Calif. Gov. Davis Signs Family Leave Bill Opposed by Insurers

California Gov. Gray Davis has signed a bill (SB 1661) that permits workers to take six weeks off to care for a new baby, a newly adopted child or a family member who has fallen ill. With the signing, California becomes the first state to put into law a comprehensive paid family leave program.

Nicole Mahrt, public affairs director western region, for the American Insurance Association, told Insurance Journal that, “the impact on insurers’ and every business in California is the same. AIA was part of the coalition, led by the California State Chamber of Commerce, in opposing the bill. Basically, it will put another burden on employers to hold up a job or find a replacement.”

The bill goes into law July of 2004 and will make employees eligible to receive a little more than half (percent) of their wages covering the time of their absence.

“There was a large business coalition that did oppose it and did negotiate some amendments to the bill,” Mahrt added. “Initially, the bill called for employers to have to pay an amount equivalent to what employees contribute. The leave was going to be 12 weeks and was changed to six, and employees make the contributions. California loves to be the leader on big issues as always. It just adds to an increasingly difficult business climate in California.”

When asked the impact on agents, Mahrt added, “It does impact agents if they’re a small business. There are some thresholds where if you’re under 50 employees, you don’t have to hold the job open, but you most likely have to hire the person back on in a different position. That is ultimately the impact on an agency. Their person goes out and they have to find someone to do the work, but they have to bring the person back. In a small shop, that can be a significant impact. People are going to have to change the way they think when people have kids.”

Topics California Carriers