Labor & Employment (Unemployment)

Existing law establishes the Employment Development Department, administered by the Director of Employment Development who is vested with certain duties relating to unemployment compensation. Under existing law, employer contributions to the Unemployment Fund accrue and become payable by every employer, except as specified, for each calendar year with respect to wages paid for employment. Existing law prohibits employers from deducting the required employer contributions from the wages of their employees. This bill would make a nonsubstantive change to that latter provision.

Existing law makes it a misdemeanor or a felony to engage in specified acts of fraud or material misrepresentation for the purpose of obtaining or denying workers' compensation, as specified. Existing law, the Workers' Compensation Insurance Fraud Reporting Act (the act) , requires insurers and licensed rating organizations to release upon request to an authorized governmental agency, as defined, relevant information deemed important to the authorized governmental agency that the insurer or licensed rating organization may possess relating to any specific workers' compensation insurance fraud investigation. The act requires, under specified circumstances, an insurer or licensed rating organization to notify the local district attorney's office and the Fraud Division of the Department of Insurance, and requires that entity, unless specified circumstances exist, to notify any other authorized governmental agency of suspected fraud, as specified. The act also requires the Employment Development Department (EDD) to release, upon written request, to an authorized governmental agency relevant information that the EDD may possess relating to any specific workers' compensation insurance fraud investigation. The act requires, unless specified circumstances exist, an authorized governmental agency that is provided with information pursuant to those provisions to release or provide that information in a confidential manner to any other authorized governmental agency for purposes of investigation, prosecution, or prevention of insurance fraud or workers' compensation fraud. This bill would require an insurer or licensed rating organization to notify the EDD, in addition to the local district attorney's office and Fraud Division on the Department of Insurance, of suspected fraud when the fraudulent act relates to premium fraud. The bill would authorize an insurer to submit wage records and employee counts for an employer to the EDD and would require the EDD to identify discrepancies in the submitted information, as specified, and report any discrepancies back to the submitting insurer. Upon request by an insurer, the bill would require the EDD to release or provide detailed payroll information, including payroll summary totals, allowing the requester to compare the records with the information they are otherwise entitled to receive from employers in workers' compensation claims or pursuant to workers' compensation policies, unless doing so would violate federal law or compromise an ongoing investigation. The bill would require the EDD to only provide the information if specified requirements are met, and the requesting insurer to reimburse the department's actual, direct costs of releasing or providing this information. The bill would prohibit the provided documents from being used for specified purposes. Existing federal regulations generally prohibit the disclosure of confidential unemployment compensation information unless disclosure is on the basis of, among other things, informed consent to an agent of an employer. This bill would provide that by entering into a policy of workers' compensation insurance with an insurer, an employer in California consents and designates that insurer as the employer's agent to act for or in the place of the employer only with respect to a request for the above-described payroll information. Existing constitutional provisions require that a statute that limits the right of access to the meetings of public bodies or the writings of public officials and agencies be adopted with findings demonstrating the interest protected by the limitation and the need for protecting that interest. This bill would make legislative findings to that effect.

Existing law requires a claimant for unemployment compensation disability benefits to establish medical eligibility for each uninterrupted period of disability by filing a first claim for disability benefits supported by a certificate of a treating physician or practitioner that establishes the sickness, injury, or pregnancy of the employee, or the condition of the family member that warrants the care of the employee. For subsequent periods of uninterrupted disability after the period covered by the initial certificate or any preceding continued claim, existing law requires a claimant to file a continued claim for those benefits supported by the certificate of a treating physician or practitioner. This bill would prohibit a physician or practitioner from charging an administrative fee to complete a form for a certificate. The bill would also prohibit a physician or practitioner from charging an administrative fee to complete a recertification examination or for a form that is required to maintain continued eligibility for disability benefits. The bill would provide that these provisions do not prohibit a physician or practitioner from billing for medical services provided in connection with an examination or collecting an applicable copayment, coinsurance, or deductible, as specified.

Existing unemployment compensation disability law requires workers to pay contribution rates based on, among other things, wages received in employment and benefit disbursement, for payment into the Unemployment Compensation Disability Fund, a special fund in the State Treasury. That fund is continuously appropriated for the purpose of providing disability benefits and making payment of expenses in administering those provisions. Existing law, the family temporary disability insurance program, provides up to 8 weeks of wage replacement benefits to workers who take time off work to care for a seriously ill child, spouse, parent, grandparent, grandchild, sibling, or domestic partner, or to bond with a minor child within one year of birth or placement in connection with foster care or adoption, or to participate in a qualifying exigency related to the covered active duty or call to covered active duty of the individual's spouse, domestic partner, child, or parent in the Armed Forces of the United States. Existing law defines "covered active duty" to mean, with respect to a member of the regular Armed Forces of the United States, duty during the deployment of the member with the regular armed forces to a foreign country and, with respect to a member of the reserve components of the Armed Forces of the United States, duty during the deployment of the member of those reserve components to a foreign country under a federal call or order to active duty. This bill would, starting upon specified changes to the Employment Development Department's integrated claims management system or on July 1, 2028, whichever occurs sooner, expand the definition of "covered active duty" to additionally include duty during training, deployment other than deployment to a foreign country, and, with respect to a member of the reserve components of the Armed Forces of the United States, a call or order to state active duty. By authorizing expenditures from the continuously appropriated fund for these expanded purposes, this bill would make an appropriation.

