BILL ANALYSIS
SB 1472
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Date of Hearing: June 23, 2010
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
SB 1472 (Leno) - As Amended: April 20, 2010
SENATE VOTE : 23-9
SUBJECT : Unemployment insurance: shared work.
SUMMARY : Requires the Employment Development Department (EDD)
to develop a plan to provide information to employers about the
shared work unemployment benefits program. Specifically, this
bill :
1)Requires the EDD to develop and implement an outreach plan
designed to provide information and inform employers of the
shared work unemployment compensation benefit program.
2)Requires the plan to include outreach to statewide and local
chambers of commerce, employer advisory councils, and small
business advisory councils.
EXISTING LAW :
1)Provides that an unemployed person is eligible for
unemployment insurance (UI) benefits if he or she becomes
unemployed through no fault of their own, has worked in
UI-covered employment, is able and available to work, and is
totally or partially unemployed during the week for which a
claim is filed.
2)Provides that a person is eligible for "shared work
unemployment compensation benefits" under the following
circumstances:
a) the person works less than his or her normal weekly
hours of work for his or her regular employer during a
particular week;
b) the EDD Director finds that the regular employer has
reduced or restricted the person's normal hours of work or
has rehired a person previously laid off and reduced that
person's normal hours of work from those previously worked;
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c) the regular employer has a plan to, in lieu of layoff,
reduce employment and stabilize the work force by a program
of sharing the work remaining after a reduction of total
hours of work and a corresponding reduction in wages of at
least 10 percent; and
d) the plan must involve the participation of at least two
employees and at least 10 percent of the employer's regular
permanent work force.
3)Provides that a person who is eligible for a shared work
unemployment benefit during any week of partial unemployment
shall be paid a benefit equal to the percentage of reduction
of the person's wages resulting from the approved plan and
multiplied by the person's weekly benefit amount.
4)Specifies that a plan for shared work unemployment benefits
shall expire in six months.
FISCAL EFFECT : Undetermined costs to EDD to develop and
implement the outreach plan.
COMMENTS :
1)Purpose . The purpose of this bill is to require EDD to
develop and implement an outreach plan to provide information
to employers about the shared work unemployment benefits
program and to increase participation in this program.
2)Background. Under current law, a person who is partially
employed and partially unemployed (i.e., not working
full-time) is potentially eligible to receive a reduced amount
of unemployment compensation benefits if their employer
participates in the shared work unemployment compensation
benefits program. This program allows for the payment of
partial unemployment benefits to people whose normal weekly
wages have been reduced at least 10 percent. This program was
created by legislation in 1978 (Statutes 1978, Chapter 397).
In calendar year 2008, there were 2,679 employers who
participated in this program and 80,402 shared work
unemployment claims filed. In calendar year 2009, there were
6,400 employers who participated in this program and 219,580
shared work unemployment claims filed. In May 2010, 2.3
million people in California are unemployed and 1.5 million
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are receiving either state or federal unemployment
compensation benefits.
3)Arguments in support. The author and the California Labor
Federation state that during an economic downturn the shared
work unemployment compensation benefit program provides
employers with an alternative to layoffs by offering partial
unemployment benefits to its employees whose wages have been
reduced. By retaining their work force rather than letting
them go, employers are spared the expense of recruiting,
hiring and training new employees once the economy improves,
while workers are spared the economic hardship of total
unemployment. At the same time, the costs to the Unemployment
Insurance Fund are reduced.
The author and the California Labor Federation state this bill
is needed because only a fraction of California's businesses
are participating in this program, and they note that after
the State of New York heavily marketed a similar program in
that state last year, businesses using the shared work program
increased 557 percent and a greater number of workers needed
only partial unemployment benefits.
The National Federation of Independent Businesses states that as
small businesses continue to face the most severe economic
recession in more than 50 years, they are often forced to make
the difficult decision to lay off valued employees as a last
resort for preserving their life's work. This bill would help
ensure that employers are aware of an alternative to layoffs
that will preserve jobs and save the potential future expenses
of recruiting and training new employees.
REGISTERED SUPPORT / OPPOSITION :
Support
California Labor Federation, AFL-CIO
National Federation of Independent Business
Opposition
None received.
Analysis Prepared by : Manny Hernandez / INS. / (916) 319-2086
SB 1472
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