Laws: October, 2003 - Number #08

Unemployment Insurance. California paid $5.4 billion in UI benefits to jobless workers in 2002, up sharply from $3.4 billion in 2001. Rising weekly benefits plus higher unemployment combined to push up employer UI tax rates, which range from 0.9 to 5.4 percent of the first $7,000 in worker earnings. However, the amount paid to workers filing fraudulent claims doubled, from $140 million to $280 million between 2000 and 2002, giving California a fraud rate of 5.1 percent, more than double the 2.2 percent US rate. There are several reasons why UI fraud may be increasing. EDD tries to help unemployed workers by issuing "EDD Control Numbers" to persons who file claims under a Social Security number that belongs to another person; 30,000 checks were issued in 2002 to workers who did not have correct SSNs. UI benefit claimants can request benefits by phone, and can say they worked for fictitious employers, who thus do not contest their claims. EDD relies on employers to challenge incorrect UI claims. Some employers in seasonal industries go in and out of business to reduce UI taxes: the UI tax rate for new businesses for their first three years is 3.4 percent. California employers also pay 0.9 percent for disability taxes on the first $57,000 of wages. Beginning July 1, 2004, there will be a tax of $27 a year on employees to cover the cost of a new family leave benefit of up to six weeks at up to $728 a week, the same top rate that can be paid under the disability program. About 232,000 California workers a year, 1.5 percent of those eligible, are expected to take paid leave to care for newborns or other family members. Workers' Compensation. Workers' compensation is a no-fault system that provides benefits to workers injured on the job. In exchange for injured workers giving up the right to sue their employers, they are granted medical and wage replacement benefits as well as rehabilitation services according to a state-fixed schedule. The cost of California's workers' compensation system, which covers 14 million workers, rose from $9 billion in 1995 to $29 billion in 2003, so that California employers pay an average $5 per $100 in wages in workers' compensation insurance premiums, compared to $3 elsewhere in the US; farmers often pay $15 to $20 per $100 in wages because farm work results in more injuries. One reason costs rose so fast is that the state refused to cap doctors' fees or to put limits on visits by injured workers to doctors- medical costs are 60 percent of workers' compensation costs. The reforms approved in September 2003 take both steps, linking state workers' compensation fees to (lower) Medicare fees and placing caps on visits to chiropractors and physical therapists; they are expected to save $4 billion a year. Among the many cuts and changes, the new workers' compensation system substitutes a retraining voucher for the current program that gives injured workers up to $16,000 each for counseling, retraining and living expenses, thus supporting vocational schools; some 900 vocational schools might have to shrink or close. California, Arizona and most other states provide workers' compensation benefits to unauthorized workers, although in California they may not get rehabilitation services to prepare for new jobs if their employers complain. However, some employers argue, on the basis of the US Supreme Court's 2002 Hoffman decision that held unauthorized workers who were fired unlawfully for engaging in union activities were not entitled to back pay, that unauthorized workers should receive only emergency health care benefits, and no pay for the time that they could not work because of their injuries. That position has so far been rejected by the courts. Health Care. California employers with 50 or more workers must "play or pay" for employee health insurance, that is, provide health insurance for their employees (50 to 199 workers beginning in 2007) or employees and their families (200 workers or more beginning in 2006), or pay an undetermined fee into a state-operated pool that would offer health insurance to uncovered employees beginning on January 1, 2006. In both cases, employers would pay at least 80 percent of the cost of health insurance, or fees roughly equal to that amount, and workers would pay no more than 20 percent; the total costs of the new program were put at $7 billion a year. Some one million Californians are expected to be covered, and coverage will be extended to employers with 20 to 49 workers if the state adds a tax credit for small employers. Employees become eligible if they work at least 100 hours a month and have been employed by the same company for at least three months. Most employer groups opposed the law, saying that it was being pushed by an "unlikely coalition of insurers, hospitals, physicians and organized labor." Some 87 percent of California employers have 19 or fewer workers, and would be exempt; employers with collective bargaining agreements that include health insurance are also exempt. Across the US, employers' health plans covered 175 million people in 2002, including 160 million workers and their families and 15 million retirees. However, the percentage of Americans who receive health insurance through their employers has been falling, and reached a low of 61 percent in 2002. About 19 percent or seven million California residents, and 15 percent or 44 million US residents (43 percent of non-US citizens), lack health insurance. California enacted legislation in October 2003 that require employers to offer health insurance to about one million uninsured California workers at a cost to employers of $7.1 billion year, according to employers, with employers paying 80 percent. Supporters argued that the cost would be far less because there would be less uncompensated care. About 27 percent of the 3.8 million uninsured workers in California are employed in retail trade. Wal-Mart Stores Inc., the largest US employer with 53,000 workers in California, is likely to be affected by the new state law, although Wal-Mart says it pays two-thirds of the cost of health insurance for most employees. California Rural Legal Assistance launched a statewide campaign to force hospitals to provide language assistance to patients who do not speak English or Spanish; many are newly arrived indigenous people from southern Mexico. According to CRLA, a non-Spanish speaking Mixtec Indian from the Mexican state of Guerrero did not receive adequate interpretative services while hospitalized in February 2003 in Oxnard. The federal government matches state contributions for interpretative services, but California has not provided the funds, so there is no federal match. Business Climate. California's GSP is $1.4-trillion, which would make it the world's fifth-largest economy, but businesses say that costs of production are at least a third higher in the state. The Los Angeles Times profiled a firm that was moving 200 jobs to Toluca, Mexico, silk-screen apparel maker Spirit Apparel Inc, and a South Korean maker of tofu and other soy products that opened a new plant in Los Angeles, Pulmuone Co. California apparel employment fell from 122,000 to 94,000 between 2000 and 2003. Fred Alvarez, "Group Pushes Translation Aid for Immigrants," Los Angeles Times, October 6, 2003. Marla Dickerson, "A Variable Climate," Los Angeles Times, October 5, 2003.