Amended in Assembly March 19, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 1392

Introduced by Committee on Insurance

March 4, 2013

An act to begin delete amend end delete begin insert repeal and add end insert Section 1279.5 of the Unemployment Insurance Code, relating to unemployment insurance.

LEGISLATIVE COUNSEL’S DIGEST

AB 1392, as amended, Committee on Insurance. Unemployment insurance: work sharing plans.

begin insert

Existing law deems an individual unemployed in any week if the individual works less than his or her normal weekly hours of work for the individual’s regular employer as the result of a plan by the employer, in lieu of layoff, to reduce employment and stabilize the work force by work sharing. Existing law requires that plan to have been approved by the Director of Employment Development, pursuant to prescribed requirements. Existing law requires the plan to involve the participation of at least two employees and include not less than 10 percent of the employer’s regular permanent work force, as specified. Existing law requires an approved plan to expire 6 months after its effective date. Existing law provides that employees participating are eligible to receive unemployment compensation benefits in an amount equal to the percentage of reduction of the employee’s wages resulting from an approved plan, as specified.

end insert begin insert

This bill would revise and recast these provisions. The bill would define a work sharing plan as a plan submitted by an employer, for approval by the Director of Employment Development, pursuant to which the employer requests the payment of work sharing compensation to employees in an affected unit of the employer in lieu of layoffs and would establish other definitions in this regard. The bill would require that an employer wishing to participate in the work sharing program submit a signed written work sharing plan to the director for approval, and that the director develop an application form that fulfills specified requirements, and develop an approval process, and designate a work sharing administrator. The employer would be required to make a series of certifications and to provide for notification of employees, as specified. The bill would establish timelines for the approval or disapproval of a plan and authorize its modification pursuant to a specified process. The bill would prescribe requirements for employees to be eligible for work sharing compensation, as defined. The bill would require that work sharing compensation be charged to employers’ experience rating accounts in the same manner as unemployment compensation. Among other things, the bill would prohibit employees from being eligible to receive any benefits pursuant to these provisions unless their employer agrees, in writing, and their bargaining agent agrees, in writing, pursuant to any applicable collective bargaining agreement, to voluntarily participate in the work sharing program.

end insert begin delete

Under existing law, unemployment compensation benefits are payable from the Unemployment Fund to eligible unemployed individuals. Under existing law, an individual is unemployed under specified circumstances, including when he or she performs no services and receives no pay. Existing law deems an individual unemployed in any week that the individual works less than his or her normal weekly hours of work for the individual’s regular employer due to participating in a specified work sharing plan that has been approved by the Director of Employment Development and adopted by the employer to avoid a layoff, if the employee’s wages have been reduced by at least 10%.

end delete begin delete

This bill would provide that an individual is deemed unemployed for these purposes in any week that the individual works less than his or her normal weekly hours due to participating in a work sharing plan described above that is adopted by the employer and approved by the director, to avoid a layoff, if the employee’s wages have been reduced by at least 10% but not more than 60%.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 1279.5 of the end insert begin insert Unemployment Insurance
Code end insert begin insert is repealed. end insert

begin delete

1279.5.  

(a) Notwithstanding Section 1252 or 1252.2 or any
other provision of this part, for the purposes of this section an
individual is “unemployed” in any week if the individual works
less than his or her normal weekly hours of work for the
individual’s regular employer, and the director finds that the regular
employer has reduced or restricted the individual’s normal hours
of work, or has rehired an individual previously laid off and
reduced that individual’s normal hours of work from those
previously worked, as the result of a plan by the regular employer
to, in lieu of layoff, reduce employment and stabilize the work
force by a program of sharing the work remaining after a reduction
in total hours of work and a corresponding reduction in wages of
at least 10 percent. The application for approval of a plan shall
require the employer to briefly describe the circumstances requiring
the use of work sharing to avoid a layoff. Normal weekly hours
of work means the number of hours in a week that the employee
normally would work for the regular employer or 40 hours,
whichever is less. The plan must involve the participation of at
least two employees and include not less than 10 percent of the
employer’s regular permanent work force involved in the affected
work unit or units in each week, or in at least one week of a
two-consecutive-week period. A plan approved by the director
shall expire six months after the effective date of the plan.

(b) Except as otherwise provided in this section, each individual
eligible under this chapter who is “unemployed” in any week shall
be paid with respect to that week a weekly shared work
unemployment compensation benefit amount equal to the
percentage of reduction of the individual’s wages resulting from
an approved plan, rounded to the nearest 5 percent, multiplied by
the individual’s weekly benefit amount.

(c) No individual who receives any benefits under this section
during any benefit year shall receive any benefits pursuant to
Section 1252 or 1252.2 as a partially unemployed individual with
respect to any week during such benefit year while in employment
status with the regular employer who initiated the program of
sharing work under this section. No benefits under this section
shall be payable on any type of extended claim.

(d) Any amount payable under this section shall be reduced by
the amount of any and all compensation payable for personal
services whether performed as an employee or an independent
contractor or as a juror or as a witness, except compensation
payable by the regular employer under a shared work plan.

For the purposes of this subdivision, “regular employer” may
include, pursuant to an approved plan, a labor organization which
periodically employs individuals in accordance with a collective
bargaining agreement.

(e) The benefit payment under this section, if not a multiple of
one dollar ($1), shall be increased to the next higher multiple of
one dollar ($1).

(f)  Sections 1253.5 and 1279 shall not apply to any individual
eligible for any payment under this section.

(g) For the purposes of this section, an individual shall not be
disqualified under subdivision (c) of Section 1253 for any week
if both of the following conditions exist:

(1) The individual has not been absent from work without the
approval of the regular employer.

(2) The individual accepted all work the regular employer made
available to the individual during hours scheduled off due to the
work-sharing plan.

(h) Except as otherwise provided by or inconsistent with this
section, all provisions of this division and authorized regulations
apply to benefits under this section. Authorized regulations may,
to the extent permitted by federal law, make such distinctions and
requirements as may be necessary in the procedures and provisions
applicable to unemployed individuals to carry out the purposes of
this section, including regulations defining normal hours, days,
workweek, and wages.

(i) Employees shall not be eligible to receive any benefits under
this section unless their employer agrees, in writing, and their
bargaining agent pursuant to any applicable collective bargaining
agreement agrees, in writing, to voluntarily participate in the shared
work unemployment insurance benefit program created by this
section.

(j) Notwithstanding Section 1327, the department shall not be
required to notify an employer of additional claims which result
from an approved plan submitted by the employer under which
benefits are not paid in each week.

(k) The director may terminate a shared work plan for good
cause if the plan is not being carried out according to its terms and
intent.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 1279.5 is added to the end insert begin insert Unemployment
Insurance Code end insert begin insert , to read: end insert

begin insert

begin insert 1279.5. end insert   

(a) As used in this section:

(1) “Affected unit” means a specified plant, department, shift,
or other definable unit that includes two or more workers and not
less than 10 percent of the employer’s regular permanent work
force involved in the affected unit or units in each week, or in at
least one week of a two-consecutive-week period, to which an
approved work sharing plan applies.

(2) “Health and retirement benefits” means employer-provided
health benefits and retirement benefits under a defined benefit
pension plan, as defined in Section 414(j) of the Internal Revenue
Code, or contributions under a defined contribution plan, as
defined in Section 414(i) of Internal Revenue Code, that are
incidents of employment in addition to the cash remuneration
earned.

(3) “Work sharing compensation” means the unemployment
compensation benefits payable to employees in an affected unit
under an approved work sharing plan, as distinguished from the
unemployment compensation benefits otherwise payable under
this part.

(4) “Work sharing plan” means a plan submitted by an
employer, for approval by the director, under which the employer
requests the payment of work sharing compensation to employees
in an affected unit of the employer in lieu of layoffs.

(5) “Work sharing program” means the program described by
this section.

(6) “Usual weekly hours of work” means the usual hours of
work for full-time or part-time employees in the affected unit when
that unit is operating on its regular basis, not to exceed forty hours
and not including hours of overtime work.

(7) “Unemployment compensation” means the unemployment
compensation benefits payable under this part other than work
sharing compensation and includes amounts payable pursuant to
an agreement under federal law providing for compensation,
assistance, or allowances with respect to unemployment.

(b) Notwithstanding Section 1252 or 1252.2 or any other
provision of this part, for the purposes of this section an employee
is “unemployed” in any week if the employee works less than his
or her usual weekly hours of work for the employee’s regular
employer, as the result of the regular employer’s participation in
a work sharing plan that meets the requirements of this section
and has been approved by the director, pursuant to which the
employer, in lieu of layoff, reduces employment and stabilizes the
workforce.

(c) An employer wishing to participate in the work sharing
program shall submit a signed written work sharing plan to the
director for approval. The director shall develop an application
form to request approval of a work sharing plan and an approval
process that meets the requirements of this section. The application
shall include, but is not limited to, the following:

(1) The affected unit covered by the plan, including the number
of full-time or part-time employees in the unit, the percentage of
employees in the affected unit covered by the plan, identification
of each individual employee in the affected unit by name, social
security number, and the employer’s unemployment tax account
number and any other information required by the director to
identify plan participants.

(2) A description of how employees in the affected unit will be
notified of the employer’s participation in the work sharing plan
if the application is approved, including how the employer will
notify those employees in a collective bargaining unit as well as
any employees in the affected unit who are not in a collective
bargaining unit. If the employer does not intend to provide advance
notice to employees in the affected unit, the employer shall explain
in a statement in the application why it is not feasible to provide
that notice.

(3) A requirement that the employer identify, in the application,
the usual weekly hours of work for employees in the affected unit
and the specific percentage by which their hours will be reduced
during all weeks covered by the plan. The percentage of reduction
of usual weekly hours of work for which a work sharing plan may
be approved shall not be less than 10 percent or more than 60
percent. If the plan includes any week for which the employer
regularly does not provide work, including, but not limited to,
incidences due to a holiday or plant closing, then that week shall
be identified in the application.

(4) (A) Except as provided in subparagraph (B), certification
by the employer, if the employer provides health and retirement
benefits to any employee whose usual weekly hours of work are
to be reduced under the plan, that the benefits will continue to be
provided, to the extent permitted by federal law, to employees
participating in the work sharing plan under the same terms and
conditions as though the usual weekly hours of work of these
employees had not been reduced or to the same extent as other
employees not participating in the work sharing plan. For defined
benefit retirement plans, to the extent permitted by federal law,
the hours that are reduced under the work sharing plan shall be
credited for purposes of participation, vesting, and accrual of
benefits as though the usual weekly hours of work had not been
reduced. The dollar amount of employer contributions to a defined
contribution plan that are based on a percentage of compensation
may be less due to the reduction in the employee’s compensation.

(B) If a reduction in health and retirement benefits is scheduled
to occur during the duration of the plan and those reductions will
be applied equally to employees who are not participating in the
work sharing program, then the application shall so certify, and
those benefits may be reduced for those employees who are
participating in the work sharing plan.

(5) Certification by the employer that the aggregate reduction
in work hours is in lieu of temporary or permanent layoffs, or both.
The application shall include an estimate of the number of workers
who would have been laid off in the absence of the work sharing
plan.

(6) Agreement by the employer to do all of the following:

(A) Furnish reports to the director relating to the proper conduct
of the plan.

(B) Allow the director or his or her authorized representatives
access to all records necessary to approve or disapprove the plan
application.

(C) After approval of a plan, monitor and evaluate the plan.

(D) Follow any other directives the director deems necessary
for the department to implement the plan and that are consistent
with the requirements for plan applications.

(7) Certification by the employer that participation in the work
sharing plan and its implementation is consistent with the
employer’s obligations under applicable federal and state laws.

(8) The effective date and duration of the plan, which shall not
be later than the end of the 12th full calendar month after the
effective date.

(9) Any other provision added to the application by the director
that the United States Secretary of Labor determines to be
appropriate for purposes of a work sharing plan.

(d) The director shall approve or disapprove a work sharing
plan in writing by the close of business no later than 10 working
days from the date the completed plan is received and communicate
the decision to the employer. A decision disapproving the plan
shall clearly identify the reasons for the disapproval. Within 20
days, the employer may submit a request for review of the
disapproved work sharing plan to the director’s work sharing
administrator, whom the director shall designate for this purpose.
After review, the work sharing administrator’s decision of approval
or disapproval shall be final. If disapproved, the employer may
submit a different work sharing plan for approval.

(e) The director shall work with the employer to determine the
effective date of a work sharing plan, which shall be specified in
the notice of approval to the employer. The plan shall expire on
the date specified in the notice of approval, which shall be either
the date at the end of the 12th full calendar month after its effective
date or an earlier date mutually agreed upon by the employer and
the director. However, if a work sharing plan is revoked by the
director under subdivision (f) of this section, the plan shall
terminate on the date specified in the director’s written order of
revocation. An employer may terminate a work sharing plan at
any time upon written notice to the director. An employer may
submit an application to renew the work sharing plan not more
than 10 days after a previously approved work sharing plan
expires.

(f) The director may revoke approval of a work sharing plan
for good cause at any time. The revocation order shall be in writing
and shall specify the reasons for the revocation and the date the
revocation is effective. The director may periodically review the
operation of an employer’s work sharing plan to ensure that good
cause does not exist for revocation of the approval of the plan.
For purposes of these provisions, good cause includes, but is not
limited to, failure to comply with the assurances given in the plan,
unreasonable revision of productivity standards for the affected
unit, conduct or occurrences tending to defeat the intent and
effective operation of the work sharing plan, and violation of any
criteria on which approval of the plan was based.

(g) An employer may request a modification of an approved
plan by filing a written request to the director. The request shall
identify the specific provisions proposed to be modified and provide
an explanation of why the proposed modification is appropriate
for the work sharing plan. The director shall approve or disapprove
the proposed modification in writing by the close of business no
later than 10 working days from the date the proposed modification
is received and communicate the decision to the employer. The
director, in his or her discretion, may approve a request for
modification of the plan based on conditions that have changed
since the plan was approved, provided that the modification is
consistent with and supports the purposes for which the plan was
initially approved. A modification does not extend the expiration
date of the original plan, and the director shall promptly notify
the employer whether the plan modification has been approved
and, if approved, the effective date of the modification, which shall
not be earlier than the effective date of the original work sharing
plan. An employer is not required to request approval of a plan
modification from the director if the change is not substantial, but
the employer shall promptly report, in writing, every change to
the plan to the director. The director may terminate an employer’s
plan if the employer fails to meet this reporting requirement. If the
director determines that the reported change is substantial, the
director shall require the employer to request a modification to
the plan.

(h) (1) An employee is eligible to receive work sharing
compensation with respect to any week only if the employee is
monetarily eligible for unemployment compensation, not otherwise
disqualified for unemployment compensation, and both of the
following are true:

(A) During the week, the employee is employed as a member of
an affected unit under an approved work sharing plan, which was
approved prior to that week, and the plan is in effect with respect
to the week for which work sharing compensation is claimed.

(B) Notwithstanding any other provisions relating to availability
for work and actively seeking work, the employee is available for
the employee’s usual hours of work with the work sharing
employer, which may include, for purposes of this section,
participating in training to enhance job skills that is approved by
the director, such as employer-sponsored training or training
funded under the federal Workforce Investment Act of 1998 (29
U.S.C. Sec. 2801 et seq.).

(2) Notwithstanding any other provision of law, an employee
covered by a work sharing plan is deemed unemployed in any week
during the duration of that plan if the employee’s remuneration
as an employee in an affected unit is reduced based on a reduction
of the employee’s usual weekly hours of work under an approved
work sharing plan.

