The California state Assembly rejected a bill Thursday that would penalize large employers if their workers ended up on state Medicare rolls.

Assembly Bill 880, proposed by Jimmy Gomez, D-Los Angeles, was rejected on a vote of 46 to 27, falling short of the 54 votes needed to continue.

Though the issue could come up again this year, bill watchers say that’s unlikely because it would need a two-thirds vote for passage, and Democrats will reportedly lose their majority after an Assembly member moves to the Los Angeles City Council next week.


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AB-880 aimed to close the so-called “Walmart loophole,” the notion that employers will shift to part-time workers rather than pay the health care costs for those working 30 hours or more, as will be required under the federal Patient Protection and Affordable Care Act, or PPACA.

The bill would have required large employers to pay penalties for any employee — even those working as little as eight hours per week — who chose coverage under the state’s Medicaid program, or Medi-Cal. Additional penalties would come into play if large employers demoted, discharged or suspended workers who chose Medi-Cal.

The penalties would have gone toward alleviating the cost of the Medi-Cal program, which is expected to see a dramatic increase in participation once the Affordable Care Act is implemented next year.

Business groups widely opposed AB-880. The California Restaurant Association, the National Retail Federation and the National Council of Chain Restaurants were among those who argued that the legislation would have unfairly punished employers who planned to offer health care coverage under PPACA’s specifications.

Orlando, Fla.-based Darden Restaurants Inc. chief executive Clarence Otis was among those who visited Sacramento this year to oppose the legislation. Darden has roughly 16,000 employees in restaurants across California.

Matt Sutton, the California Restaurant Association’s vice president of government affairs and public policy, described the Assembly vote Thursday as “a victory for the restaurant industry — for now.”

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout