BILL ANALYSIS �
AB 1392
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CONCURRENCE IN SENATE AMENDMENTS
AB 1392 (Insurance Committee)
As Amended June 19, 2013
Majority vote
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|ASSEMBLY: |75-0 |(May 9, 2013) |SENATE: |33-0 |(July 8, 2013) |
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Original Committee Reference: INS.
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,
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2014, if implementation by January 1, 2014, is not feasible.
7)Includes numerous provisions related to work sharing programs
that are currently in the California Code of Regulations.
The Senate amendments:
1)Delay implementation until July 1, 2014.
2)Amend the formula for calculating the amount of work sharing
benefit payments to conform with new federal requirements.
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%; 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.
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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.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)Purpose . The bill addresses federal conformity requirements
that are necessary for the continued operation of California's
work sharing 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 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.
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, President Barack
Obama 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
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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
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 to 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.
Analysis Prepared by : Paul Riches / INS. / (916) 319-2086
FN: 0001468