A bill that would provide unemployment insurance (UI) benefits for striking workers was introduced in the California Legislature this week by Senator Anthony Portantino.
This new bill, SB 1116 (Portantino; D-Burbank), is a reintroduction of last year’s SB 799 (Portantino; D-Burbank), which was vetoed by Governor Gavin Newsom.
The California Chamber of Commerce labeled SB 799 a job killer and urged its veto because it would have forced employers to, in effect, pay their own employees to strike.
The bill would have provided a benefit to workers who voluntarily chose to not work, the opposite of the purpose of UI benefits, which is to compensate employees who are separated from their jobs through no fault of their own.
Moreover, the bill would have raised taxes on employers across California and would have put the state’s UI program at risk of violating federal law.
In addition to adding to employers’ tax burden, SB 799 also would have added to the state’s General Fund obligation regarding the UI Fund because interest on the UI Fund debt is paid by the state.
In his veto message, Governor Newsom pointed out that the state should not incur more UI debt.
“Any expansion of eligibility for UI benefits could increase California’s outstanding federal UI debt projected to be nearly $20 billion by the end of the year and could jeopardize California’s Benefit Cost Ratio add-on waiver application, significantly increasing taxes on employers. Furthermore, the state is responsible for the interest payments on the federal UI loan and to date has paid $362.7 million in interest with another $302 million due this month [September 2023]. Now is not the time to increase costs or incur this sizable debt,” he stated.
The California fund is in historic debt — approximately $20 billion — due to the COVID-19 pandemic and subsequent statewide shutdown. As a result, California employers already are paying increased UI taxes pursuant to federal law and are likely to face ongoing tax increases until approximately 2032.
