Employer healthcare penalty bill defeated in Assembly

By CMTA Staff

Capitol Update, July 26, 2013

AB 880 by Assemblymember Jimmy Gomez (D-Los Angeles) that would have imposed the state equivalent of an “employer responsibility penalty” on large employers failed passage last month in the Assembly. The bill required a two-thirds vote, but fell eight votes short of the 54 needed with six Assembly Members not voting and three Democrats voting no. The bill was defeated by a vote of 46-27.

The measure would have required companies with 500 employees or more to pay a penalty any time one of their employees who worked more than 12 hours a week and more than 45 days in a calendar year enrolled in Medi-Cal. This fee would have been imposed irrespective of whether or not the employer offered affordable healthcare and was based on a complicated and arbitrary calculation that could have cost employers three times the federal healthcare penalty. Revenues collected from the fee would have been deposited into an established trust fund to offset costs associated with the state’s Medi-Cal expansion.

AB 880 was opposed by a large coalition of state employers, including CMTA. The bill’s defeat is good news for California manufacturers who employ temporary, seasonal and even employees-in-training, all of which would have been captured under this bill.  Equally good news is the one-year delay, to 2015, of the federal healthcare reform “employer responsibility penalty” as announced by President Obama earlier this month.

However, since the Assembly granted reconsideration to the author upon AB 880’s defeat, it is possible this bill could come up again for a vote during the final weeks of session. 

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