(i) For the purposes of this section, an employee shall not be
disqualified under subdivision (c) of Section 1253 for any week if
both of the following conditions exist:

(1) The employee has not been absent from work without the
approval of the regular employer.

(2) The employee accepted all work the regular employer made
available to the individual during hours scheduled off due to the
work sharing plan.

(j) The work sharing weekly compensation amount shall be the
product of the regular weekly unemployment compensation amount
for a week of total unemployment multiplied by the percentage of
reduction in the individual’s usual weekly hours of work, rounded
to the nearest 5 percent.

(k) (1) Provisions applicable to unemployment compensation
shall apply to employees in a work sharing plan to the extent that
they are not inconsistent with work sharing program provisions.
An employee who files an initial claim for work sharing
compensation shall receive a monetary determination. An employee
may be eligible for work sharing compensation or unemployment
compensation, as appropriate, except that an employee shall not
be eligible for combined benefits in any benefit year in an amount
more than the maximum entitlement established for regular
unemployment compensation, nor shall an employee be paid work
sharing benefits for more than 52 weeks under a work sharing
plan.

(2) An employee who is not provided any work during a week
by the work sharing employer, or any other employer, and who is
otherwise eligible for unemployment compensation, shall be
eligible for the amount of regular unemployment compensation to
which he or she would otherwise be eligible.

(3) An employee who is not provided any work by the work
sharing employer during a week, but who works for another
employer and is otherwise eligible, may be paid unemployment
compensation for that week subject to the disqualifying income
and other provisions applicable to claims for regular
unemployment compensation.

(4) The work sharing compensation paid to an employee shall
be deducted from the maximum entitlement amount of regular
unemployment compensation established for that employee’s
benefit year.

(5) An employee who has received all of the work sharing
compensation or combined unemployment compensation and work
sharing compensation available in a benefit year shall be
considered an exhaustee for purposes of extended benefits and, if
otherwise eligible under those provisions, shall be eligible to
receive extended benefits.

(6) No employee who receives any benefits under this section
during any benefit year shall receive any benefits pursuant to
Section 1252 or 1252.2 as a partially unemployed individual with
respect to any week during a benefit year while in employment
status with the regular employer who initiated the work sharing
plan under this section.

(7) Sections 1253.5 and 1279 shall not apply to any individual
eligible for any payment under this section.

(l) Any amount payable under this section shall be reduced by
the amount of any and all compensation payable for personal
services, whether performed as an employee or an independent
contractor or as a juror or as a witness, except compensation
payable by the regular employer under a work sharing plan. For
the purposes of this subdivision, “regular employer” may include,
pursuant to an approved plan, a labor organization that
periodically employs individuals in accordance with a collective
bargaining agreement.

(m) Work sharing compensation shall be charged to employers’
experience rating accounts in the same manner as unemployment
compensation is charged under this part. Employers liable for
payments in lieu of contributions shall have work sharing
compensation attributed to service in their employ in the same
manner as unemployment compensation is attributed.

(n) The benefit payment under this section, if not a multiple of
one dollar ($1), shall be increased to the next higher multiple of
one dollar ($1).

(o) Except as otherwise provided by or inconsistent with this
section, all provisions of this division and authorized regulations
apply to benefits under this section. Authorized regulations may,
to the extent permitted by federal law, make those distinctions and
requirements as may be necessary in the procedures and provisions
applicable to unemployed individuals to carry out the purposes of
this section, including, but not limited to, regulations defining
normal hours, days, workweeks, and wages.

(p) Employees shall not be eligible to receive any benefits under
this section unless their employer agrees, in writing, and their
bargaining agent pursuant to any applicable collective bargaining
agreement agrees, in writing, to voluntarily participate in the work
sharing program created by this section.

(q) Notwithstanding Section 1327, the department shall not be
required to notify an employer of additional claims that result
from an approved plan submitted by the employer under which
benefits are not paid in each week.

(r) (1) This section shall be implemented commencing on
January 1, 2014, unless the department determines that
implementation by that date is not feasible, in which case the
department shall implement this section no later than July 1, 2014.

