BILL ANALYSIS
AB 1814
Page 1
Date of Hearing: April 21, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 1814 (Buchanan) - As Amended: April 13, 2010
Policy Committee: JudiciaryVote:9-0
(Consent)
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill provides that the age discrimination prohibitions of
the Fair Employment and Housing Act do not prohibit an employer
from providing health benefits or health care reimbursement
plans to retired persons that are altered, reduced, or
eliminated when the person becomes eligible for Medicare health
benefits. This is consistent with federal law on this subject.
FISCAL EFFECT
By clarifying state discrimination law in this area and
conforming to federal law, some local governments could avoid
litigation costs.
COMMENTS
Purpose . Many California employers in both the public and
private sectors provide some type of continued medical benefits
(called "bridge plans") for certain qualified employees who
retire before they are eligible to receive Medicare. Typically,
the level of such benefits is reduced once the retiree becomes
Medicare-eligible. In 2007, the federal Equal Employment
Opportunity Commission enacted a regulation that specifically
permits these "bridge plans" by exempting them from the
prohibition of the federal Age Discrimination in Employment Act.
This bill clarifies that these bridge plans would also be
permitted under California's Fair Employment and Housing Act
(FEHA).
According to the author, this bill responds to litigation
brought by a retiree against a school district in Contra Costa
AB 1814
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County. The plaintiff in that case was apparently denied a
contractual benefit because she retired after she was eligible
for Medicare and the benefit was intended to be a bridge to
Medicare. She initiated a law suit against both the school
district employer and the employee organization claiming age
discrimination. The District subsequently filed a cross
complaint for declaratory relief against the employee
organization and 24 retirees, threatening to recoup benefits
already paid to those retirees and to cease paying future
benefits if the collective bargaining agreement that provided
the retiree health benefits was found to be illegal.
The author argues that if this type of litigation proliferates
under the FEHA, California employers will be discouraged from
offering these modest retiree health benefits, which currently
enable employees to be covered by medical insurance if they
choose to retire before they are Medicare eligible.
Analysis Prepared by : Chuck Nicol / APPR. / (916) 319-2081