BILL ANALYSIS �
AB 1392
Page 1
Date of Hearing: May 1, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1392 (Committee on Insurance) - As Amended: March 19, 2013
Policy Committee: InsuranceVote:13
- 0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill conforms state law to new federal requirements for the
Work Sharing Program. Specifically, this bill:
1)Limits the reduction in hours for an employee participating in
the program to a minimum of 10% and a maximum of 60%.
2)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.
3)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.
4)Permits EDD to defer implementation of the bill until July 1,
2014 if implementation by January 1, 2014 is not feasible.
FISCAL EFFECT
1)Minor and absorbable costs for EDD to revise their Work
Sharing Program regulations, policies and procedures, and
various forms and publications.
2)Recent federal legislation provides for federal reimbursement
to the states for work-sharing benefit costs for up to three
years between February 26, 2012, and August 22, 2015. For
states with existing work-sharing programs like California, in
order to be reimbursed 100% by the federal government for the
AB 1392
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benefit costs, the federal law provides a transition period of
2.5 years (February 26, 2012 through August 22, 2014) for
states to amend their laws to conform to the new federal legal
requirements. If this legislation passes, California should
receive in excess of $250 million in federal funding for the
Work Sharing Program.
COMMENTS
1)Purpose . This bill conforms state law to federal law in
regard to the state's work-sharing program. EDD believes that
this bill is necessary in order to retain federal funding for
the program.
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% 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% 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 declined to 111,347 in 2011.
Analysis Prepared by : Julie Salley-Gray / APPR. / (916)
319-2081