BILL ANALYSIS Ó
SENATE COMMITTEE ON LABOR AND INDUSTRIAL RELATIONS
Senator Tony Mendoza, Chair
2015 - 2016 Regular
Bill No: AB 908 Hearing Date: June 24,
2015
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|Author: |Gomez |
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|Version: |June 18, 2015 |
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|Urgency: |No |Fiscal: |Yes |
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|Consultant:|Deanna Ping |
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Subject: Disability compensation: family temporary disability
insurance.
KEY ISSUE
Should the Legislature extend the paid family leave program
benefits from 6 weeks to 10 weeks?
Should the Legislature increase the wage replacement rate for
PFL benefits from 55% to either 65%, 75%, or 80% depending on an
individual's wage level?
Should the Legislature establish a $250 minimum weekly benefit
amount for the paid family leave program?
ANALYSIS
Existing law established a family temporary disability insurance
program, Paid Family Leave (PFL) that provides up to six weeks
of wage replacement benefits to workers who take time off work
to care for:
a seriously ill child, spouse, parent, or domestic
partner, siblings, grandparents, grandchildren, and
parents-in-laws or to bond with a minor child in connection
with foster care or adoption. (Unemployment Insurance Code
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§3301)
Existing law establishes the State Disability Insurance (SDI)
Program for individuals who are unable to work due to sickness
or injury, the sickness or injury of a family member, or the
birth, adoption, or foster care placement of a new child.
Existing law requires a claimant for SDI or PFL benefits to
establish his or her medical eligibility for each period of
disability by obtaining a certificate from a treating physician
or practitioner that establishes the sickness, injury, or
pregnancy of the employee, or the condition of the family member
that warrants the care of the employee. As part of the
certificate of eligibility to care for a family member, the
physician or practitioner must provide an estimate of the time
needed by the employee to care for the child, parent, spouse, or
domestic partner.
(Unemployment Insurance Code §3301)
Existing law requires each employee to contribute to the
Disability Fund to pay the costs of DI benefits. The rate of
these employee contributions ranges from 0.1% to 1.5% of wages,
and are calculated and announced annually by the Director of the
EDD based on the financial condition of the disability fund.
(Unemployment Insurance Code §3301)
Existing law states that an individual is eligible to receive
temporary disability insurance benefits equal to one-seventh of
his or her weekly benefit amount for each full day during which
he or she is unable to work due to caring for a seriously ill or
injured family member or bonding with a minor child within one
year of the birth or placement of the child in connection with
foster care or adoption. (Unemployment Insurance Code §3301)
This Bill increases the level and duration of benefits provided
in the Paid Family Leave (PFL) insurance program. Specifically,
this bill:
1)Increases the maximum duration of PFL insurance benefits from
6 to 10 weeks.
2)Establishes a minimum weekly benefit amount of $250.
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3)Increases the wage replacement rate for PFL benefits from 55%
to:
a. 80% for those who make up to 25% of the full-time
minimum wage.
b. 75% for those who make between 25% and 75% of the
full-time minimum wage.
c. 65% for those who make more than 75% of the
full-time minimum wage.
4)Defines the annual "full-time minimum wage" as product of the
California minimum wage and 2,000 hours.
COMMENTS
1. Background on the Paid Family Leave Program .
In 2002 Senate Bill 1661 was enacted, making California the
first state in the nation to provide Family Temporary
Disability Insurance, more commonly known as Paid Family
Leave. Established within the State Disability Insurance
program and administered by the Employment Development
Department, PFL provides benefits to individuals who take time
off of work to care for a seriously ill child, spouse, parent,
or registered domestic partner, or to bond with a new minor
child due to birth, adoption, or foster care placement.