(2) A work sharing plan that is in effect when this section is
implemented shall continue in effect and be subject to the law
applicable when the plan was approved, but shall not be renewed.
Upon expiration or termination of the plan, this section shall apply.

end insert

begin delete

SECTION 1.  

Section 1279.5 of the Unemployment Insurance
Code is amended to read:

1279.5.  

(a) Notwithstanding Section 1252 or 1252.2 or any
other provision of this part, for the purposes of this section an
individual is “unemployed” in any week if the individual works
less than his or her normal weekly hours of work for the
individual’s regular employer, and the director finds that the regular
employer has reduced or restricted the individual’s normal hours
of work, or has rehired an individual previously laid off and
reduced that individual’s normal hours of work from those
previously worked, as the result of a plan by the regular employer
to, in lieu of layoff, reduce employment and stabilize the work
force by a program of sharing the work remaining after a reduction
in total hours of work and a corresponding reduction in wages of
at least 10 percent but no more than 60 percent. The application
for approval of a plan shall require the employer to briefly describe
the circumstances requiring the use of work sharing to avoid a
layoff. Normal weekly hours of work means the number of hours
in a week that the employee normally would work for the regular
employer or 40 hours, whichever is less. The plan must involve
the participation of at least two employees and include not less
than 10 percent of the employer’s regular permanent work force
involved in the affected work unit or units in each week, or in at
least one week of a two-consecutive-week period. A plan approved
by the director shall expire six months after the effective date of
the plan.

(b) Except as otherwise provided in this section, each individual
eligible under this chapter who is “unemployed” in any week shall
be paid with respect to that week a weekly shared work
unemployment compensation benefit amount equal to the
percentage of reduction of the individual’s wages resulting from
an approved plan, rounded to the nearest 5 percent, multiplied by
the individual’s weekly benefit amount.

(c) No individual who receives any benefits under this section
during any benefit year shall receive any benefits pursuant to
Section 1252 or 1252.2 as a partially unemployed individual with
respect to any week during such benefit year while in employment
status with the regular employer who initiated the program of
sharing work under this section. No benefits under this section
shall be payable on any type of extended claim.

(d) Any amount payable under this section shall be reduced by
the amount of any and all compensation payable for personal
services whether performed as an employee or an independent
contractor or as a juror or as a witness, except compensation
payable by the regular employer under a shared work plan.

For the purposes of this subdivision, “regular employer” may
include, pursuant to an approved plan, a labor organization which
periodically employs individuals in accordance with a collective
bargaining agreement.

(e) The benefit payment under this section, if not a multiple of
one dollar ($1), shall be increased to the next higher multiple of
one dollar ($1).

(f)  Sections 1253.5 and 1279 shall not apply to any individual
eligible for any payment under this section.

(g) For the purposes of this section, an individual shall not be
disqualified under subdivision (c) of Section 1253 for any week
if both of the following conditions exist:

(1) The individual has not been absent from work without the
approval of the regular employer.

(2) The individual accepted all work the regular employer made
available to the individual during hours scheduled off due to the
work-sharing plan.

(h) Except as otherwise provided by or inconsistent with this
section, all provisions of this division and authorized regulations
apply to benefits under this section. Authorized regulations may,
to the extent permitted by federal law, make such distinctions and
requirements as may be necessary in the procedures and provisions
applicable to unemployed individuals to carry out the purposes of
this section, including regulations defining normal hours, days,
workweek, and wages.

(i) Employees shall not be eligible to receive any benefits under
this section unless their employer agrees, in writing, and their
bargaining agent pursuant to any applicable collective bargaining
agreement agrees, in writing, to voluntarily participate in the shared
work unemployment insurance benefit program created by this
section.

(j) Notwithstanding Section 1327, the department shall not be
required to notify an employer of additional claims which result
from an approved plan submitted by the employer under which
benefits are not paid in each week.

(k) The director may terminate a shared work plan for good
cause if the plan is not being carried out according to its terms and
intent.

end delete