The California Chamber of Commerce has tagged SB 1116 (Portantino; D-Burbank) as a job killer, citing the proposal’s requirement for employers to subsidize striking workers through additional taxes paid to the Unemployment Insurance (UI) Fund. By forcing employers to pay UI benefits to striking workers, SB 1116 would also raise taxes on employers across California, overturn more than 70 years of precedent, and put California’s UI program at risk of violating federal law.
This bill is a repeat of last year’s SB 799 (Portantino; D-Burbank), which was tagged as a job killer and was vetoed by Governor Gavin Newsom because of the debt it would add to California’s UI Fund. This concern is even more pressing given this year’s budget troubles.
SB 1116 would give striking workers the ability to claim unemployment after two weeks of striking—and thereby add the cost of those benefits to California’s outstanding $20 billion in federal loans.
The California UI Fund is in historic debt—approximately $20 billion—due to the COVID-19 pandemic and subsequent statewide shutdown. As a result, California employers already are paying increased UI taxes pursuant to federal law and are likely to face ongoing tax increases until approximately 2032.
In addition to adding to employers’ tax burden’s, SB 1116 will also add to the state’s General Fund obligation regarding the UI Fund. For example, in 2023–2024, the interest payment is expected to cost the state approximately $300 million—and similar payments will continue until the UI Fund returns to solvency. In the proposed 2024–2025 budget, it is estimated to rise to $331 million. SB 1116 risks compounding UI’s insolvency, which will weigh heavily on the State, California’s employers, and California’s unemployed.
A copy of the CalChamber’s opposition letter is available here.
About CalChamber
The California Chamber of Commerce (CalChamber) is the largest broad-based business advocate to government in California. Membership represents one-quarter of the private sector jobs in California and includes firms of all sizes and companies from every industry within the state. Leveraging our front-line knowledge of laws and regulations, we provide products and services to help businesses comply with both federal and state law. CalChamber, a not-for-profit organization with roots dating to 1890, promotes international trade and investment in order to stimulate California’s economy and create jobs. Please visit our website at www.calchamber.com.
Denise Davis
