Assembly Standing Committee on Insurance

All right. Members of the committee, welcome to the Assembly Committee on Insurance. Please note that Assembly Members Bonta and Lee will be filling in for Assembly Members Rodriguez and Soria today. Today we're going to consider two bills, and one of these bills is back on concurrence. I don't think we have enough to establish a quorum, so we're going to start as a subcommittee. So the first bill we're going to hear is SB 799 by Senator Portantino. This bill allows individuals involved in a trade dispute to be eligible to collect unemployment insurance benefits after two weeks. Senator, whenever you're ready.

Thank you, Madam Chair and Committee Members. I appreciate the opportunity to present SB 799. SB 799 will restore unemployment benefits to workers who are unemployed due to participation in a trade dispute after two weeks. We have seen hotel workers, nurses, fast food workers -- obviously, writers, delivery workers, city and county workers, all striking. And frankly, it's concerning. It is a period in time where I believe there is significant unrest within the labor force.

Wage disparities, worsening work conditions, health and safety concerns, the threat of AI displacing human labor, are just some of the concerns that have recently motivated workers to seek fair and just compensation. This year, we've seen an unprecedented level of Californians striking, demonstrating the strength and unity amongst our working class and, frankly, their frustrations. Deciding to go on strike is not easy. Some people have this romantic vision, this view, that being on strike is somehow a romantic rite of passage. It's not. It's difficult.

I remember my own mother-in-law talking about when my father-in-law went on strike. He was an IBW worker. And how, even though they ended up getting the contract they wanted, the toll it took on the family during that time was not fun. It was necessary, but it wasn't fun. Workers put their livelihood on the line as bills pile up, rent and mortgages potentially go unpaid, and their debt accumulates.

So it's critical for workers, and, frankly, for the economy to have job security and a seat at the table as we negotiate the future of the workforce. This is the time to have that robust conversation. And so SB 799 would provide a lifeline for California's workers, while preserving the economy and, frankly, the right to lawfully strike, to ask for better conditions. From 2012 to 2022, California had 56 major strikes. Of those 56, only two lasted more than two weeks.

So we're not talking about something that's going to be a significant, significant hit to our society, but actually will have a significant benefit to those workers. The total amount of individuals that will become eligible under SB 799 could be significant, but most likely based on past history, will not. So that's why it's important to put this bill in proper context. People also say, "Well, has this worked in other places?" Yes, both New York and New Jersey have similar laws.

The New York State statute was upheld by the US Supreme Court and found to be preempted by the National Labor Relations Act, paving the way for California -- for us -- to do our duty and pass this today and put it on the governor's desk before the end of session. 799 will help California's workers put food on their table, keep workers and their families financially secure and keep the economy alive, even in the middle of a labor negotiation.

So with me today, I'm proud that we have Meredith Stiehm, President of the Writers Guild of America West, and Joely Fisher, secretary treasurer of SAG AFTRA. And we have Jenna Gerry, senior staff attorney for the National Employment Law Project, who's here for technical assistance. So thank you, Madam Chair. Thank you, Members.

Good afternoon. My name is Meredith Stiehm. I'm the President of the Writers Guild of America West. On behalf of the over 13,000 members of the WGA, who work here in California, we wish to express our strong support for unemployment insurance for striking workers. Our union members have been on strike for 122 days. We are in an existential fight, for our profession, against the powerful studio management. Four months without work is emotionally brutal and financially disastrous.

The companies, of course, know this, and have prayed upon our members' economic insecurity and personal anxieties. One studio executive told a reporter that the company's endgame is to allow things to drag on, until union members start losing their apartments and losing their houses. This blithely, cruel statement shows our employers' willingness to cause grave economic harm, as they try to avoid paying us a fair share of the value we bring to the business.

I'm proud to report that our members have held strong, and kept their resolve throughout this long, hot summer -- we also call it a hot labor summer -- but they are suffering. Because California does not have unemployment insurance, which would provide some financial cushion to those engaged in a work stoppage like ours, writers have had to rely on strike loans from our union, donations, philanthropy, second and third jobs to pay for their basic needs, since May 2.

By contrast, UI for striking workers is the law in New York and in New Jersey, and this has been on the books for decades in New York. Our colleagues in our sister guild, the Writers Guild of America East, based in New York, rightfully have access to this, and they have used those benefits, which they contributed to, to sustain them through the strike. The cost of UI for striking workers does not break the bank in New York.

Yet striking workers in California are penalized when there's a work stoppage, a penalty that no other worker faces while unemployed. It's time for California to catch up and meet the demands of the time. Writers are the present day example of workers who could greatly benefit from UI. But we're really here for the workers in the future, who will need this protection if they make the difficult decision to go on strike. It is a safety net California can, and should, provide to striking workers. I know it would have made our ongoing struggle a bit less difficult for our members. Thank you for having us here today.

