Sweetened Beverage Bill Tabled, Workers’ Comp Bill Falls Short

Two more job killer bills failed to advance this week in the face of strong concern about their negative impacts.

• The author of AB 138 (Bloom D-Santa Monica) announced he will not pursue the targeted tax on sweetened beverages this year.

• SB 567 (Caballero; D-Salinas), setting a troubling precedent that would significantly increase costs for the workers’ compensation system, failed to win enough support to pass a Senate policy committee. The bill was granted reconsideration and could come back.

AB 138: Sweetened Beverage Tax

The CalChamber opposed AB 138 a job killer because it unfairly targets and discriminates against one category of taxpayers to fund health-related programs for all.

The targeted excise tax on distributors of sweetened caloric beverages will force distributors to reduce costs through higher prices to consumers or limit their workforce.

The day AB 138 was scheduled to be considered by the Assembly Revenue and Taxation Committee, the author said he is tabling the bill for this year.

Although the CalChamber agrees with efforts to improve individuals’ health and reduce the prevalence of diabetes, obesity, heart disease and dental issues, it disagrees with the proposed revenue source set forth in AB 138.

Specifically, AB 138 imposes a 2-cent excise tax per fluid ounce of a sugar-sweetened beverage on the sale or transfer of any sugar-sweetened beverage product by the distributor.

To mitigate the cost increase, the targeted taxpayer will likely pass the increase on to consumers through higher prices. Moreover, given that the intended effect of AB 138 is to deter consumers from buying sugar-sweetened beverages or concentrates, the bill will have a direct impact on the beverage industry and its employees, including potential workforce reductions.

The CalChamber has consistently stated that any tax increase should be broad-based and shared by all so the financial impact is mitigated.

SB 567: Workers’ Comp

The CalChamber opposed SB 567 as a job killer because it significantly increases workers’ compensation costs for public and private hospitals by presuming certain diseases and injuries are caused by the workplace and establishes an extremely concerning precedent for expanding presumptions into the private sector.

Injuries occurring within the course and scope of employment are automatically covered by workers’ compensation insurance, regardless of fault.

SB 567 would require that hospital employees do not need to demonstrate work causation for specified injuries or illnesses in any circumstances. Instead, these injuries and illnesses are presumed to be work-related.

Presumptions of industrial causation for specific employees and injury types are not needed and create a tiered system of benefits that treats employees differently based on occupation and undermines the credibility and consistency of the workers’ compensation system.

Other problems with SB 567:

• The presumption is extended for up to 10 years (depending on the injury) after the hospital worker leaves employment. Generally, there is a one-year statute of limitations for workers’ compensation claims, ensuring claims will be resolved while evidence and witnesses still are available.

Stale claims, faded memories, and unavailable witnesses not only impede an employer’s ability to defend against a claim, but also impedes the ability of the workers’ compensation system to properly evaluate a claim.

• SB 567 creates a troubling precedent. Although there is a long history of legal presumptions being applied to public safety employees in the workers’ compensation system, there has never been a presumption applied to private sector employees. SB 567 would be the first such presumption applied to private sector employees.

Workers’ compensation is designed to apply a consistent, objective set of rules to determine eligibility, medical needs and disability payments for all injured workers in California. The CalChamber does not believe the Legislature should take on the role of trying to identify likely injuries for every occupation in the state with the goal of creating special rules for those employees.

This is an unrealistic expectation in an insurance system that covers thousands of types of employees and employers.

• There is no evidence that hospital workers should be entitled to a separate legal standard for certain injuries and illnesses.

All employees, in every type of occupation, face risks inherent to their employment. This is anticipated by current labor law, which requires every employer to evaluate the specific risks faced by their employees and develop an Injury and Illness Prevention Plan that mitigates those risks.

• Narrower versions of the presumption proposed in SB 567 have failed with many bills not passing the legislative policy committee or failing a full vote in the Assembly or Senate. The only version to make it to the Governor was vetoed in 2014.

The vetoed bill applied only to a specific staph infection and extended the post-employment presumption of the illness being work-related for 60 days.

In contrast, SB 567 extends the presumption to a laundry list of illnesses and injuries, including cancer, where the post-employment presumption is 10 years.

Such a drastic shift in the law will create an astronomical financial burden on health care employers and the system, creating an appreciable impact on the cost of health care at a time when we are trying to make health care more affordable.

Key Vote

SB 567 failed to pass the Senate Labor, Public Employment and Retirement Committee, on April 24, 1-2:

Ayes: Jackson (D-Santa Barbara).

Noes: Hill (D-San Mateo), Morrell (R-Rancho Cucamonga).

Not voting: Mitchell (D-Los Angeles), Pan (D-Sacramento).

The bill was granted reconsideration.