News Column

California Legislature Considers 'Wal-Mart' Bill

June 25, 2013

With Democrats set to lose their Assembly supermajority in California this week, moderates are in the hot seat as the house decides the fate of one of organized labor's top priorities.

A measure by Assemblyman Jimmy Gomez, which seeks to bar Wal-Mart and other large employers from providing wages and hours low enough to qualify for Medi-Cal rolls, requires a two-thirds supermajority to pass.

The bill, expected to be acted upon Thursday by the Assembly, will test liberal Democrats' ability to control the Legislature before their opportunity evaporates. They'll learn whether moderates of their own party will stand with them or move to kill a bill labeled a "job killer" by the California Chamber of Commerce.

"This is one of the first real, hard acid tests of the two-thirds supermajority casting an extraordinary vote for an obvious labor agenda," said Rob Stutzman, a GOP political consultant. "It will be interesting to see if two-thirds is enough."

Time is running out on Gomez because Assemblyman Bob Blumenfield will resign his seat Sunday to join the Los Angeles City Council, leaving the Assembly with 53 Democrats, one shy of a supermajority.

Key business and labor groups, lobbying hard on AB 880, say they will watch carefully when moderate Democrats cast their vote.

"This is truly the first test of 'mods' in the Assembly -- who are you, and are you real?" said Bill Dombrowski, president of the California Retailers Association and leader of the opposition to AB 880.

Jim Araby, director of the Western States Council of the United Food and Commercial Workers International Union, a co-sponsor of the bill, said his union will remember who voted against AB 880 when California's 2014 election rolls around.

"This will definitely be a key issue in determining if we challenge certain Democrats," he said. "It's definitely going to be one of the issues that we judge that on."

The California Labor Federation and UFCW, teaming to push AB 880, tout the bill as closing a loophole that allows the state's largest businesses -- 500 employees or more -- to avoid subsidizing employee medical insurance under next year's federal health care overhaul.

Federal law will penalize businesses if workers toiling 30 hours a week are forced to buy health insurance from a new state exchange next year because they are not covered by an employer plan. AB 880 would expand the concept to penalize large firms about $4,400 for each employee on Medi-Cal rolls if they work at least 12 hours per week.

"It's really just the largest, most profitable employers in the state that we're talking about -- and it's an issue of basic fairness," said Steve Smith, spokesman for the California Labor Federation.

A high-powered coalition of restaurant, retail, grocer, farm and other business groups criticizes Gomez's legislation as premature, costly and a drag on the economy that will encourage lawsuits and discourage the hiring of part-time workers.

"It has far-reaching consequences, well beyond what people advertise it to be," said Allan Zaremberg, president of the state Chamber of Commerce. The organization contends that targeting employers who hire part-time workers would make it harder for students, senior citizens, single parents and others to earn extra income.

"The bottom line is, it's just an attack on large employers," said Dombrowski of the California Retailers Association.

AB 880 follows a 2012 election that boosted moderates' political power by featuring redrawn legislative districts and a primary system that pitted the top two vote-getters, regardless of party, against one another in a November runoff.

Gomez, D-Los Angeles, has spent days negotiating with wary Democrats. He introduced amendments Monday to delay implementation for one year, reduce penalties, exempt seasonal employees, and commit some money to underserved areas for Medi-Cal providers and for physician training.

Assemblyman Henry Perea, a Fresno Democrat who leads a bloc of Assembly moderates, called AB 880 "definitely one of the hottest issues of the year."

"We don't want large employers to use the state to subsidize worker health care by pushing them down to Medi-Cal rolls," he said. "On the flip side, we need to make sure (AB 880) doesn't go so far that it drives business out of the state. It's a fine balance. That balance has not been reached yet."

Assembly Democrats Richard Bloom of Santa Monica, Sharon Quirk-Silva of Fullerton, Steve Fox of Palmdale and Adam Gray of Merced are considered key votes in deciding AB 880's fate, according to Capitol and labor sources.

Bloom, Quirk-Silva, Fox and Gray, all freshmen, represent competitive Assembly districts, are moderate in political bent, or benefited from business support in capturing their seat.

"No matter what decision I make, it's a very, very tough vote," Quirk-Silva said.

Garry South, Democratic political strategist, said the fight over AB 880 reflects a changing dynamic in which key Capitol fighting will pit Democrats against members of their own party, not Republicans.

"It's going to be between a handful of genuine moderates or people who feel they represent districts where they can't get too far out of line," South said.

"They're simply going to say, 'I can't do every single thing that caucus leadership wants, or organized labor wants -- or that anybody wants,' " South said.

Medi-Cal serves about 250,000 people who work in firms meeting AB 880's threshold -- about 44 percent of them in the restaurant or retail industries, according to Ken Jacobs, chairman of the UC Berkeley Center for Labor Research and Education.

Sponsors target Wal-Mart in pushing AB 880, marking the latest in a long battle between organized labor and the nonunion retail giant.

But restaurant chains and other large firms also could be affected by the bill.

Wal-Mart, in a written statement, said its wages and benefits "meet or exceed those offered by most competitors and our health care offerings go beyond the eligibility and affordability requirements of the Affordable Care Act."

New full-time workers are eligible for health benefits after six months, while part-time workers are eligible after one year of service if they work an average of 30 hours per week, Wal-Mart said.

Wal-Mart's lowest "associate-only" medical plan costs employees only $8.70 per week and offers benefits that include no lifetime maximum for covered expenses, preventive care covered at 100 percent, and a company contribution of $250 to help pay for medical expenses, the statement said.

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Source: (c)2013 The Sacramento Bee (Sacramento, Calif.) Distributed by MCT Information Services

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