Staff:

Laura Popa, Counsel

Ann Thomas, Counsel

Bikku Kuruvila, Counsel

Rocco D’Angelo, Finance Analyst

Luisa Sanchez, Finance Analyst

Seth Gladstone, Communications

T H E C O U N C I L

REPORT OF THE HUMAN SERVICES DIVISION

Robert Newman, Acting Legislative Director

COMMITTEE ON HEALTH

Council Member Joel Rivera, Chair

March 1, 2006

INT. NO. 758-A: By Council Members Quinn, Addabbo, Jr., Brewer, Clarke, James, Jennings, Liu, Palma, Seabrook, Sears, Stewart, Weprin, Jackson and Martinez

TITLE: A local law to amend the administrative code of the city of New York, in relation to the Health Care Security Act.

ADMINISTRATIVE CODE: Amends subdivision b, paragraphs (1), (3) and (4) of subdivision c, and paragraphs (2) and (4) of subdivision f of section 22-506 of chapter 5 of title 22.

On March 1, 2006, the Health Committee, chaired by Council Member Joel Rivera, will hold a hearing on Int. No. 758-A, which would amend section 22-506 of chapter 5 of Title 22 of the Administrative Code of the City of New York, also known as the “Health Care Security Act” (HCSA). At that time, the Committee will override the Mayor’s veto of this legislation (Mayor’s Message No. 11). Previous hearings on this legislation were held on December 13, 2005 and December 21, 2005, at which time the Committee, and subsequently the full Council, passed Int. No. 758-A.

The HCSA was enacted as Local Law 89 of 2005 on October 11, 2005, pursuant to a Council override of a Mayoral veto. Hearings on the HCSA were held on December 10, 2004, June 9, 2005, August 17, 2005 and October 11, 2005.

BACKGROUND

The HCSA was enacted to require that grocery employers provide financial assistance for their employees’ health care costs, marking the first step in an effort toward reducing the number of working New Yorkers who do not receive health care coverage. The HCSA requires certain employers in the grocery industry to make required health care expenditures on behalf of their employees each fiscal year from July 1 through June 31, beginning on July 1 of 2006. Such expenditures are based on the prevailing rate in the grocery industry, an industry in which a majority of employers already contribute to their employees’ health care costs. Under Local Law 89 of 2005, the Mayor must appoint an administering agency to annually determine the prevailing health care expenditure rate. This determined rate is to be published by the administering agency by March 1 of each year, and shall take effect on July 1 of the fiscal year. Grocery employers covered by the legislation must annually determine their required health care expenditure by multiplying the prevailing health care expenditure rate as determined by the administering agency by the total number of hours worked during the fiscal year by their employees.

INT. NO. 758-A

Section 1 of Int. No. 758-A would amend subdivision b of section 22-506 of chapter 5 of Title 22 of the Administrative Code of the City of New York, entitled “Definitions.” Paragraphs (1) through (14) would be renumbered as paragraphs (2), (3), (4), (5), (6), (7), (8), (10), (12), (13), (14), (15), (16) and (17), respectively. New paragraphs (1), (9) and (11) would be added to read as follows:

(1) “Active retail floor space” means the floor space in any store operated by a grocery employer that is utilized for the display and sale of food; provided that such term shall not include any storage space, loading dock, food preparation space or eating area designated for the consumption of prepared food.

(9) “Family member of a covered employer” means the spouse or domestic partner as defined in section 3-240 of the administrative code of a covered employer and each child, parent, sister or brother of such employer.

(11) “Food” means nourishment for human consumption.

Renumbered paragraphs (6), (12) and (13) would be amended to read as follows:

(6) “Employee” means any person who is not a family member of a covered employer and who works at any location in the city on a full-time, part-time or seasonal basis for any grocery employer; provided that such term shall not include persons who are managerial, supervisory or confidential employees; and provided further that such term shall not include persons who are hired to work exclusively for the holiday period from November 1 through December 31.

