BILL ANALYSIS
AB 516
Page 1
Date of Hearing: May 6, 2009
ASSEMBLY COMMITTEE ON INSURANCE
Joe Coto, Chair
AB 516 (Niello) - As Introduced: February 24, 2009
SUBJECT : Workers' compensation: temporary disability.
SUMMARY : Repeals the minimum level of temporary disability (TD)
benefits which an injured worker can receive. Specifically,
this bill :
1)Specifies that in computing average annual earnings for the
purposes of TD workers' compensation for injuries occurring on
or after January 1, 2010, the average weekly earnings shall be
taken at not less than an amount equal to the employee's
average weekly earnings from all employers, nor more than
$1,260 or 1.5 times the state average weekly wage, whichever
is greater.
2)Provides that commencing on January 1, 2010, the maximum limit
specified above shall be increased by an amount equal to the
percentage increase in the state average weekly wage as
compared to the prior year.
EXISTING LAW:
1)Specifies that in computing average annual earnings for the
purposes of temporary disability compensation and permanent
total disability compensation for injuries occurring on or
after January 1, 2006, the average weekly earnings shall be
taken at not less than $189, nor more than $1,260 or 1.5 times
the state average weekly wage, whichever is greater.
2)Provides that commencing on January 1, 2007, and each January
1 thereafter , the limits specified above (in existing law)
shall be increased by an amount equal to the percentage
increase in the state average weekly wage as compared to the
prior year.
FISCAL EFFECT : Undetermined.
COMMENTS :
1)Purpose. The author states that this bill will:
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a) Allow for actual earnings to be used in determining the
temporary disability compensation.
b) Discourage a person who is injured, yet receives a
higher benefit through workers' compensation, from
unnecessarily remaining temporarily disabled.
c) Further the goal of workers' compensation to encourage
recovery and a return to employment.
2)Background. The author states the following as background on
the bill:
a) The change proposed by this bill will impact those
employees whose earnings are less than $189 per week or
those without earnings at the time of injury or 52 weeks
prior to the date of injury. Under this bill, injured
workers who have earnings will continue to receive
temporary disability workers' compensation based on average
weekly earnings up to $1,260 per week, or up to $840 per
week in compensation payments, based on the formula where
the compensation payment is calculated at 2/3 of the weekly
earnings.
b) Workers' compensation is the only class of benefits that
allows a person without earnings to receive an indemnity
benefit. Both state disability insurance (SDI) and
unemployment insurance (UI) benefits require earnings to
determine the rate in which benefits will be calculated. A
person without earnings would not qualify for either SDI or
UI.
3)Comparison of benefits under current law to those in bill.
Under existing law, the minimum TD benefit is $143.70 per week
in 2009. The bill would eliminate this minimum benefit for
persons injured who have no earnings. Under both existing law
and this bill, the maximum TD benefit is $958.01 in 2009.
Under both existing law and this bill, in 2010 the maximum TD
benefit will be the same adjusted amount (for any increase in
the state average weekly earnings). However, starting in
January 1, 2011, this bill appears to require the maximum TD
benefit to stay at the 2010 level and not increase over time.
Existing law requires that the maximum TD benefit rise each
year with increases in the state average weekly wage.
4)Persons affected . This bill would affect a variety of
individuals who volunteer their time to help their
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neighborhood, city, school district or other local entity.
The bill also affects certain people who are injured while
working part-time for wages, and can affect others such as
prisoners who are not considered to be earning wages while
employed in prison assignments.
a) Volunteers generally. As examples, a significant number
of individuals statewide volunteer their time as crossing
guards in front of schools in order to help maintain the
safety of children who walk to and from school. Other
volunteers are found in school yards, classrooms, school
cafeterias, and public and school libraries. If a
volunteer has not earned wages from any employer, then
under this bill, that person when injured while
volunteering would be denied benefits previously covered by
current law.
b) Part-time workers. The bill would also affect
individuals who work part-time for wages but whose earnings
average less than $215.55 per week. Under present law, if
an individual's part-time wages are $180 per week, and if
he or she is injured on the job, he or she will receive the
minimum $143.70 in workers' compensation weekly (2/3 of
$215.55). With this bill, the same person would receive
$120 per week, or $23.70 less.
