The California legislature is contemplating passage of a bill similar in virtually all respects to one vetoed last year by Governor Gavin Newsom which would allow striking workers to claim unemployment benefits.
The proposed legislation, Senate Bill 1116 by Democrat State Senator Henry Portantino, would give striking workers the ability to claim unemployment after two weeks of striking. Under the bill, striking claimants would be paid, like any temporarily unemployed worker in the state, from their particular former employer’s reserve account in the unemployment insurance fund.
In describing Senate Bill 1116, Portantino, whose 25th Senate District includes Upland in San Bernardino County, said, “Senate Bill 1116Will allow striking or locked out workers to be eligible to receive UI benefits for the duration of the dispute after the dispute has lasted more than two weeks.”
Senate Bill 1116 is a slight redraft of Senate Bill 799, introduced by Portantino last year and which was passed by the legislature. Senate Bill 799 was to restore unemployment insurance eligibility for striking workers who left work because of a trade dispute after those workers were voluntarily off their job for two weeks. The bill codified specified case law that held employees who left work due to a lockout by the employer, even if it was in anticipation of a trade dispute, were eligible for benefits. The bill made clear that the bill’s provisions did not diminish eligibility for benefits of individuals deprived of work due to an employer lockout or similar action. Governor Newsom vetoed Senate Bill 799.
Senate Bill 1116 which would allow workers who have left work as part of a strike action to apply for and to receive, after two weeks without a paycheck, unemployment benefits.
The bill is being opposed by the California Chamber of Commerce and the California Bankers Association, the California Building Industry Association, the California Farm Bureau California, the California Grocers Association, the California Hospital Association, the California Hotel & Lodging Association, the California League of Food Producers, the California Manufacturers & Technology Association, the California Restaurant Association, the California Retailers Association, the California Taxpayers Association, the California Travel Association, the California Trucking Association, the Western Electrical Contractors Association and the Western Growers Association.
A letter from the California Chamber of Commerce to Senator Portantino states, “SB 1116 fundamentally alters the nature of unemployment insurance by providing unemployment to workers who still have a job and have voluntarily chosen to temporarily refuse to work as a negotiating tactic. Striking is obviously a federally protected right and has historically been a key strategy in labor disputes. But being on strike is not the same as being terminated. Striking workers generally have the right to return to their position at the conclusion of the labor dispute, under both federal law and union contracts. In contrast, an employee who has been terminated has no similar job waiting for [him or her] and is truly facing an uncertain future—which unemployment insurance helps by providing some support while [that person] looks for new work. Striking workers have a job—they are just choosing not to work in order to create economic pressure and negotiate. That is not the same as having no idea where your next paycheck comes from. SB 1116 is a profound departure from unemployment insurance’s history, and a significant tax increase on California’s employers, including those who have no involvement in any labor disputes. Moreover, with a recession potentially in our future, SB 1116 risks compounding unemployment insurance’s insolvency—which will weigh heavily on the State, California’s employers, and California’s truly unemployed.”
At present, California does not have sufficient money to pay for unemployment benefits now being doled out to the state’s unemployed workers. To maintain its unemployment insurance system and continue to provide checks to the unemployed, the state has taken out nearly $20 billion in federal loans, which need to be paid back with interest.
California’s unemployment insurance fund is provided entirely by employers. In this way, the debt the system is taking on will ultimately be borne by California employers. In essence, Senate Bill 1116 would require that employers subsidize the strikes their own workers are engaged in, an activity diametrically against their own interest. Moreover, SB 1116 will effectively put employers with businesses against which no labor action is taking place to subsidize strikes against other companies, some of which may be their competitors, because the unemployment insurance fund’s debt adds taxes for all employers uniformly.

Unemployment insurance payments are intended to assist employees who through circumsances beyond their control have become separated from employment. Federal law sets out the basic requirements for individuals to qualify, including being “ready and willing to immediately accept work” and “totally or partially unemployed,” and “actively looking for work.”
The California Unemployment Insurance Fund is already enmeshed in historic debt, which at present runs to roughly $20 billion, a circumstance that was exacerbated by the COVID-19 pandemic and shutdown mandates. Consequently, California employers already are paying increased unemployment insurance taxes based upon both state and federal pursuant requirements. Projections are those increases will continue under the current conditions and actuarials at least until 2032.
California is already plagued by a growing interest payment to simply remain in a static position with regard to its unemployment insurance fund within the State of California’s general fund. In 2023–2024, that interest payment has reached $300 and that payment will continue to escalate until the unemployment insurance fund returns to solvency. In the proposed 2024–2025 budget, the interest payment will rise to a projected $331 million. SB 1116 risks compounding the unemployment insurance fund’s insolvency.
Upon the fund becoming insolvent, employers have faced these escalating unemployment insurance taxes to the point of their current exorbitance, ones which in anything approaching a full-blown recession would force the majority of companies out of business.