(12) “Grocery employer” means any entity operating one or more retail stores in the city that (i) primarily sell food for off-site consumption, where such entity employs fifty or more employees at any one such store, provided that such entity shall be deemed to employ the highest number of employees that such entity employed at any time during the preceding fiscal year or (ii) contain 12,500 square feet or more of active retail floor space for the sale of food for off-site consumption, such as a “big box” retail store or warehouse club; provided that such term shall not include any retail store for which pharmacy sales comprise fifty percent or more of store sales.

(13) “Health care expenditure” means any amount paid by a covered employer to its employees or to another party on behalf of its employees and/or the families of its employees for the purpose of providing health care services or reimbursing the cost of such services for its employees and/or the families of its employees, including, but not limited to, (i) contributions by such employer to a health savings account as defined under section 223 of the United States internal revenue code or to any other account having substantially the same purpose or effect without regard to whether such contributions qualify for a tax deduction or are excludable from employee income; (ii) reimbursement by such employer to its employees and/or the families of its employees for incurred health care expenses where such recipients had no entitlement to have expenses reimbursed under any plan, fund or program maintained by such employer; or (iii) contributions by such employer to any New York city health and hospitals corporation facility or federally qualified health center that is located in a borough where such employer operates a store or where the majority of such employer’s employees reside, provided that such contributions shall not be designated for a particular individual or group of individuals, notwithstanding anything herein to the contrary; provided, however, that such term shall not include any payment made directly or indirectly for workers’ compensation, Medicare benefits or any other health care costs, taxes or assessments that such employer is required to pay pursuant to any federal, state or local law other than this section, or any amount deducted from an employee’s wages and not reimbursed by such employer.

Section 2 of Int. No. 758-A would amend paragraphs (1), (3) and (4) of subdivision c of section 22-506 of chapter 5 of Title 22 of the Administrative Code. The amendment to paragraph (1) would clarify that employers would be required to make health care expenditures each fiscal year, beginning on July 1, 2006. The amendment to paragraph (1) would also allow employers to make such expenditures for the fiscal year within thirty days after the close of the fiscal year for which such expenditures are required to be made, provided that no health care expenditures may be credited toward more than one fiscal year.

Paragraph (3) of subdivision c would be amended to add language providing that a covered employer may use any reasonable methodology to determine (i) the number of hours worked during the fiscal year by its employees; (ii) such employer’s required health care expenditure for the fiscal year; and (iii) whether the health care expenditure made by such employer during the fiscal year is at least equal to such employer’s required health care expenditure for such year. Pursuant to amended paragraph (3), each covered employer would be required to file a concise statement describing such methodology with the administering agency, or if no such agency has been designated, with the city clerk, by April 1 of each year for the following fiscal year.

Subparagraph (i) of Paragraph (4) of subdivision c would be amended to note that the work log required to be maintained by each covered employer pursuant to the HCSA shall include, for each employee, such employee’s name, trade or occupation, and the dates and hours or time periods worked by such employee, provided, however, that covered employers shall not be required to maintain such records in any particular form.

Section 3 of Int. No. 758-A would amend paragraph (4) of subdivision f of section 22-506 of chapter 5 of Title 22 of the Administrative Code. Pursuant to amended paragraph (4), in addition to any joint-labor management committee established pursuant to the federal Labor Management Cooperation Act of 1978 operating in the covered industry, any employee of a covered employer may bring an action in any court of competent jurisdiction against a covered employer that fails to make health care expenditures during the fiscal year at least equal to the required health care expenditure for such employer in violation of this section. Upon a determination of any such violation, the court may award any appropriate equitable relief to secure compliance with the legislation and shall award reasonable attorney’s fees and costs incurred in maintaining the action to any complaining party who prevails in any such enforcement action.

Section 4 of Int. No. 758-A would contain a severability clause.

Section 5 of Int. No. 758-A would provide that this local law would take effect immediately or on the date that local law 89 of 2005 takes effect, whichever is later.