BILL ANALYSIS �
AB 1392
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Date of Hearing: April 10, 2013
ASSEMBLY COMMITTEE ON INSURANCE
Henry T. Perea, Chair
AB 1392 (Committee on Insurance) - As Amended: March 19, 2013
SUBJECT : Unemployment Insurance: Work Sharing Programs
SUMMARY : Conforms California law to new federal requirements
for work sharing programs. Specifically, this bill :
1)Reduces the maximum cut in employee hours permitted in work
sharing programs from 90% to 60% of the employee's usual
weekly hours.
2)Defines health and retirement benefits to include health
insurance, defined benefit retirement plans, and defined
contribution retirement plans.
3)Requires participating employers providing health or
retirement benefits to continue those benefits for the
duration of the program as if the affected employees were
working normal hours.
4)Requires applications for work sharing programs to include:
a) A description of how the employer will notify
employees of the work sharing plan.
b) An estimate of the layoffs averted by implementing a
work sharing program.
c) A certification by the employer that their
participation in a work sharing program is consistent
with the employer's obligations under state and federal
law.
5)Allows employees in a work sharing program to participate in
training approved by the Employment Development Department
(EDD) including employer required training or training funded
through the Workforce Investment Act.
6)Permits EDD to defer implementation of the bill until July 1,
2014 if implementation by January 1, 2014 is not feasible.
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7)Includes numerous provisions related to work sharing programs
that are currently in the California Code of Regulations.
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;
c) The 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 employer reduces the hours worked 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.
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FISCAL EFFECT : Unknown
COMMENTS :
1)Purpose . The bill addresses federal conformity requirements
that are necessary for California's continued operation of a
work sharing program. EDD provided the language to the
Committee based on its review of model language provided by
the U.S. Department of Labor (USDOL). EDD recognizes that
this bill is necessary to retain the work sharing program in
California, and it also allows California to qualify for an
additional six months of reimbursement by the federal
government for work sharing benefits.
2)Work Sharing Programs . Current law allows employers to
participate in the work sharing unemployment compensation
benefits program which makes employees eligible to receive a
reduced amount of unemployment compensation benefits if their
work hours are reduced by more than ten percent. For example,
a company with 100 employees may need to lay off 20 percent of
its workforce as business slows. When it chooses to
participate in a shared work program, the company keeps its
full workforce but moves to a four-day work week. That allows
the employer to achieve the same 20 percent savings in payroll
costs but without layoffs. Employees not only keep their jobs
but they also receive unemployment insurance benefits to make
up for part of their reduced wages.
A 2004 study of the work sharing program in California found
that participating companies tended to be larger, older,
unionized manufacturers with higher paid employees.
Participation in the work sharing program has increased
dramatically during the recession. Initial shared work
compensation claims rose from 45,276 in 2007 to a peak of
219,580 in 2009. Claims have declined to 111,347 in 2011.
3)Federal Conformity . On February 22, 2012, the President
signed the Middle Class Tax Relief and Job Creation Act of
2012 (the Act) into law. The Act contains many provisions
concerning the unemployment insurance programs, and the U.S.
Department of Labor (USDOL) has provided guidance to states
about the minimum conformity requirements related to work
sharing programs. That guidance includes conforming state
work sharing statutes with a revised model law developed, in
consultation with stakeholder groups, by the USDOL. In
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addition to implementing the substantive changes required by
the Act, the model law includes many provisions currently
included in regulations adopted by EDD. In order align
California statute as closely as possible with the model law,
the bill includes numerous provisions drawn from the
California Code of Regulations.
4)Federal Funding . The Act also provides funding for states
that bring their work sharing programs into compliance with
the new requirements. California is slated to receive over
$250 million to help pay for work sharing benefits and will be
eligible for approximately $11 million in grant funding for
program administration after enactment of the model law.
REGISTERED SUPPORT / OPPOSITION :
Support
None received
Opposition
None received
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086