The Personal Income Tax Law, in modified conformity with federal income tax law, allows various deductions from gross income in calculating adjusted gross income. This bill, for taxable years beginning on or after January 1, 2026, would allow a deduction from gross income for any qualified fitness benefit provided by an employer to an employee, as specified. The bill would define "qualified fitness benefit" as a uniform stipend amount to all full-time employees for fees or dues for membership in a fitness center, health club, or gym, except as specified. Existing law requires specified employers to contribute to the Unemployment Fund based on wages paid for employment. Existing law defines "wages" for this purpose, as provided, and excludes from that definition, among other things, remuneration in excess of $7,000 paid to an individual by an employer during any calendar year, with respect to employment. This bill would additionally exclude from that definition of wages any qualified fitness benefit provided by an employer to an employee, up to $600 per year, as specified. Existing law requires a bill authorizing a new tax expenditure to contain, among other things, specific goals the tax expenditure will achieve, detailed performance indicators, and data collection requirements. This bill would include additional information required for any bill authorizing a new tax expenditure. This bill would take effect immediately as a tax levy.

Existing law, the California Worker Adjustment and Retraining Act (Cal/WARN Act) , among other things, prohibits an employer from ordering a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order to the employees affected by the order and to the Employment Development Department and certain local officials. Existing law requires the notice to contain specified information and makes an employer who fails to give the required notice liable to each employee entitled to notice who lost their employment for back pay and the value of the cost of any benefits to which the employee would have been entitled had their employment not been lost, as provided. Existing law also makes an employer subject to civil penalties, as provided, for each day of the employer's violation. Existing law defines "employer" for these purposes to mean any person, as defined, who directly or indirectly owns and operates a covered establishment and defines "covered establishment" to mean any industrial or commercial facility or part thereof that employs, or has employed within the preceding 12 months, 75 or more persons. This bill would add "public agency" to the definitions of employer and covered establishment, thereby making the Cal/WARN Act applicable to public agencies. The bill would, in the case of a sale of part or all of an employer's business, make the seller responsible for providing the notice for any mass layoff, relocation, or termination up to and including the effective date of the sale, and make the purchaser responsible for providing the notice following the effective date of the sale. The bill would make other technical and conforming changes.

Existing law, the California Worker Adjustment and Retraining Act (Cal/WARN Act) , prohibits an employer from ordering a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect, the employer gives written notice of the order to the employees affected by the order and to the Employment Development Department and certain local officials. Existing law makes an employer who fails to give specified notice regarding a mass layoff, relocation, or termination subject to a civil penalty of not more than $500 for each day of the employer's violation. This bill would revise the Cal/WARN Act to also require an employer giving notice of a mass layoff, relocation, or termination caused in whole or in substantial part by an artificial intelligence (AI) system or other automated technology replacing or automating employment positions to include certain information in the notice, including the job functions performed by workers that will be automated by AI or other automated technology. The bill would require the department to publish a summary of the notices received on its internet website and to post a quarterly statewide summary of technological displacements reported. The bill would require the department, on or before January 1, 2028, to submit a report to the Legislature on artificial intelligence's effects on business hiring practices, including its impact on industries and occupations at the state and regional level. The bill would repeal the provision requiring that report on January 1, 2029.

Existing law requires a 3-part test, commonly known as the "ABC" test, to determine if workers are employees or independent contractors for purposes of the Labor Code, the Unemployment Insurance Code, and the wage orders of the Industrial Welfare Commission. Under the ABC test, a person providing labor or services for remuneration is considered an employee rather than an independent contractor unless the hiring entity demonstrates that the person is free from the control and direction of the hiring entity in connection with the performance of the work, the person performs work that is outside the usual course of the hiring entity's business, and the person is customarily engaged in an independently established trade, occupation, or business. Existing law provides for a system of unemployment insurance providing benefits for persons unemployed through no fault of their own and exempts from the definition of "employment" for that purpose services performed as a real estate, mineral, oil and gas, or cemetery broker or as a real estate, cemetery, or direct sales salesperson, or a yacht broker or salesman, by an individual if certain criteria are met, including that the individual is licensed, as specified, or is engaged in the trade or business of primarily in-person demonstration and sales presentation of consumer products, including services or other intangibles, in the home or sales to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis, for resale by the buyer or any other person in the home or otherwise than from a retail or wholesale establishment. Existing law exempts specified occupations and business relationships from the application of the ABC test described above, including an exemption for a direct sales salesperson described in the above-described unemployment insurance exemption. This bill would revise the above-described unemployment insurance exemption to additionally exempt from the definition of "employment" an individual engaged in the trade or business of primarily person-to-person sales activities door-to-door, telephonically, or online or sales to any buyer on a buy-sell basis, a deposit-commission basis, or any similar basis, for resale by the buyer or any other person in the home or otherwise than from a contractually required retail or wholesale establishment.

This measure would urge the United States Congress to enact federal legislation that would ensure that federal unemployment taxes on businesses are not increased due to any debt to the federal Unemployment Trust Fund that was a direct result of a state's decisions resulting in increased filings, including shutdowns, extensions of shutdowns, or lapses in fraud prevention programs.

Existing law, the California Worker Adjustment and Retraining Act, governs mass layoffs, relocations, and terminations. Existing law prohibits an employer, with certain exceptions, from ordering a mass layoff, relocation, or termination at a covered establishment without giving prescribed written notice to the employees, the Employment Development Department, and other local agencies. This bill would require employers to include in the notice whether the employer plans to coordinate services through the local workforce development board or another entity, as specified, and information regarding the statewide food assistance program known as CalFresh, as specified.