BILL ANALYSIS                                                                                                                                                                                                    



                                                                       


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          |SENATE RULES COMMITTEE            |                  AB 1080|
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                                 THIRD READING


          Bill No:  AB 1080
          Author:   Kehoe (D), et al
          Amended:  8/14/02 in Senate
          Vote:     21

           
           SENATE JUDICIARY COMMITTEE  :  4-1, 6/25/02
          AYES:  Escutia, Kuehl, O'Connell, Sher
          NOES:  Haynes

           SENATE APPROPRIATIONS COMMITTEE  :  7-3, 8/21/02
          AYES:  Alpert, Bowen, Burton, Escutia, Karnette, Perata,  
            Speier
          NOES:  Battin, Johannessen, Poochigian

           ASSEMBLY FLOOR  :  Not relevant


           SUBJECT  :    Public contracts:  benefits for domestic  
          partners

           SOURCE  :     California Alliance for Pride and Equality


           DIGEST  :    This bill:

          1. Prohibits a state agency from entering any contract for  
             goods or services with a vendor or contractor that does  
             not provide the same benefits to an employee with a  
             registered domestic partner that it provides to an  
             employee with a spouse.

          2. Requires a state agency to take all reasonable measures  
             to find a contractor or vendor that does not  
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             discriminate in its employee benefit plan against  
             employees with registered domestic partners instead of  
             spouses, but would otherwise permit contracting without  
             compliance under specified circumstances.

          3. Deems that it is not discrimination if a vendor or  
             contractor, where the actual cost of providing the same  
             benefits to an employee with a registered domestic  
             partner is higher than the cost of providing benefits to  
             an employee with a spouse, required the cost  
             differential to be paid by the employee or provided the  
             employee with a cash equivalent instead. 

          The bill makes confidential, as specified, any request by  
          an employee or employment applicant for spousal or domestic  
          partner benefits, including documentation provided by the  
          employee for purposes of verifying eligibility for  
          benefits.

          This bill does not apply to contracts executed or amended  
          prior to April 1, 2003 and to bid packages advertised and  
          made available to the public and to competitive or sealed  
          bids received by the state prior to April 1, 2003, but  
          applies to a contract amended after March 31, 2003.

           ANALYSIS  :    Existing law provides registered domestic  
          partners with specific rights, privileges and standing that  
          are consistent with the rights, privileges and standing of  
          spouses.  Existing law also requires group policy carriers  
          that provide health benefits to employees and their spouses  
          and families to provide the same to registered domestic  
          partner employees and their domestic partners.  

          Existing law specifies the process by which a state agency  
          may contract for goods or services, to protect the public  
          from misuse of state funds and to ensure a fair and  
          equitable process to vendors and contractors for goods and  
          services.  The law also provides for exceptions from strict  
          compliance with this process under specified circumstances.

          This bill would prohibit a state agency from entering a  
          contract for goods and services with a vendor or contractor  
          that does not provide the same benefits to employees with  
          domestic partners that the vendor or contractor provides to  







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          an employee who has a spouse and to his or her spouse.

          This bill would permit a state agency, provided it has  
          taken all reasonable measures to find a compliant vendor or  
          contractor, to waive the requirement that a  
          vendor/contractor provide the same benefits to a registered  
          domestic partner employee as it does to a married employee,  
          under the following circumstances:

          1. Whenever there is only one prospective contractor  
             willing to enter into a specific contract with the state  
             agency.

          2. If the contract is necessary to respond to an emergency  
             that endangers the public health or safety and no entity  
             which complies with the requirements of this section  
             capable of responding to the emergency is immediately  
             available.

          3. Where the requirements of this section violate, or are  
             inconsistent, with the terms or conditions of a grant,  
             subvention or agreement with a public agency or the  
             instructions of an authorized representative of any  
             public agency with respect to any grant, subvention, or  
             agreement, provided that a good faith attempt has been  
             made by the agency to change the terms or conditions of  
             any grant, subvention, or agreement to authorize  
             application of this section.

          4. Where there are no qualified responsive bidders or  
             prospective contractors or vendors who could comply with  
             the requirements of this section and the contract is  
             essential to the state and state residents.