5)Support arguments. The author states this bill is needed for
the following reasons:
a) Since temporary disability benefits are not taxable,
most injured workers receive up to 89% of their pre-injury
wages. This provides very little incentive for an injured
employee to return to work. The minimum level now results
in several categories of employees earning more income
while out on disability than if they returned to work.
b) A major impact of this bill would be on those who are
injured while serving time in county jails or volunteers.
Those who have not received a wage for services provided
would not be entitled to temporary disability compensation,
if they sustain a workers' compensation injury, as there
would be no loss of earnings. This is consistent with the
intent of the workers' compensation system which is to
provide medical treatment and a wage replacement supplement
for those who sustained a loss of earnings due to injury.
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While workers' compensation is aimed at making an injured
worker whole, it should not allow a greater compensation
than that which is actually lost.
6)Opposition arguments. The California Applicants' Attorneys
Association (CAAA) and the California Labor Federation state
the following reasons to oppose the bill:
a) The bill reduces the existing maximum weekly temporary
disability (TD) benefit ($958) by reverting it to the 2006
level ($840), and eliminates the minimum temporary
disability (TD) benefit;
b) TD benefits are the only income an injured worker can
rely on when he or she is medically unable to return to
work. The 2004 workers' compensation reforms already
limited TD benefits to a maximum of 104 weeks. There are
injured workers who now are exhausting their benefits, even
when they continue to be unable to return to work.
c) The 2004 workers' compensation reforms made major
reductions in benefits for injured workers. It eliminated
up to 30 weeks of permanent disability (PD) benefits. The
administration then adopted regulations that resulted in a
50% to 70% reduction in PD benefits. PD benefits are among
the lowest in the nation.
d) Employers premiums have been reduced by more than 60%
since 2004. At a time when employers are enjoying an
annual $15 billion in savings, cutting benefits for injured
workers is unduly punitive and without basis.
7)Clarifying amendment recommended. The author informs the
Committee that this bill is intended to limit the minimum TD
benefits but not to change the maximum TD workers'
compensation benefits. In order to clarify that the bill does
not change existing law regarding maximum TD benefits after
January 1, 2011, it is recommended that the following language
be added on page 3, line 38 of the bill, after the second
comma:
" and each January 1 thereafter,"
8)Amendment to consider. The bill would require after January
1, 2010, that the maximum TD benefit would be based on a
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formula that, in part, uses $1,260 in average weekly earnings
or 1.5 times the state average weekly wage, whichever is
greater. Under existing law the $1,260 amount has been in
effect since 2006, and the "1.5 times the state average weekly
wage" part of the formula has increased to $1,437.01 in 2009.
If the author wishes to keep the existing purchasing power of
the maximum TD benefit, it would be necessary to replace the
$1,260 figure with $1,437. At page 3, line 36 of bill, strike
out $1,260 and insert $1,437.
9)Previous legislation . In 2002, AB 749 (Calderon), Chapter 6,
Statutes of 2002, enacted both increases in workers'
compensation benefits and cost-saving reforms to the workers'
compensation system. One of provisions of that law was to
establish the minimum weekly TD and PD benefit at $126 and
adjust it for increases in the state average weekly wage.
Last legislative Session, AB 1341 (Benoit) proposed to repeal
the minimum level of temporary disability workers'
compensation, as is proposed by this bill. The author removed
that provision from AB 1341, and the bill subsequently failed
passage in the Assembly Insurance Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Association of Joint Powers Authorities (CAJPA)
California Chamber of Commerce
California Coalition on Workers' Compensation
California State Association of Counties (CSAC)
California State Sheriffs' Association
CSAC-Excess Insurance Authority (a joint powers authority
representing public entities)
Non-profits United Workers' Compensation Group (NPU-WCG)
Regional Council of Rural Counties (RCRC)
Opposition
California Applicants' Attorneys Association (CAAA)
California Labor Federation
California Nurses Association/National Nurses Organizing
Committee
California School Employees Association (CSEA), AFL-CIO
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Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086