Okay, we're going to take a quick second to establish a quorum. Secretary, please call the roll.

Calderon. Here. Essayli. Here. Berman. Cervantes. Chen. Fong. Gibson. Here. Grayson. Here. Jones-Sawyer. Here. Ortega. Here. Bonta. Lee. Here. Valencia. Wood. Here.

We have a quorum. You can go ahead, thank you.

Thank you. So I actually got emotional listening to my sister, Meredith, speak about the 122 days that they've been out there. I went out the very first day and not happy to join your fight, but in solidarity, did join almost 50 days ago, ourselves. My name is Joely Fisher. I am a union member for 40 years. I know it's hard to imagine because I'm so young. I'm a second generation unionist, and I'm a working actor, most of the time, and I serve as secretary treasurer of SAG AFTRA.

I'm here today to speak about SB 799, a bill that would provide unemployment insurance benefits to striking workers who are off the job and on the picket lines for more than two weeks. Clearly, we've been out longer than that. This vital piece of legislation will make a real impact for our members and for millions of workers across California. A proud AFL-CIO SAG AFTRA affiliate, SAG AFTRA is an American labor union representing members working together to ensure protections for entertainment and media artists into the 21st century and beyond.

We represent approximately 160,000 actors, announcers, broadcast journalists, dancers, recording artists, singers, stunt performers, voiceover artists, puppeteers -- bet you didn't know that one -- and other entertainment and media professionals worldwide, almost half of whom live and work in California. As I speak to you all right now, our members are marching on picket lines across the country, as we approach -- like I said -- our 50th day of striking against the employers who refuse to offer us a fair deal on our television, streaming and theatrical contract. For most actors right now, contracts are a one-way street. Studios, networks, and streaming platforms hold all the power. They call all the shots.

And most actors, me included, we're still unable to negotiate sensible contracts that allow us to earn enough money to qualify for health coverage, let alone sustain California's continuously rising cost of living. When an employer refuses to fairly compensate someone for their work, that worker should have the freedom to negotiate a fair deal without the pressures of worrying whether they can afford to feed their families or take their sick child to a doctor.

Right now, we have thousands of members who are foregoing a paycheck and, potentially, their health insurance. This, in addition to the thousands of members of the WGA who have been on strike for 122 days. As a working actor, I understand, fundamentally and personally, the stresses that arise when one is out of work, because that's most of the time. The stress of being out of work during the strike has directly impacted my own family, including my five children.

I fear that I will not earn enough to qualify them for health coverage. Actually, as of today, I am not going to qualify for health coverage, for my family. And as parents, our job is to shield our children from harsh realities of the world. And yet I worry that my children will begin to feel the adverse effects of now, myself and my husband, who's a 35-year member of IATSE, not working as well.

Despite the hardship, I am on strike because we are fighting to negotiate a fair and sensible contract that allows us to earn enough money to qualify for health coverage, keep a roof over our heads, and keep up with California's cost of living. I am on strike to fight against artificial intelligence in the workplace and other company practices that increase worker precarity and threaten the sustainability of jobs in the overall industry.

The research has demonstrated this time and time again, when union members win strong contracts, they lift up wages and labor standards for workers across the entire industry. Unemployment insurance benefits for strikers will have a minimal impact on the UI fund, but it will make a huge difference to our members and communities. Actors will have enough money to buy groceries and school supplies and pay bills and rent and even bring donuts or coffee to the picket lines.

They'll spend that money at the businesses that are struggling in our areas: the restaurants, the grocery stores, nail salons, hairdressers, drugstores and so many more that rely on entertainment industry to stay afloat. Denying UI to striking workers is another way that employers hold an unfair advantage over workers fighting for what is right. CEOs play the waiting game, knowing workers living on the margins have to pay rent and they have groceries to buy. SB 799 gives workers a chance to fight for what's fair. We are in the fight of our lives -- for our jobs, our industry, our future. We cannot wait any longer for UI benefits that will help us survive and will help all workers to stand up to fight for a better future. I urge your support for this bill. Thank you.

Thank you. Do we have any additional support in the room?

Madam Chair, Members. Sarah Flocks, California Labor Federation, proud co-sponsor of SB 799.

Hello, Connie Chan on behalf of California State Treasurer's Office, proud co-sponsor of SB 799. And thank you, Senator, for your leadership.

Good afternoon. Scott Brent with the SMART Transportation Division, California State Legislative Board in support. Thank you.

Kimberly Rosenberger on behalf of SEIU and Western Center on Law and Poverty in support.

Good afternoon. Shane Gusman on behalf of the Teamsters, the Amalgamated Transit Union, the Utility Workers Union of America, Engineers and Scientists of California, Unite Here and the Machinist Union. And because Jassy Grewal couldn't be here, also on behalf of the UFCW, in strong support of the bill.

Rachel Torres with the Writers Guild of America West in strong support.

Thank you, Madam Chair. Megan Stubers on behalf of the California Professional Firefighters and the CSU Employees Union in support.

Michelle Warshaw, on behalf of State Superintendent of Public Instruction, Tony Thurmond, in support.

Good afternoon, Chair and Members. Bryant Miramontes with AFSCME California in support.

Honorable Chair and Members, Amy Hines-Shaikh with Unite Here Local 11 and their 32,000 members in Riverside, San Bernardino, Orange and Los Angeles counties, in strong support. Thank you.

Madam Chair and Members, Tristan Brown with the CFT -- A Union of Educators and Classified Professionals, the statewide affiliate for the American Federation of Teachers, in support. Thank you.

Navnit Puryear on behalf of the California School Employees Association, also in support.

Madam Chair and Members. Ignacio Hernandez, on behalf of the Communication Workers of America District 9, in support.

Seth Bramble, speaking today, on behalf of more than 300,000 educators, the members of the California Teachers Association, in strong support.

Good afternoon. Silvia Solis Shaw, here on behalf of the city of West Hollywood, in support. Thank you.

Francesca Wander, California StateStrong Indivisible: Indivisible Sacramento, Indivisible Yolo and Indivisible San Francisco, in strong support.

Kenny Lam, on behalf of Commissioner Ricardo Lara, California Department of Insurance, in support.

Thank you. Okay, do we have any primary witnesses in opposition? You're welcome.

Good afternoon, Madam Chair and Members. Robert Moutrie for the California Chamber of Commerce, and we are opposed to SB 799 as a job killer. First, I'd like to thank staff for the thorough analysis of the bill, given the tight timeline. Our opposition is based on four basic concerns here. Number one, there's a fundamental issue that: we view strike -- being on strike as fundamentally different than being unemployed, and this is reflected in the law a bit, but someone on strike has a job and is choosing not to work to create economic pressure on their employer. And that's not to say it is easy, but that it is an economic technique to create that pressure.

The term may be, as noted, an AI issue, a cost of living increase, but it is a negotiating technique that is fundamentally different than someone who's been let go and has no idea when, or if, they will work again. I've been let go from one or two jobs, sadly, and I will say it's a terrible feeling, but it is different, we view, than being on strike. Second, there's an issue as to the UI fund debt and the tax implications across California employers.

As you all know, the UI fund is in historic debt due to the state ordered shutdowns around COVID-19. Employers are already paying tax increases for those shutdowns and will continue to for the next decade. To the comment -- I should say the extent of this measure's effect, we retained an economist and tried to do some math around how much this will cost. Our estimate, if this bill had been in effect for the last twelve months, is around $215 million in benefits from the UI fund.

Now, over the -- obviously years are different -- but over the course of ten years estimated insolvency, we see that around $2 billion added to the fund debt, and that's a very significant tax increase for us across California employers. Third, there is a federal law issue. Federal law lays out the basic federal requirements to be eligible for UI: you must be able to work, available for work, looking for work, and unemployed, through no fault of your own.

And we do not candidly see how those can be read in conjunction. Now, with respect to New York and New Jersey, they have made those changes. I've spoken to federal experts, and our understanding is that those programs have not been blessed. It's more a matter of Department of Labor discretion as to if those terms are enforced. Let's just say an unfriendly administration to California could enforce those terms and cause cataclysmic issues for our program. Finally, we have some concerns about EDD feasibility here.

As we all know, EDD is coming out of a very rough patch and trying to recover from the pandemic problems with the EDDNext program and other improvements. We have big concerns that changing eligibility in a drastic new way, mid-overhaul, could be really hard on EDD and negatively affect their overhaul and their fraud prevention and accuracy in claims. So for those reasons, we are opposed to SB 799 as a job killer. And I would pass to my colleague Katie Davey from the restaurants. Thank you.

Good afternoon, Katie Davey with the California Restaurant Association. We are respectfully opposed to SB 799. Between March and April of 2020, over 1 million restaurant employees were laid off to comply with public health orders that closed restaurants to stop the spread of COVID-19. The impact from the pandemic has left California's UI fund facing an unprecedented $18 billion deficit, roughly twice the size of the deficit from the Great Recession. Many restaurants, like Ambrosia and Pizza Rock, across California, shut down and never reopened.

