BILL ANALYSIS �
Senate Committee on Labor and Industrial Relations
Senator Ben Hueso, Chair
Date of Hearing: June 25, 2014 2013-2014 Regular
Session
Consultant: Gideon L. Baum Fiscal:Yes
Urgency: No
Bill No: AB 2378
Author: Perea
As Introduced/Amended: May 23, 2014
SUBJECT
Workers' compensation: temporary disability payments.
KEY ISSUE
Should the Legislature nullify a court decision and provide that
specified peace officers and firefighters are eligible for up to
three years of tax-free disability leave in the event of
disability due to an occupational injury?
ANALYSIS
Existing law establishes a workers' compensation system that
provides benefits to an employee who suffers from an injury or
illness that arises out of and in the course of employment,
irrespective of fault. This system requires all employers to
secure payment of benefits by either securing the consent of the
Department of Industrial Relations to self-insure or by securing
insurance against liability from an insurance company duly
authorized by the state.
Existing law provides that certain peace officers and fire
fighters employed on a regular, full-time basis who incur on the
job injury or illness, are entitled to receive disability
payment for up to one year. These employees include:
a) City police officers;
b) City, county, or district firefighters;
c) Sheriffs;
d) Inspectors, investigators, detectives, or personnel with
comparable titles in any district attorney's office;
e) County probation officers, group counselors, or juvenile
services officers; and
f) Lifeguards employed by a county of the first class or
the City of San Diego
g) Airport law enforcement officers
h) Harbor or port police officers, wardens, or special
officers of a harbor or port district or city or county
harbor department
i) Police officers of the Los Angeles Unified School
District
This leave is awarded irrespective of service, and it can be
less than a year if the employee retired on permanent
disability, and is actually receiving disability pension
payment. This leave of absence is set forth in Labor Code
Section 4850 and is sometimes referred to as "4850 leave".
(Labor Code �4850)
Existing law provides similar leaves of absence for similarly
situated peace officers, such as Department of Justice peace
officers, California Highway Patrol officers, and University of
California peace officers and firefighters. (Labor Code
��4800-4820)
Existing law provides for the payment of indemnity benefits if
the occupational injury causes temporary or permanent disability
which prevents the worker from returning to his or her job. In
the case of temporary disability payments, the benefit is
two-thirds of the weekly loss in wages due to disability for up
to 104 weeks within 5 years (Labor Code ��4650, 4653, 4654 and
4656).
Under federal tax law both temporary disability benefits and
"4850 leave" are exempt from taxation.
This bill would specify that paid leaves of absences for peace
officers and firefighters discussed above are in addition to the
104 weeks of temporary disability benefits.
This bill would also declare the intent of the legislature to
abrogate the holding in County of Alameda v. Workers'
Compensation Appeals Board (Knittel) (2013) 213 Cal.App.4th 278.
Hearing Date: June 25, 2014 AB 2378
Consultant: Gideon L. Baum Page 2
Senate Committee on Labor and Industrial Relations
This bill would further find and declare that the Court of
Appeal issued a decision in 2013 that wrongly interprets
existing law, and AB 338, with the consequence of wrongfully
denying these fire and peace officer employees the full benefits
that the statues intended to provide to them.
COMMENTS
1. Need for this bill?
AB 2378 directly addresses a recent appellate court decision,
Alameda v. Workers' Compensation Appeals Board (Knittel)
(2013) 213 Cal.App.4th 278. This decision found that "4850
leave" counted towards a year of leave as per temporary
disability, which is capped at two years. The end result of
this court decision is that peace officers and firefighters
would receive two years of benefits like all other injured
workers, with the first year being full salary replacement
under "4850 leave".
This interpretation hinged on two phrases, one found in Labor
Code Section 4656 and the other found in Labor Code Section
4850. Specifically, Labor Code Section 4850(a) reads:
(a) Whenever any person listed in subdivision (b) [specified
peace officers and firefighters]? is disabled? by injury or
illness arising out of and in the course of his or her duties,
he or she shall become entitled? to a leave of absence while
so disabled without loss of salary in lieu of temporary
disability payments or maintenance allowance payments, if any,
that would be payable under this chapter, for the period of
the disability, but not exceeding one year?