Approximately 13.1 million Californians are covered by PFL. In
2013 Governor Brown signed SB 770 (Jackson) which extended PFL
to workers who take time off of work to care for a seriously
ill parent-in-law, grandparent, grandchild, or sibling. In
calendar year 2013, 203,732 PFL claims were filed, and
approximately 90% of which were filed to take time off to bond
with a newborn child. It is important to distinguish the
difference between the PFL program (which provides only wage
replacement during leave) and job protection legislation such
as the federal Family & Medical Leave Act (FMLA) and the
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California Family Rights Act (CFRA). The PFL program itself
does not provide job protection but the program itself nearly
covers all employees, aside from some self-employed and public
sector persons, regardless of the size of the employer.
However, a claimant could have such job protection benefits if
they also qualify under the requirements of FMLA or CFRA.
PFL is funded by an employee-paid payroll tax with benefit
levels indexed to inflation, built upon California's long
standing State Disability Insurance system, which has provided
income support for employees' medical and pregnancy-related
leaves for many years. However, unlike SDI benefits, income
from PFL has been deemed taxable by the Internal Revenue
Service. Under the PFL program, workers can claim a cash
benefit set at 55% of "base period" wages for up to 6 weeks.
The maximum weekly benefit is currently set at $1,104 and is
adjusted every year based on the statewide average weekly
wage. The average claim in 2013 paid $527 per week for 5.4
weeks. National data show that two-thirds of women were
working during their last pregnancy and that 70% of women took
maternity leave with an average duration of 10 weeks.
Studies have shown paid family leave policies have positive
impacts on infant and maternal health, have been associated
with greater labor-force attachment (women retaining jobs into
their pregnancy and returning to work after giving birth), and
have resulted in increased wages for some women.
2. Funding PFL .
The PFL insurance program is part of the State Disability
Insurance (SDI) program that is paid for by the proceeds of an
employee payroll deduction which are deposited in the
Disability Insurance (DI) Fund. PFL claims are approximately
12% of total payments from the DI Fund. The SDI contribution
is set at 0.9% of the first $108,160 of wages in 2015. Both
the rate and the wage ceiling are adjusted by EDD according to
a formula every year. At the end of 2014, the DI fund was
projected to have reserves ($3.3 billion) that are over 60% of
annual program costs. EDD guidelines suggest that a reserve
of 25% is adequate to ensure the ongoing solvency of the DI
Fund.
3. Need for this bill?
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California's PFL program is funded through worker
contributions and provides partial wage replacement (55% of
prior wage levels) for up to 6 weeks for bonding with a new
child or caring for a seriously ill relative. According to the
author, although the PFL benefit enhances security for
claimants who take leave to bond with children or care for
sick family members, the benefit is simply insufficient to
offer meaningful wage replacement for workers, especially
those whose only source of paid leave is PFL. The author
brings attention to one survey, in which nearly a third of
respondents who were aware of PFL did not apply for it when
family needs arose because the wage replacement level was too
low - making it difficult for workers that live pay check to
paycheck to meet their basic needs. The author notes that
these workers cannot absorb the pay cut imposed by the current
PFL benefit limits, particularly when it is coupled with the
increased financial burdens that accompany supporting a
newborn child or caring for a relative. The author also notes
that these workers should be able to use the PFL insurance for
which they pay.
AB 908 would increase the maximum benefit to 10 weeks, as well
as increase the wage replacement rate based on wage level
ranging from 65% for a higher wage level to 80% for a lower
wage level, as well as increase the minimum weekly benefits to
$250. According to the author these changes to the PFL program
will make PFL a real option for most working families by
reducing the financial burden when having a baby or caring for
an ill relative.
4. Proponent Arguments :
Proponents note that California's PFL program is wholly funded
through worker contributions and covers all private sector
workers and some public sector workers. Proponents bring
attention to research that shows that paid family leave not
only improves the ability of working families to meet the
obligations of their family members, but employers benefit
from reduced turnover as families that benefit from paid
family leave are more likely to stay in the workforce.
Proponents also highlight a recent study that found that women
who take paid family leave are 39 percent less likely to
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receive public assistance and 40 percent less likely to
receive food stamps in the year following a child's birth.