Those that managed to survive the closures are dealing with significant debt on their own. I want to flesh out what Rob said regarding these tax increases, which are assessed on a per employee basis, because restaurants employ a lot of Californians compared to other industries, including a lot of part-time and seasonal jobs. We are being hit particularly hard by these tax increases, and they will get even harder as they increase over the next decade.

I remember in 2017, 2016 time frame, when we were repaying a much smaller UI debt after the Great Recession, the CRA government affairs team was regularly flooded with calls from independent restaurateurs asking, "What is this massive federal bill I have to pay? I don't have $30,000 in savings to pay this." Restaurants are often payroll to payroll and don't have significant savings, let alone six months of operating expenses saved. So this kind of tax is a big deal to us.

For restaurants and many others who are closed due to government orders, this is a fundamental issue of fairness. We are now left holding the bag when it comes to repaying the UI deficit. During the pandemic years, the state enjoyed massive budget surpluses. Yet none of those funds were put towards repaying the UI deficit. Despite proposals in last year's budget to provide some help, they were stripped this year, and no help has been provided.

My members do not see it as fair to now ask restaurants to subsidize striking workers, when we are presently paying increased taxes for the pandemic-driven UI debt. And that brings me to the second point on fairness. Even employers who are not presently having a strike, or who never had any prolonged strike, are going to be paying increased taxes under SB 799. This is fundamentally unfair to neighborhood restaurants in your districts, who will be paying more because of a labor dispute that they have no involvement with. For these reasons, we are respectfully opposed to SB 799.

Thank you. Do we have any public opposition, additional opposition?

Good afternoon, Madam Chair and Members. Matthew Allen, Western Growers, also opposed.

Good afternoon, Madam Chair. Chris McKaley on behalf of the Los Angeles Area Chamber of Commerce in respectful opposition.

Yeah. Julee Malinowski-Ball, behalf of the California Hotel and Lodging Association, respectfully in opposition.

Tim Taylor with the National Federation of Independent Business in opposition.

Jackie Hannas on behalf of the California Fuels and Convenience Alliance in respectful opposition. Thank you.

Natalie Boust on behalf of the California Business Roundtable and California Business Properties Association in opposition.

Yarelie Magallon with Political Solutions on behalf of the California Travel Association, Family Winemakers of California and the Western Car Wash Association in opposition.

Lawrence Gayden on behalf of the California Manufacturers and Technology Association in opposition. Thank you.

Faith Borges on behalf of the Family Business Association of California, the California Association of Joint Powers Authorities, California Employment Law Council. And I've also been asked to register opposition for my colleagues at CSAC and AXA.

Nico Molina, on behalf of the California Forestry Association and the Silicon Valley Leadership Group, in respectful opposition. Thank you.

Madam Chair, Members. Carlos Gutierrez on behalf of the California Grocery Association, in opposition.

Alex Torres on behalf of the Bay Area Council and the New California Coalition, in opposition. Also been asked to express opposition for LA County BizFed. Thank you.

Bret Gladfelty with Apex Group on behalf of the Associated General Contractors of California Chapters, in strong opposition. Thanks.

John Moffatt on behalf of the American Council of Engineering Companies, in opposition.

Good afternoon. Bryan Little, California Farm Bureau, in opposition. Thank you.

Good afternoon. Taylor Roschen, on behalf of various agricultural associations, in opposition.

Good afternoon. Ryan Allain, on behalf of the California Retailers Association, in opposition. Thank you.

Nick Chiappe on behalf of the California Trucking Association, in respectful opposition. Thank you.

Alyssa Silhi on behalf of the California Association of Recreation and Park Districts, and also on behalf of my colleagues at the California Special Districts Association and Urban Counties of California. Thank you.

Good afternoon. Sabrina Demayo Lockhart on behalf of the California Attractions and Parks Association, in opposition. Thank you.

Good afternoon. Johnnie Pina with the League of California Cities, in respectful opposition. Thank you.

Good afternoon. Michael Miller, California Association of Wine Group Growers, in respectful opposition. Thank you.

Sarah Dukett on behalf of the Rural County Representatives of California, in respectful opposition.

Good afternoon. Tyler Gerlach on behalf of the California Asian Pacific Chamber of Commerce, in respectful opposition.

Madam Chair, Members. Beau Biller on behalf of the Association of Western Employers, in opposition.

Thank you. Seeing no additional comments. I'll bring it back to the committee for questions, comments?

Thank you, Madam Speaker. Thank you, Senator. This is a really interesting issue because I think we can all sympathize with the challenges the writers are facing. I agree that AI presents a threat to our way of life and to a lot of industries, and so there's no disagreement with that. What we're talking about today is whether the taxpayer, or other small businesses, should subsidize the activities of unions. So, Senator, I'll ask you, I mean, the estimated cost here is that it could cost up to $2 billion a year for this fund, or to fund this bill or the striking activities. Are you aware of the current balance of the unemployment fund?

