BILL ANALYSIS Ó SB 559 Page 1 Date of Hearing: July 8, 2015 ASSEMBLY COMMITTEE ON INSURANCE Tom Daly, Chair SB 559 (Block) - As Introduced February 26, 2015 SENATE VOTE: 28-3 SUBJECT: Workers' compensation: public employees. SUMMARY: Authorizes enhanced temporary disability benefits (known as "4850 time") for specified lifeguards employed by the City of Imperial Beach. Specifically, this bill : 1)Adds lifeguards employed by the City of Imperial Beach on a full-time, year-round basis to the class of public safety employees who receive special, enhanced temporary disability benefits when they are unable to work due to illness or injury that arose out of, or in the course of, employment. 2)Includes legislative findings that a special law is necessary within the meaning of Section 16 of Article IV of the California Constitution. EXISTING LAW : 1)Provides for a comprehensive system of benefits, paid for by employers, to employees who suffer illness or injury that arises out of, or in the course of, employment. SB 559 Page 2 2)Includes temporary disability benefits (TD) for up to 104 weeks if an employee is temporarily unable to work during recuperation from the workplace illness or injury. 3)Establishes a minimum and a maximum amount that an employee may receive, which is adjusted annually to reflect rising wage levels. Currently the minimum benefit is $165 per week, and the maximum benefit is $1103. The benefit is calculated based on 2/3 of an employee's average weekly wages, subject to the maximum cap. 4)Provides specified public safety officers with an enhanced temporary disability benefit for up to the first year of temporary disability. These safety officers receive their full salary (tax free) during the first year of temporary disability. 5)Includes lifeguards who are full time year round employees of the County of Los Angeles and the City of San Diego among the safety officers who are entitled to this special enhanced temporary disability benefit. 6)Provides that a special statute is invalid if a general statute could be made applicable. FISCAL EFFECT : Undetermined increased workers' compensation costs to the City of Imperial Beach. COMMENTS : SB 559 Page 3 1)Purpose . According to the author, the bill is intended to provide temporary disability benefits that are the same as lifeguards in Los Angeles and San Diego receive, because "their profession exposes them to dangers and threats similar to that of police officers and firefighters as they regularly perform water rescues, operate fire boats, assist in underwater diving searches, and deliver emergency medical aid." 2)Collective bargaining ? If a local public agency wants to grant employees certain benefits of employment, it is able to accomplish that goal without need for a statutory change. In fact, the City of Los Angeles has provided "4850-like" benefits to a range of employees without need of a statute mandating the benefit for those employees. The collective bargaining process, and not legislation, may be the better approach to enhancing the benefits of this class of employee. 3)Temporary disability benefits . The goal of TD is to approximate an employee's take home pay during the period after injury when the employee is temporarily unable to work. This goal is implemented by basing the weekly TD benefit on 2/3 of the employee's average weekly wages. Because there is a cap, employees who make more than approximately $1600 per week do not reach this 2/3 goal, but because the benefit is tax free, most employees receive an adequate TD benefit while they are recovering. One alternative to adding more classes of employees entitled to 4850 time (which pays substantially more than normal take home pay - see tax discussion, below) would be to simply eliminate the cap on TD benefits for those employees who are deemed entitled to special benefits. 4)Special public safety benefits . Public safety officers (police, sheriff, and firefighter employees generally) receive certain special workers' compensation benefits that other employees do not receive. Most notably, this class of employee has the benefit of a range of "presumptions" that SB 559 Page 4 certain illnesses or injuries are automatically deemed to be work related. All other employees are required to prove that their condition is work related. The second significant special workers' compensation benefit is granted by Labor Code Section 4850 - commonly referred to as "4850 time" - and this law grants defined employees up to one year of full salary in lieu of the regular method for calculating TD benefits. The author asserts that these lifeguards are sufficiently like other peace officers as to justify awarding them the special disability leave benefits. 5)Tax advantages . Because these benefits are paid due to disability, they are not subject to either state or federal taxes. This applies to regular TD benefits - the 2/3 of regular wages formula used to calculate TD benefits is designed to approximate actual take home pay -- and to 4850 benefits. Because of the tax-free status of this benefit, a public safety officer takes home substantially more in weekly benefits than they normally earn while working - i.e., normal take home pay plus what would have been paid in taxes. Public employers have long complained that this creates a disincentive in getting injured public safety officers to return to work, even if they are able, due to the financial loss they would suffer when they return. The extent of the return to work disincentive may be unclear with respect to these particular employees, but factually, they make more money while off duty than when they return. 6)Lifeguards . It appears that the year round, full-time lifeguards employed by Los Angeles County were included in the original legislation in 1983 that established Labor Code Section 4850. It is not clear why those employees were included, nor whether they perform substantially public safety and law enforcement duties, as is claimed by the City of San Diego, City of Imperial Beach or the City of Oceanside lifeguards. However, if the expansion of public safety officer benefits to other classes of employee is appropriate, the legislation should be clear that the employees must be public safety officers. SB 559 Page 5 In addition, if there is a class of employee - lifeguards employed by various city, county, state park, or special district employers -- it is not clear why a "special law" is an appropriate vehicle to provide this class of employees with safety officer special benefits. A general law, applicable to the whole class of employees, may be more appropriate if, in fact, these employees perform comparable peace officer duties as the broader class of peace officers who receive this benefit. 7)Related legislation . AB 1451 (Chavez) proposes the same expansion of 4850 time as proposed by this SB 559, but would apply the rule to lifeguards employed by the City of Oceanside. The Assembly Insurance Committee passed AB 1451 earlier this year on the author's commitment that he would not present the bill on the Assembly Floor unless there was an affirmative expression from the City of Oceanside in support of the bill. In early June, the City of Oceanside City Council voted to support AB 1451. Should a similar expression of support be presented from the City of Imperial Beach before the Committee passes SB 559? Should AB 1451 and SB 559 both pass the Legislature, they would be in conflict with each other, and the earlier signed measure would be at risk of being chaptered out. The author should, in the event SB 559 is passed by the Insurance Committee, consult Legislative Counsel and AB 1451's author about double-jointing language. REGISTERED SUPPORT / OPPOSITION: Support California State Council of the Service Employees International Union (SEIU) SB 559 Page 6 Service Employees International Union (SEIU) Local 221 Opposition None received Analysis Prepared by:Mark Rakich / INS. / (916) 319-2086