BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 908|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: AB 908
Author: Gomez (D) and Burke (D), et al.
AmendedAmended:8/31/15 in Senate
Vote: 21
SENATE LABOR & IND. REL. COMMITTEE: 4-1, 6/24/15
AYES: Mendoza, Jackson, Leno, Mitchell
NOES: Stone
SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/27/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
ASSEMBLY FLOOR: 60-17, 6/2/15 - See last page for vote
SUBJECT: Disability compensation: family temporary disability
insurance
SOURCE: Author
DIGEST: This bill increases the level and duration of benefits
provided in the Paid Family Leave insurance program, as
specified.
ANALYSIS:
Existing law:
1)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
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Page 2
with foster care or adoption. (Unemployment Insurance Code
§3301)
2)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.
3)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)
4)Requires each employee to contribute to the Disability Fund to
pay the costs of disability insurance 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 Employment Development Department based on the
financial condition of the disability fund. (Unemployment
Insurance Code §3301)
5)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:
1)Increases the level and duration of benefits provided in PFL
insurance program.
2)Increases the maximum duration of PFL insurance benefits from
six to eight weeks on or after January 1, 2018.
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Page 3
3)Establishes a weekly benefit amount of $250 for an
individual's who disability base period is no more than
$4,063, except the weekly benefit amount shall not exceed the
amount of wages paid to the individual during the person's
highest earning quarter divided by 13.
4)Creates a tier-based wage replacement based on income instead
of a standard 55% wage replacement rate for PFL benefits.
Specifically:
a) 80% wage replacement for an individual whose highest
quarter in his or her disability base period is more than
$4,063 but no more than $5,000, with benefits set at 80% of
the amount of wages paid in the individual's highest
quarter divided by 13.
b) 75% wage replacement for an individual whose highest
quarter in his or her disability base period is more than
$5,000 but no more than $15,000, with benefits set at 75%
of the amount of wages paid in the individual's highest
quarter divided by 13 or $308 (whichever is higher).
c) 65% wage replacement for an individual whose highest
quarter in his or her disability base period exceeds
$15,000, with benefits set at 80% of the amount of wages
paid in the individual's highest quarter divided by 13 or
$865 (whichever is higher.)
d) This wage replacement section shall become operative on
January 1, 2017.
Comments
PFL is funded by an employee-paid payroll tax with benefit
levels indexed to inflation, built upon California's long
standing SDI 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 six weeks. The maximum weekly benefit is
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Page 4
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.
California's PFL program is funded through worker contributions
and provides partial wage replacement (55% of prior wage levels)
for up to six 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 increases the maximum benefit to eight 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.
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.
FISCAL EFFECT: Appropriation: Yes Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee:
Increasing the benefit duration and wage replacement level
would likely result in increased payments from the
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Unemployment Compensation Disability Fund (UCDF) in the
hundreds of millions of dollars annually, assuming no change
to the program's current utilization rate. If utilization were
to rise, benefit payments would be higher.
The worker contribution rate would be adjusted upward to
ensure benefit payments can be maintained. The current rate is
1.0 percent.
The Employment Development Department would incur IT-related
costs ($844,000 one-time, $47,000 on-going) to implement the
expanded benefits (UCDF).
SUPPORT: (Verified8/28/15)
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
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
County of Los Angeles Board of Supervisors
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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
Health Officers Association of California
Jewish Labor Committee Western Region
Legal Aid Society- Employment Law Center
Mujeres Unidas y Activas
National Association of Social Workers-California Chapter
National Association of Working Women, California Chapter
National Council of Jewish Women
National Council of La Raza
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
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OPPOSITION: (Verified8/28/15)
None received
ARGUMENTS IN SUPPORT: 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 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 PFL 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 six 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 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.
AB 908
Page 8
ASSEMBLY FLOOR: 60-17, 6/2/15
AYES: Achadjian, Alejo, Baker, Bloom, Bonilla, Bonta, Brown,
Burke, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper,
Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia,
Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,
Grove, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine,
Linder, Lopez, Low, Maienschein, Mathis, McCarty, Medina,
Mullin, Nazarian, O'Donnell, Olsen, Perea, Quirk, Rendon,
Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone,
Thurmond, Ting, Waldron, Weber, Williams, Wood, Atkins
NOES: Travis Allen, Bigelow, Brough, Chang, Dahle, Gallagher,
Hadley, Harper, Jones, Lackey, Mayes, Melendez, Obernolte,
Patterson, Steinorth, Wagner, Wilk
NO VOTE RECORDED: Chávez, Beth Gaines, Kim
Prepared by:Deanna Ping / L. & I.R. / (916) 651-1556
8/30/15 19:42:22
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