Labor Code Section 4656(c)(1) reads:
(c) (1) Aggregate disability payments for a single injury
occurring on or after April 19, 2004, causing temporary
disability shall not extend for more than 104 compensable
weeks within a period of two years from the date of
Hearing Date: June 25, 2014 AB 2378
Consultant: Gideon L. Baum Page 3
Senate Committee on Labor and Industrial Relations
commencement of temporary disability payment.
Taken together, the court found that the "in lieu" provision
of Labor Code Section 4850 meant that "4850 leave" was a paid
single year of full salary instead of a year of 2/3rds salary,
with the total or aggregated temporary disability benefits
capped at two years under Labor Code Section 4656.
In both cases, the key phrases have been present in law for a
significant period of time. While the caps and nature of
temporary disability benefits has changed over the years, the
"aggregate disability payments" language dates back to at
least 1947, and the "in lieu of temporary disability payments"
language in Labor Code Section 4850 dates back to at least
1949. The Knittel interpretation, however, is relatively
recent.
At the conclusion of the Knittel decision, the court stated:
"It appears the Legislature tried to reach a compromise with
subdivision (c)(2) of section 4656 - a year of enhanced
benefits for public safety officers under section 4850
followed by a year of temporary disability indemnity. To the
extent the law is not working or the compromise is unfair, the
parties should bring their concerns to the attention of the
Legislature." AB 2378 responds to this call by nullifying the
Knittel decision, granting up to three years of tax-free
workers' compensation benefits to eligible peace officers and
firefighters.
2. Proponent Arguments :
Proponents argue that, historically, peace officers and
firefighters have been eligible for both one year of
disability leave and two years of temporary disability. With
the Knittel decision, however, proponents argue that the
Legislature's original intent has been lost. Proponents argue
that AB 2378 will return temporary disability provisions for
California's peace officers and firefighters to its original
intent.
3. Opponent Arguments :
Hearing Date: June 25, 2014 AB 2378
Consultant: Gideon L. Baum Page 4
Senate Committee on Labor and Industrial Relations
Opponents argue that the Knittel decision accurately
interprets the law, and therefore that AB 2378 is a benefit
increase for peace officers and firefighters. Opponents argue
that AB 2378 would be an expensive increase in workers'
compensation costs, with the City and County of San Francisco
reporting that their costs alone would be an additional $1
million per year. Opponents also argue that additional
disability benefits would encourage longer periods of
disability, leading to higher overtime costs and/or service
reductions.
4. Prior Legislation :
SB 1234 (Block) of 2014 would have extended "4850 leave" to
additional classes of peace officers. SB 1234 was held under
submission by the Senate Committee on Appropriations.
SUPPORT
California Labor Federation, AFL-CIO (Co-Sponsor)
California Professional Firefighters (Co-Sponsor)
Peace Officers Research Association of California (Co-Sponsor)
American Federation of State, County and Municipal Employees,
AFL-CIO
Association for Los Angeles Deputy Sheriffs' Association
California Applicants' Attorneys Association
California Association of Professional Employees
California School Employees Association, AFL-CIO
Los Angeles Police Protective League
Los Angeles Probation Officers' Union, AFSCME, Local 685
Organization of SMUD Employees
Riverside Sheriffs' Association
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
The Glendale City Employees Association
OPPOSITION
Hearing Date: June 25, 2014 AB 2378
Consultant: Gideon L. Baum Page 5
Senate Committee on Labor and Industrial Relations
California Association of Joint Powers Authorities
California Coalition on Workers' Compensation
California Joint Powers Insurance Authorities
California State Association of Counties
City and County of San Francisco
CSAC Excess Insurance Authority
League of California Cities
Los Angeles County Board of Supervisors
Rural County Representatives of California
The City of Redwood City
Hearing Date: June 25, 2014 AB 2378
Consultant: Gideon L. Baum Page 6
Senate Committee on Labor and Industrial Relations