Proponents argue that AB 908 will make paid family leave work
for all workers by addressing two critical aspects of the
benefit design. For many workers, the 55 percent wage
replacement level is simply insufficient to offer meaningful
wage replacement, especially when PFL is the only source of
paid leave. They argue that PFL's current wage replacement
level of 55 percent coupled with increased financial burdens
when having a baby or caring for a relative makes it
financially impossible for workers to use their PFL benefits.
Proponents argue that in addition to wage replacement levels,
the 6 weeks of paid leave offered by PFL is far less than
nearly every other developed county. Proponents bring
attention to the fact that in comparison to the thirty-eight
Organization for Economic Co-operation and Development (OECD)
countries, the median amount of fully-paid leave available for
mothers is over five months. Proponents also argue that longer
paid leave is associated with a range of positive physical and
mental health benefits for families and children, as well as
improved early child development.
5. Opponent Arguments :
None on file.
6. Prior Legislation :
SB 1661 (Kuehl) Chapter 901, Statutes of 2002 created the PFL
program which began on January 1, 2004.
SB 727 (Kuehl), Chapter 797, Statutes of 2003 made changes
that clarified the role of EDD in maintaining the program as
well as ensuring the accumulation of enough funds to pay for
the benefits.
SB 727 (Kuehl) of 2007, proposed to extend the PFL Program to
caring for grandparents, grandchildren, siblings, and
parents-in-law, was vetoed by the Governor.
AB 804 (Yamada) of 2011, proposed to extend the PFL program
Program to caring for grandparents, grandchildren, siblings,
and parents-in-law and was held in the Assembly Appropriations
Committee.
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SB 770 (Jackson), Chapter 350, Statutes of 2013 expanded the
definition of family to include in-laws, siblings and
grandparents.
SUPPORT
Alliance of Californians for Community Empowerment
American Association of Retired Persons
American Association of University Women
American Federation of State, County and Municipal Employees,
AFL-CIO
Breastfeed LA
California Alliance for Retired Americans
California Black Health Network
California Breastfeeding Coalition
California Child Care Resource and Referral Network
California Domestic Workers Alliance
California Employment Lawyers Association
California Partnership
California WIC Association
California Women's Law Center
California Work and Family Coalition
Career Ladders Project
Center for Law and Social Policy (CLASP)
Child Care Law Center
Children Now
Communications Workers of America, AFL-CIO District 9
Communications Workers of America, AFL-CIO Local 9003
Community Clinic Association of Los Angeles County
Congress of California Seniors
Congress of California Seniors
County of Los Angeles Board of Supervisors
County of Monterey Board of Supervisors
County of Santa Cruz Board of Supervisors
Courage Campaign
Equal Rights Advocates
Family Caregiver Alliance, National Center on Caregiving
First 5 California
Glendale City Employees Association (GCEA)
Health Officers Association of California
Jewish Labor Committee Western Region
Legal Aid Society- Employment Law Center
Mujeres Unidas y Activas
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National Association of Social Workers-California Chapter
National Association of Working Women, California Chapter
National Council of Jewish Women
National Council of La Raza (NCLR)
Next Generation
Organization of SMUD Employees
Parent Voices
Raising California Together
Restaurant Opportunities Center of Los Angeles
San Bernardino Public Employees Association
San Diego County Court Employees Association
San Francisco Breastfeeding Promotion Coalition
San Luis Obispo County Employees Association
School Employees Association of California
Small Business Majority
Small School Districts' Association
St. Anthony Foundation
Teamsters Local 986
The Center for Popular Democracy
The Health Officers Association of California
The Women's Foundation of California
Tradeswomen Inc.
Tulare County Breastfeeding Coalition
Tuolumne County Breastfeeding Colition
UFCW Western States Council
Ultra Violet
Western Center on Law and Poverty
Western Regional Advocacy Project
Zero to Three, National Center for Infants, Toddlers, and
Families
9 to 5 California
OPPOSITION
None on file.
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