Yeah, I know that there are issues with the fund, but that's not what we're here to discuss today, as far as whether this policy makes sense for the state of California and whether it impacts the economy on a positive level or a negative level. And I would stipulate that well-paid workers are excellent consumers. Shorter strikes are better for the economy, and well-paid workers who consume more products and go to more restaurants actually make those restaurants more successful. So I think in the long run, this will have a benefit. It's not just the cost in an isolation. You have to project out the benefit to the economy and the multiplier effect of what a well-trained and well-paid workforce will contribute as consumers. And so I think the net benefit will be positive, not negative.

The thing with money, it's not theoretical. It's a real thing. So you're aware the unemployment fund is in debt over $18 billion, right? So that's a loan that the federal government is now expecting small businesses to pay. And they're going to be increasing their dues for each employee that they hire, every year, in perpetuity, until that's paid off. And that's not a small amount. The next state, I think, is under 8 billion. That's New York. So we're way over double. The Governor promised to help pay that off, and he has not delivered on that. And so I just don't think we can afford to take on additional expenses on the unemployment fund, when we're already at $18 billion. It just doesn't seem responsible.

Let me ask you this. Are you aware of the federal law, that the definition of what qualifies for unemployment benefits, that the employee has to be a person who is ready and willing to immediately accept work? Are you aware that that is the law under 42 U.S.C. 503 (a) (12)?

Are you asking me if this is constitutional? I would say yes.

I'm asking you if this is going to jeopardize our federal funding from Congress. Congress provides a lot of money for the unemployment insurance fund, and they have parameters on that. One of the parameters is that the employee has to be ready and willing to work. Here, we're talking about people who are not involuntarily out of work. They're making a decision. I understand why. That's up to them. They're deciding to stop working to impose financial pressure on an employer to come to the table. I have no qualms with that. They have every right to do that. But my concern is that this is going to jeopardize federal funding to the state of California. So have you considered that, or is that a concern to you?

I don't believe that's an accurate statement. I don't think it's going to jeopardize the federal funding coming to the state of California. So I disagree with your thesis.

Okay.

Thank you, Mr. Essayli.

I just have a couple more questions left.

Well, Mr. Grayson had a question.

I'm not done speaking.

Go ahead, Mr. Grayson.

Hold on one second. Madam Chair, if I could ask for technical assistance? We have a-

Sure.

That would be great. Thank you.

Hi, I'm Jenna Gerry. I'm a senior staff attorney with the National Employment Law Project and their social insurance program specializing in unemployment insurance. And I just -- on the note of the federal requirements -- he's absolutely right, that under federal law, when an ongoing eligibility requirement of unemployment insurance is that you're able, available, and actively searching for work. This bill does not change that requirement. Striking workers will still have to apply for benefits and meet those ongoing eligibility requirements.

However, technically, yes, the federal government -- if a state is out of compliance with federal law -- they can remove administrative funding from the state. That has never happened in the 90 years of the program, and it most likely is not going to, because that effectively shuts down a state's UI program. There's also 1979 case law that looked at New York's law that already provided UI to striking workers and found that it was compliant with federal law, and that states have the right to determine whether or not striking workers can get UI. So that is not actually a concern and wouldn't raise federal conformity issues.

Okay, thank you. I'd like to just conclude with a remark if I can. I think the fundamental question before us is, is it fair for the taxpayer to subsidize these ... activities? Whether some other groups -- you guys are unionized, there are other union interests that are aligned with yours. Like, SEIU has $400 million in their bank. They can assist the workers through this difficult time. I just don't think it's fair to ask the taxpayer and the small businesses to do that. And out of their money, they've spent $63 million on political activities. So they've got money out there. They should help you. I just don't think the taxpayers can afford it. So with that, I will be opposing this. But thank you.

Mr. Grayson.

Thank you, Madam Chair. My question was answered by Council. Thank you.

Thank you, Mr. Grayson. Ms. Ortega?

I have more of a comment than a question. Since arriving to Sacramento, I've learned more about artificial intelligence. Unfortunately, I've seen more artificial than intelligence, seriously, and hearing some of the comments today are artificial arguments opposing this bill. For one, I know that going on strike is a last resort. Workers do not go on strike for fun. They don't put their livelihood on the line for fun. They're doing it because they deserve the wages that they have been working for their entire lives, like our testimony today. So I want to thank the author and appreciate today's bill. And with that, I want to move a motion.

Second.

Thank you. Secretary, call the roll.

