The California Assembly voted down a bill Thursday that would have fined large employers whose workers end up on Medi-Cal — the state subsidized health care program for low-income residents.
AB880, better known as “the Wal-Mart bill,” fell nine votes short of passage. Democrats in the Assembly were hoping to pass the bill while they still have a super-majority, which ends July 1 when Bob Blumenfield (D-San Fernando Valley) resigns on July 1 to take his seat on the L.A. City Council.
The bill’s author, Assemblyman Jimmy Gomez (D-LA), warned without it there would be nothing to deter companies from cutting workers hours in order to sidestep the Affordable Care Act requirements to provide insurance to full-time workers.
“If their employees in the inverse end up on Medi-Cal, and we don’t recoup some of those costs, it is a de-facto subsidy for those companies,” Gomez said.
Assemblyman Don Wagner (R-Irvine) criticized the measure for lumping businesses together based on a head count.
“There’s nothing in this bill that specifically addresses whether a company can afford the penalty that we’re going to sock them,” Wagner said. “The mere fact that you have 500 or more employees does not necessarily make you a great big company that is as profitable and able to absorb everything this legislature dishes out. That’s not how business works.”
Gomez shot back: “We know how it works perfectly."
In the run-up to the vote on AB880, the CEO of Darden Restaurants, which owns both the Olive Garden and Red Lobster chains, flew in from Florida to lobby against the bill.
Last year the company tried replacing full-time workers with part-timers. The Associated Press reported the company abandoned the effort because of a public backlash and a 37 percent drop in net income.
Steve Smith of the California Labor Foundation called Thursday’s decision “a tough vote” and said they would consider the options for bringing the issue back.
Smith thinks more lawmakers might vote for the change after the Affordable Care Act takes effect. The labor federation estimates as many as 150,000 workers who work for large employers in the state could end up on Medi-Cal.
“I think were going to start to see it happen and people will see the negative consequences,” Smith said.