivision, both of the following
29definitions shall apply:

30(1) “Personal assistance” is limited only to those services
31provided by vendors classified by the regional center as personal
32assistance providers, pursuant to the miscellaneous services
33provisions contained in Title 17 of the California Code of
34Regulations.

35(2) “Supported living services” are limited only to those services
36defined as supported living services in Title 17 of the California
37Code of Regulations.

38(d) Notwithstanding subdivision (a), commencing July 1, 2015,
39regional centers may negotiate a rate adjustment with existing
40service providers for services for which rates are determined
P8    1through negotiation between the regional center and the provider,
2if the adjustment is necessary to implement Article 1.5
3(commencing with Section 245) of Chapter 1 of Part 1 of Division
42 of the Labor Code, as added by Chapter 317 of the Statutes of
52014. The rate adjustment may be applied only if a minimum of
624 hours or three days of paid sick leave per year was not a benefit
7provided to employees as of June 30, 2015, and shall be specific
8to payroll costs associated with any increase necessary to
9compensate an employee up to a maximum of 24 hours or three
10days of paid sick leave in each year of employment.

11(e) This section shall not apply to those services for which rates
12are determined by the State Department of Health Care Services,
13or the State Department of Developmental Services, or are usual
14and customary.



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