Hold on. Madam Chair, may I make a closing statement, please?

Please, would you like to close?

Thank you. First of all, I'd like to thank the Chair for having the hearing today and all the Members who are here and frankly, everyone who-

I'm sorry, I didn't realize you had a question. Go ahead. Thank you.

Thank you, Madam Chair. And Senator, my apologies. Just also wanted to ask some technical questions on this particular topic. The California Labor Federation is sponsoring AB 504, which would allow sympathy strikers to join picket lines. There's also another bill, AB 1484, which would allow temporary workers of cities and counties to join existing bargaining units. If this bill were to make it through the legislative process and signed by the Governor, would these workers be able to claim unemployment insurance as well, with this?

Yeah. So again, in order to qualify for unemployment insurance, there are several eligibility requirements. A, you have to be monetary eligible, which means you've earned a certain amount of wages within your base period, which is roughly a year before you file for benefits. Then your reason for separation has to be a qualifying reason. And this is what this bill is about, right? Saying that just because you are currently without wages due to a strike, that is not an absolute barrier to accepting -- to getting unemployment insurance.

And then you have to meet the ongoing eligibility requirements, the able, available, seeking work. And so if they met all those requirements, they then would be eligible for unemployment insurance. And of course, if their employer has been paying into the program on their behalf, as well. So it's hard to answer. There theoretically could be -- just their fact of going out on strike wouldn't necessarily disqualify them from benefits.

Wonderful. Thank you for that. So there's a lot of latitude in whether or not folks would qualify, depending on these parameters. I'd also like to get a better sense of how many Californians would benefit from this resource as well. And I know it's hard to put a number to the individuals on strike, because that changes on a yearly basis, but it would be helpful to understand the impact that this would have on California.

Well, again, I think it's a good question, but the number of strikes that last beyond two weeks is not significant. Remember, you have to be on strike for two weeks in order to get this benefit. And so the question is how many strikes does this prevent versus how many strikes does this make shorter versus how many strikes last longer?

We believe this will enhance the labor management conversation, proactively, and prevent strikes, or shorten strikes, and also certainly provide that modicum of subsistence and assistance for those families who are on strike. So we think the overall net is going to be a benefit, but I can't give you the number of what it's going to do, because I think there's those other situations that are going to be positive throughout this conversation.

Sure, that would be theoretical in the future. But do we have a sense of today's numbers on workers on strike and what that would look like? If somebody would-

With the Chair's permission if you want to-

Go ahead.

I can address some of it if you'd like.

Yeah, feel free. I was just going to say that I would echo the comments of the author that it varies a lot year to year. So I can't give you the number. I can, after this hearing, pull the number for the last twelve months that we used for our estimates, if that's helpful. But there is a great variety, year-to-year, based on numbers of strikes and things like that. So it's hard to just pick a number. But I'm glad to share my assumptions, on our side, after the hearing.

Sure. I would also appreciate some clarification on both sides' understanding of the impact. I'm sorry-

That's okay. I was just going to give some context. So, yeah, I believe in the analysis of this bill, you'll see that, from 2012 to 2020, there was exactly two strikes that lasted longer than two weeks that would have potentially been eligible for this. I believe in the Chamber's opposition, they estimate 150,000 workers a year could potentially be eligible.

Just to put that in context, about 150,000 workers are laid off, on average, per month, in the state of California who are most likely eligible for unemployment insurance, since they are the main users of the program. So even on that high end, which I think is a high end estimate, also considering, in the state of California we have about a 45 percent recipancy rate. This means 45 percent of all unemployed workers actually collect unemployment insurance.

So even assuming you had 150,000 people out on strike, just knowing general UI, it would be probably half that even would potentially apply for and be eligible. And of course, they would have to not be making any other -- if they make other income, they have to report, therefore their benefits would go down. So just to put it in a little bit of context.

And I do appreciate that. And the question is more so -- to put some context to this, right, and be able to put a number to it -- not, obviously, hold anyone accountable to that data, but when we're talking about such a large policy issue, I think it's critical to have a sense of the magnitude. I would also appreciate just some clarification on the analysis from both sides, when it comes to the impact to the UI fund itself. I've heard numbers from the supporters and then I've also heard numbers from the opposition, and there is a significant difference. So maybe just some of the methodology as to how that came to be, so we can get some discrepancy maybe stated publicly and that would be helpful. Thank you.

Mr. Fong.

