BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1472 (Leno)
Hearing Date: 4/26/2010 Amended: 4/20/2010
Consultant: Bob Franzoia Policy Vote: L&IR 5-1
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BILL SUMMARY:
SB 1472 would require the Employment Development Department
(EDD) to develop and implement an employer outreach plan to
increase participation in the Work Sharing Unemployment
Insurance Program.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Expansion of Work Sharing Minor, likely absorbable costs
ongoing Special*
program
* Unemployment Administration Fund
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STAFF COMMENTS:
According to the EDD Web site, Work Sharing, a program first
implemented in California, allows for the payment of
unemployment insurance benefits to persons whose wages and hours
have been reduced. For example, due to an economic downturn, an
employer with 100 employees finds it necessary to lay off 20
employees. However, rather than lay off these employees, the
employer participates in the Work Sharing program. The employer
keeps all 100 employees on the payroll but reduces their
workweek from five days to four days, thereby achieving the same
desired 20 percent reduction in payroll. All 100 employees
continue to earn wages for four days and also are eligible for
Work Sharing benefits for the fifth (nonworking) day. The
employer retains all trained staff and, when business improves,
the employees resume their five day work schedule.
Benefits are paid weekly proportionate to the percentage of
reduction in hours and wages. For example, an employee normally
works a five-day workweek and is paid $500. If this employee's
workweek is reduced to four days, the employee's weekly wages
would be $400. This is a 20 percent reduction in wages and
hours. The Work Sharing benefits for this employee are 20
percent of the unemployment insurance benefits the employee
would receive if the employee were totally unemployed. If the
employee's weekly unemployment insurance benefit amount is $300,
the employee would qualify for $60 in Work Sharing benefits.
This results in a reduction in gross wages of only $40 for that
week ($400 + $60 = $460).
Employers are charged for Work Sharing benefits in the same
manner as for regular
unemployment insurance benefits.
Page 2
SB 1472 (Leno)
Work Sharing continues to grow in participation rates. For
example:
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|2003 |2009 |2003 |2009 |2003 |2009 |
|--------+----------+-----------+---------+----------+------------|
|New (1) |New |Renewals |Renewals |Expansions|Expansions |
| | |(2) | | |(3) |
|--------+----------+-----------+---------+----------+------------|
|1,009 |4,845 |2,769 |5,503 |119 |1,022 |
| | | | | | |
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(1) New is a new employer application not currently on an active
work plan. This can include employers that have been on work
sharing but do not have a current plan.
(2) Renewals are when an employer is under a current active plan
and the plan is expiring.
(3) Expansion is when an employer has an active work sharing
plan but is expanding the number of employees on the current
plan.
This bill is intended to expand participation in Work Sharing
and increase EDD's efforts to market the Work Sharing Program.
Any additional marketing efforts can likely be absorbed within
existing funding resources.