California passes bill to provide unemployment benefits to strikers. Will the governor sign?

Striking workers in California, including writers and actors still picketing Hollywood studios, will be eligible for unemployment benefits under legislation passed by state lawmakers Thursday.

Gov. Gavin Newsom now faces a major decision on whether to sign the bill into law and provide financial aid to striking entertainment workers and other union members who are walking off the job amid rising labor-employer tensions in California.

Under Senate Bill 799, California would become one of the few states to allow striking workers to receive unemployment benefits, joining New York and New Jersey. The bill, both strongly supported by unions and opposed by the California Chamber of Commerce, would allow striking workers to receive unemployment benefits after a two-week strike.

If the governor signs the bill into law, it will take effect in January.

Newsom has played a role behind the scenes as the Hollywood strike drags on for more than 100 days, stressing that he is working with both sides.

At an event hosted by Politico on Tuesday, the governor raised concerns about unemployment insurance debt but did not say whether he would veto the bill. California’s unemployment fund is more than $18 billion in debt after it borrowed money from the federal government to pay unemployment benefits.

“I think you have to be careful with that before you start talking about expanding its use,” Newsom said.

Democrats, on the other hand, show their support for unions.

“We want people to be able to pay their rent and for people to be able to put food on the table on strike or not on strike. That’s the right thing to do,” Sen. Anthony Portantino (D-Burbank), who authored the bill, said on the Senate floor.

The bill cleared the Senate on Thursday after Republicans opposed the legislation over concerns it would hurt businesses and “put a thumb on the scale” in favor of unions.

In California, unemployment benefits are $450 per week for a maximum of 26 weeks. To be eligible for unemployment, California residents must meet other requirements, such as making a reasonable effort to find work.

Unions, including the Writers Guild of America and SAG-AFTRA, are pushing for the bill to pass a committee hearing. On September 7, members of these unions also held a rally on SB 799, urging lawmakers to pass the legislation. Unions have strike funds to help workers pay their bills, but union leaders say that’s not enough, especially as strikes drag on for months.

The Assembly passed the bill on Monday.

Assemblyman Bill Esailly (R-Corona) said on the floor of the Assembly that the legislation is fundamentally unfair to businesses because the state would essentially side with striking union members during a labor dispute.

“This is giving one side an advantage,” said Esaily, who voted against the bill along with other Republicans. “You’re subsidizing the labor side with tax dollars.”

Assemblywoman Lori D. Wilson (D-Suisun City) voted in favor of SB 799, but also raised concerns about unemployment benefits and who is eligible for those benefits.

“We have to solve this problem of underfunding. We have to deal with this question of who it covers,” she said in the Assembly hall.

The California Chamber of Commerce argued that extending unemployment benefits to striking workers would be like a tax increase on employers since they fund the benefits. Companies pay state and federal payroll taxes on the first $7,000 of each employee’s annual earnings to fund the unemployment insurance program.

But those tax dollars are not enough to fund unemployment benefits. The state also borrowed $20 billion from the federal government in 2020 to fund unemployment claims. To repay this loan, employers will pay additional taxes each year.

Money from the state’s general fund also goes toward interest on the loan, which could be paid until 2032, according to estimates from the Office of Legislative Analysis. The amount of time needed to repay the loan may be longer if there are more job losses in California.

Determining the bill’s impact on the unemployment fund is difficult to predict because it depends on a variety of factors, including the number of workers on strike and the length of the strike. According to an analysis of the bill by the House Appropriations Committee, the cost to the state unemployment insurance fund “is likely to be in the millions to tens of millions of dollars.”

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