BILL ANALYSIS �
AB 2310
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Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON INSURANCE
Jose Solorio, Chair
AB 2310 (Morrell) - As Introduced: February 24, 2012
SUBJECT : Unemployment Compensation Insurance
SUMMARY : Requires Unemployment Compensation Insurance (UI)
benefits to be reduced if the claimant receives a government
pension. Specifically, this bill : requires the Employment
Development (EDD) to deduct the value of a government pension
benefit received by a claimant from UI benefits that claimant is
eligible to receive.
EXISTING LAW:
1)Requires EDD to deduct the value of a pension from UI benefits
only if the employer was the sole contributor to the pension.
2)Prohibits public agencies from hiring a retired annuitant who
collected UI benefits in the previous 12 months based on prior
service as a retired annuitant with that public agency.
3)Permits retired employees collecting a California Public
Employees' Retirement System (CalPERS) pension to work up to
960 hours per year for a public agency while still collecting
their pension.
4)Requires, as a matter of Federal law, state UI programs to
provide public sector and private sector employees with equal
treatment as it relates to UI benefits.
5)Provides, as a matter of Federal law, state administrative
grant funds and a credit against the Federal Unemployment Tax
(FUTA) charged to employers if the state is certified by the
Secretary of Labor as complying with federal UI requirements.
FISCAL EFFECT : Unknown.
COMMENTS :
1)Purpose. According to the author, existing law provides a
loophole through which public employees are offered an
opportunity to "double dip" by permitting individuals
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collecting government pension benefits who return to a
government agency to work as a retired annuitant and
subsequently collect unemployment benefits if they are laid
off from the annuitant position.
2)Retired Annuitants. Public employees who retire with CalPERS
benefits are eligible to work up to 960 hours per year for a
public agency as "retired annuitants" and retain their pension
benefits. Retired annuitants provide agencies a cost
effective, flexible alternative to fill particular skill gaps
and cope with workload peaks. As temporary employees, retired
annuitants work only when needed and public agencies do not
have to pay benefit costs which are near 40% for state
employees in non-safety classifications.
3)Government Pensions. The bill requires that any UI benefit
payments received by the recipient of a government pension be
reduced by the amount of the pension payment. The background
material provided by the author focuses on retired annuitants
in public agencies. However, as drafted the bill would offset
the UI benefits of anyone receiving a government pension
(including CalPERS, California State Teachers' Retirement
System, military pensions, federal employee pensions, and
Social Security benefits) by the amount of the pension benefit
received regardless of where they were employed.
For example, a Social Security recipient who works part-time
for a retail establishment to supplement his/her income and is
laid off would likely lose all UI benefits under this bill.
Under current law he/she is eligible to receive UI benefits
based on employment with the retail establishment. This bill
would reduce the UI benefit paid by one dollar for each dollar
in Social Security benefit received. The average monthly
Social Security payment is approximately $1200 and the average
weekly UI benefit amount is $292 so it is quite likely that
the Social Security payment would fully offset the UI benefit
under the requirements in this bill.
4)Equal Treatment. This bill appears to violate existing
Federal law prohibiting disparate UI rules for public and
private sector employees by treating public sector pension
income differently than private sector pension income when
computing UI benefits. Enacting a law that violates the equal
treatment requirement creates the prospect of the Secretary of
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Labor revoking California's FUTA certification resulting in
the loss of state administrative grant funds ($340 million in
the 2012 federal fiscal year) to operate the UI program and
the loss of the FUTA tax credit for California employers
resulting in approximately $6 billion of additional taxes.
REGISTERED SUPPORT / OPPOSITION :
Support
None Received
Opposition
American Federation of State, County, and Municipal Employees
California Labor Federation
California Professional Firefighters
Glendale City Employees Association
Organization of SMUD Employees
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086