Just a quick question, if I can ask, maybe the expert and maybe from the opposition. In the analysis, and I'm sure both have read it, it struck me: there was a paragraph that says states can request waivers, for example, a benefit-cost ratio add-on waiver, for these credit reductions, when it comes to the tax credit. And one criteria requires states to take no legislative action, or other action, to decrease the net solvency of the UI fund within a specified period. And it goes and say that actions like this could jeopardize California's eligibility for a BCR waiver, or the state could be assessed a tax credit reduction. Can someone explain to me, does these types of legislation or does this proposal risk a waiver? And so what would be the impact to the solvency of the fund?

Yeah, I'm happy to address that. Just to start out, when we're talking about the California Trust Fund -- the California Trust Fund has been in crisis for decades. It has, since 1990, not met the US. Department of Labor's recommended solvency levels. Actually, heading into the pandemic, the US Department of Labor had it ranked as the least solvent fund across the country, including Puerto Rico and Washington DC. So just to let you know that this is not a new problem.

The US Trust Fund has been in crisis since 1983, when we've refused to raise the taxable wage base. And so what happens is, under the unemployment insurance system, there is a federal unemployment insurance tax, which is referred to as FUTA. It is set at 6 percent. However, when states are compliant with federal law, and there isn't any outstanding loans, employers get a 5.4 percent tax credit. Now, when you have an outstanding loan that's not paid off within two years, that tax credit starts going up.

And so each year it goes up 0.3 percent. So you go from a 0.6 percent tax bill to a 0.9 percent. When you hit your fifth year of not paying it back, there is a new potential reduction in the tax credit called the benefit-cost ratio add-on. All very technical. But what it means is that, instead of just a 0.3 tax reduction, tax credit reduction, you could be facing a larger one that is calculated looking at total benefits paid versus revenues coming in. In that fifth year, a state can apply for a waiver. And that is where that potential, where the USDOL will look at whether you have passed a law that is in effect by September 30 of that year that reduces the overall solvency of the fund.

Now, inherent in that assertion in the analysis that this could potentially impact that by reducing the solvency fund is an assumption that the state of California is going to do nothing in the next four years to actually fix and address this crisis, which I think is untenable. This is a crisis that has been here for decades and it continues to hurt workers, because we have a $450 benefit amount that has not changed in 20 years, that is not livable in the state of California.

And we continue to have then -- every time, after every recession, we've had to borrow, and employers' taxes go up. Where if we actually do real reform and have a tax rate and have a larger taxable wage base and tax rate goes down, we can have a system on behalf of their employees that will meet the needs of California. And when we go into a recession, we will have funds built up, we will not have to borrow. We come out of the recession and employer taxes will not go up.

Certainly appreciate that analysis. I think that clarifies a number of things. I think acknowledging the insolvency is the elephant in the room. And I think there are a lot of assumptions being made on both sides. So I appreciate that. I didn't know if the opposition wanted to comment on the analysis that was provided or not. If not, you don't have to. But-

With permission. Yes, the explanation of BCR is apt. It is ... fifth year. And that is kind of what the question -- I think the other unspoken point that I should flag, right, is that this is in discretion of the Federal Department of Labor, in terms of a lot of how this is viewed. Right. So depending on who wins the next election, or the election after that and after that, that interpretation, I think, is something which we would view as different. I'll just say different parties may take different interpretations, should they be in federal control. And I think that's a concern for us.

I certainly appreciate the perspective of both sides. Thank you very much.

Thank you. If there aren't any other questions, we'll go to closing remarks, Senator.

May I say one more thing?

Sure. With the chair's permission. Madam Chair?

Yes?

May I say one more thing?

Yes. Your question wasn't answered. I'm sorry.

Just to revert back to the question that was skipped over due to Mr. Vince Fong's question. Yeah. The methodology. Right. There is stark differences when it comes to the impact on UI. I think it's a critical component that needs to be addressed so that we get a better sense of how this is going to impact California in the future as well. Thank you.

Go ahead.

Sorry. Again, I'll try to be brief -- respect to everyone's schedule. Just say what we tried to do was take a model based on the strikes that have occurred in the last twelve months and treat it, looking at that data -- I don't have the list of assumptions in front of me. Like I said, I'm glad to share, but that was our focus. I can't speak to anyone else's methodology, but that was kind of how we looked at it to find an anecdotal model.

Yeah. And I did not put together my own analysis on this. I can say: I think this is going to have a very minuscule impact. As I said before, there's 150,000 layoffs in California, on average, occurring right now. When we talk about the pool of unemployment insurance claims, striking workers is such a small pool of potentially eligible applicants that -- like I said, the fund is in crisis.

And this small impact will not actually change the fact of the crisis or change the degree of it, but what it will do is make a big difference in that individual striking worker's life. And I'm happy to follow up with more statistics, you know, I could look at New York and New Jersey too, and we could see the impact that it's had on their fund over the years. I will say that New Jersey has a really healthy fund and a really great program and is -- actually, we lift New Jersey up as a model state, and it provides UI for sharking workers as well.

