A bill that would penalize large businesses in California that cut their low-wage employees' hours to get around health care reform laws is attracting considerable opposition from business interests across the state.
The bill, AB 880, would impose fines on businesses with 500 or more employees who use a loophole in the federal Affordable Care Act to avoid paying health-care benefits. Workers who fall through that crack would end up having their medical costs absorbed by the state's Medi-Cal program.
It was introduced by Assembly Member Jimmy Gomez, D-East Los Angeles, and has already been passed on party-line votes in the Assembly health and appropriations committees. It is expected to come to the floor, probably in the next few weeks, Gomez said in an interview.
The bill has drawn sharp criticism from pro-business groups and industry associations, and op-ed articles bearing the byline of trade groups have appeared in several newspapers around the state. Many of those criticisms were brought up Tuesday, June 4, at a press conference at the Greater Riverside Chambers of Commerce office, which was attended by two Riverside City Council members.
AB 880 would close what many see as a flaw in the Affordable Care Act, which goes into effect in 2014. Dubbed by some the "Wal-Mart Loophole," it would prevent large corporations from cutting employees' hours to avoid having to include them in the company's health-care plan.
Workers denied health coverage because of that loophole would end up on state-funded Medi-Cal, advocates say.
But opponents at Tuesday's gathering say it would discourage new job creation and business investment and could stall the economic recovery.
"Our region's economy doesn't need one more thing that will negatively impact it," said Nicholas Adcock, the chamber's government affairs manager. "Our economy is going through a steady recovery and this is the last thing we need."
Opponents say it would be especially hard on businesses that hire part-time and seasonal workers, including students, many of whom are looking for summer work right now. The bill was also criticized for being vaguely written, coming on the heels of the complex federal health-care reform.
According to an analysis released in April by the UC Berkeley Labor Center, an estimated 250,000 people in California currently work at low-wage jobs at companies with more than 500 workers statewide and depend on Medi-Cal for their health coverage. Close to half are employed at retail chains or restaurants.
Gomez, a Riverside native, said that if the Affordable Care Act loophole is not closed, that number could go as high as 400,000 people, all of whom work for large corporations. He said that in Wisconsin, a single Wal-Mart store was found to cost the state's health care plan about $900,000.
"A fundamental strength of our economy also hangs on the budget being balanced," Gomez said. "If we don't take care of this problem, then Medi-Cal will grow and have an impact in other areas, like public safety and higher education."
Connie Leyva, president of Claremont-based Local 1428 of the United Food & Commercial Workers, the union that represents grocery workers in western San Bernardino County, said that slightly more than 1 percent of the state's businesses have 500 or more workers.
"That means 98.9 percent of businesses are unaffected," said Leyva, who is also president of the California Labor Federation. "Businesses that don't want to pay more taxes should like AB 880." ___