BILL ANALYSIS �
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THIRD READING
Bill No: AB 1392
Author: Assembly Insurance Committee
Amended: 6/19/13 in Senate
Vote: 21
SENATE LABOR & INDUST. RELATIONS COMM. : 4-0, 6/12/13
AYES: Monning, Leno, Padilla, Yee
NO VOTE RECORDED: Wyland
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 75-0, 5/9/13 (Consent) - See last page for vote
SUBJECT : Unemployment insurance: work sharing plans
SOURCE : California Department of Insurance
DIGEST : This bill conforms state law to new federal
requirements for the Work Sharing Program (Program), as
specified.
ANALYSIS :
Existing law:
1.Establishes the Unemployment Insurance (UI) program,
administered by the Employment Development Department (EDD).
The UI program is a federal-state program that provides weekly
UI payments to eligible workers who lose their jobs through no
fault of their own. The UI program is financed by employers
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who pay unemployment taxes on the first $7,000 in wages paid
to each employee in a calendar year. The benefits range from
$40 to $450 per week depending upon earnings during a 12-month
base period.
2.Permits the payment of a reduced amount of UI benefits to
individuals whose employer participates in the Program. A
person is eligible for shared work unemployment compensation
benefits under the following circumstances:
A. The person works less than his/her normal weekly hours
of work for his/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%; and
D. The employer reduces the hours worked of at least two
employees and at least 10% of the employer's regular
permanent work force.
1.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.
2.Requires employers to apply with EDD for the program and
specifies that a plan for shared work unemployment benefits
expires in six months. EDD is authorized to terminate a plan
for good cause if the plan is not being carried out according
to its terms and intent.
This bill revises and recasts the provisions covering the
Program to conform to new federal requirements. The current
provisions covering the Program will be repealed on a specified
date, after which the new provisions (below) will apply.
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This bill:
1.Requires that the employer identify, in the application for
participation in the Program, the usual weekly hours of work
for employees in the affected unit and the specific percentage
by which their hours will be reduced.
2.Provides that the percentage of reduction of hours for which a
work sharing plan may be approved shall not be less than 10%
(existing law) or more than 60%.
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.
1.Allows employees in a work sharing program to participate in
training approved by EDD including employer required training
or training funded through the Workforce Investment Act.
2.Permits EDD to defer implementation of the bill until July 1,
2014 if implementation by January 1, 2014 is not feasible.
3.Limits the application of existing law to work sharing plans
that become effective before July 1, 2014. Prohibits the
renewal of those work sharing plans on or after July 1, 2014.
Comments
The Program was established by the Legislature in 1978 - the
first of its kind in the nation. The program allows employers
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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 10%. 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.
The Program benefits both employers and employees. If employees
are retained during a temporary slowdown, employers can quickly
gear up when business conditions improve. Employers are spared
the expense of recruiting, hiring, and training new employees
and employees are spared the hardship of total unemployment.
Participation in the 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.
According to the author, this bill addresses federal conformity
requirements that are necessary for the continued operation of
California's Program, and it allows California to qualify for an
additional six months of reimbursement by the federal government
for work sharing benefits.
Prior Legislation
SB 1472 (Leno, 2010) vetoed by Governor Schwarzenegger, would
have required the EDD to develop and implement an outreach plan
designed to inform employers in California about the Program.
In his veto message, the Governor stated that, "This program has
already experienced a significant increase in participation by
California employers as a means to retain an experienced
workforce during this severe recession. Therefore, this bill is
unnecessary at this time."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 7/3/13)
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California Department of Insurance (source)
ASSEMBLY FLOOR : 75-0, 5/9/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Ch�vez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier,
Beth Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray,
Grove, Hagman, Hall, Harkey, Roger Hern�ndez, Jones,
Jones-Sawyer, Levine, Linder, Lowenthal, Maienschein, Mansoor,
Medina, Melendez, Mitchell, Morrell, Mullin, Muratsuchi,
Nazarian, Nestande, Olsen, Pan, Patterson, Perea, V. Manuel
P�rez, Quirk, Quirk-Silva, Rendon, Salas, Skinner, Stone,
Ting, Torres, Wagner, Weber, Wieckowski, Wilk, Williams,
Yamada, John A. P�rez
NO VOTE RECORDED: Donnelly, Holden, Logue, Waldron, Vacancy
PQ:ej 7/3/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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