Thank you. I would appreciate, just for my sake, that data, and will be supporting this bill in committee, but would like to also reserve my right after I review that data, if and when it does come to the floor. Thank you.

Thank you. So Senator, you can make your closing remarks, or you can allow her to make it on your behalf, but I can't open up testimony again.

Thank you, Madam Chair. No, thank you. I appreciate that. And thank you. Again, I just want to appreciate the Chair, the robust conversation we had, all the Members who are here. And I have to agree with Jenna: the fund has been an issue for a long time. We should not let this moment in time, to do the right thing, affect our decision for something that's been a long-term problem. We should use this as an opportunity to look at how we improve the fund going forward.

And I've said that from the beginning. If this bill, which will have a small impact on that fund, stimulates the bigger conversation to have: how we make it more solvent going forward and make it better for California's taxpayers, we should seize that opportunity as well. The other thing we shouldn't do, is we shouldn't revert to that conversation of, "Well, why do I pay my fire district fee if the firefighter goes to my neighbor's house? They didn't come to my house. Why should I pay the school bond, because I don't have kids in the school?" It's the collective benefit of society -- that we look out for each other, that we take care of each other, that we say -- we plan for the crisis of that individual.

And as been said, the overall impact of this is not going to be significant on the fund, but the individual benefit to that striking worker, who has to think about buying food for their family or paying their rent, it's going to have a significant benefit to that person. And I would say it's incumbent upon all of us to provide that benefit. Because what touches one of us, touches all of us. And that's why this bill is needed. And I respectfully ask for an aye vote.

Thank you, Senator. Secretary, please call the roll.

File item number 1, SB 799, Portantino. Motion is do pass to Appropriations. Calderon. Aye. Essayli. No. Berman. Aye. Cervantes. Aye. Chen. Vince Fong. No. Gibson. Aye. Grayson. Aye. Jones-Sawyer. Aye. Ortega. Aye. Bonta. Aye. Lee. Aye. Valencia. Aye. Wood. Aye.

The bill is out. Thank you, Senator. Thank you. Okay, item number 2, AB 458, Assemblyman Sawyer -- Jones-Sawyer. Whenever you're ready.

Thank you. Madam Chair, members. AB 458 is back for concurrence and Senate amendments which simply clarifies...

You can keep going.

AB 458 is back for concurrence and Senate amendments which simply clarifies e-scooter insurance requirements in order to ensure proper interpretation of existing statute. Last year, my Bill AB 371, which extended the existing scooter insurance protections to pedestrians, passed the Legislature with strong bipartisan support and was signed into law. In doing so, pedestrians, especially those with vision impairments and other disabilities, were afforded coverage for injuries caused at no fault of their own.

Because existing statute established by my Bill does not explicitly state an aggregate amount, I became informed that there have been confusion that threatens proper implementation of the insurance requirement. Though silent on the issue, the existing insurance product that AB 371 was modeled after allows for aggregate limits on third party liability insurance, even when the original policy is similarly silent on aggregate limits. Without clarification language, this will be a continued problem for providers, as the current insurance quotes are prohibitively expensive.

As such, explicit clarification of the law is warranted. AB 458 received unanimous bipartisan support in the Senate and no registered opposition. With me to speak in support of this Bill is Charles Wright on behalf of Bird.

Madam Chair. Charles Wright from Bird. I will not read my statement if it's already been moved, and seconded, if that's the preference. We're in strong support.

Thank you. Is there any opposition to this Bill? Seeing none. Do we have any public support or opposition for this Bill? Seeing none. Do we have any questions from committee members on this Bill? Seeing none. Would Mr. Jones close?

Respectfully, I ask for aye vote.

Thank you. Secretary, please call the roll.

File item number two, AB 458. Jones-Sawyer. Motion is Senate amendments be concurred in. Calderon? Aye. Calderon, aye. Essayli? Aye. Essayli, aye. Berman? Aye. Berman, aye. Cervantes? Chen? Vince Fong? Aye. Vince Fong, aye. Gipson? Aye. Gipson, aye. Grayson? Grayson, aye. Jones-Sawyer? Aye. Joan Sawyer, aye. Ortega? Aye. Ortega, aye. Bonta? Aye. Bonta, aye. Lee? Aye. Lee, aye. Valencia? Aye. Valencia, aye. Wood? Aye. Wood, aye. Cervantes? Aye. Cervantes, aye.

Okay, this Bill gets out. Thank you, Mr. Jones.

Thank you very much.

Okay. This concludes the Assembly and Insurance Committee. The committee is adjourned.