          5. Where the contract or vendor is providing wholesale or  
             bulk water, power or natural gas, the conveyance or  
             transmission of same, or ancillary services such as  
             spinning reserve, voltage control, or loading  
             scheduling, as required for assuring reliable services  
             in accordance with good utility practice, provided that  
             the purchase of same may not practically be accomplished  
             through the standard competitive bidding procedures; and  
             further provided that this exemption shall not apply to  
             contractors or vendors or franchises providing direct,  







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             retail services to end users.

          This bill would, where the cost of providing a benefit to  
          an employee and his or her registered domestic partner is  
          higher than the cost of providing the same benefit to an  
          employee and his or her spouse, deem that it is not  
          discrimination for the vendor or contractor to either  
          require the cost differential to be paid by the employee  
          with a domestic partner, or to pay the employee with a  
          domestic partner a payment equal to the amount that the  
          employer pays to provide that benefit to the spouse of an  
          employee of the benefit provided to an employee with a  
          spouse.

          The bill provides that if a vendor or contractor does not  
          discriminate in the provision of benefits between employees  
          with spouses and employees with domestic partners, a vendor  
          or contractor may do any of the following:

          1. Elect to provide benefits to individuals in addition to  
             employees' spouses and employees' domestic partners.

          2. Allow each employee to designate a legally domiciled  
             member of the employee's household as being eligible for  
             benefits.

          3. Elect not to provide benefits to employees' spouses or  
             to employees' domestic partners.

          The bill would make confidential to the extent the law  
          permits information disclosed or provided by an employee or  
          applicant for employment to verify his or her domestic  
          partnership registration or marriage for purposes of  
          qualifying for benefits.

          This bill would not apply to contracts executed or amended  
          prior to April 1, 2003 and to bid packages advertised and  
          made available to the public and to competitive or sealed  
          bids received by the state prior to April 1, 2003, but  
          would apply to a contract amended after March 31, 2003.

           Background  :

          AB 26 (Migden, Chapter 588, Statutes of 1999) statutorily  







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          recognized domestic partnerships in the State of California  
          and provided the manner by which such partnerships may be  
          formed, registered, and terminated.  AB 26 gave limited  
          legal effect to such partnerships and provided no rights to  
          domestic partners other than to allow hospital visitation  
          rights to domestic partners and health benefits to domestic  
          partners of public employees.  The Secretary of State  
          reports that there currently are 13,000 domestic  
          partnerships registered in the state.

          AB 25 (Migden, Chapter 893, Statutes of 2001) expanded  
          California law on domestic partnerships and conferred on  
          registered domestic partners various rights, privileges and  
          standing conferred by the state on married couples.  Among  
          those rights and privileges are the right to assert a cause  
          of action for wrongful death, the right to receive  
          continued health care coverage as a surviving beneficiary  
          of the decedent, the right to make health care decisions  
          for an incapacitated partner, the right to adopt a child of  
          his or her partner as a stepparent, the right to file a  
          claim for disability benefits for his or her partner in the  
          same manner as a spouse may file such a claim, and the  
          right to be nominated and appointed as conservator of an  
          incapacitated partner.  When AB 25 went into effect, public  
          agency employers became subject to a provision that where  
          benefits are provided under a group policy to an employee  
          or spouse of an employee, the policy carrier must also  
          provide benefits to an employee who is a domestic partner  
          and to his or her partner.

          This bill would prohibit a state agency from entering into  
          a public contract with a vendor or contractor for goods or  
          services that does not provide the same benefits to a  
          registered domestic partner employee and his or her partner  
          as those provided to an employee and his or her spouse.

          FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

                          Fiscal Impact (in thousands)

           Major Provisions        2002-03             2003-04               
           2004-05                    Fund
           







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          DGS administration  ---Unknown, significant increase---      
              General
                                               To review and approve  
          contracts
          State contracts          ---Unknown, potentially major---    
                    Various
                                                Increase in  
          contracting costs

           SUPPORT  :   (Verified  8/26/02)

          California Alliance for Pride and Equality (source)
          AIDS Legal Referral Panel
          AIDS Healthcare Foundation
          American Civil Liberties Union
          California Alliance for Pride and Equality (CAPE; SPONSOR)
          California HIV Advocacy Coalition, Southern California  
          Region
          California State Employees Association (CSEA)
          Center of Policy Initiatives
          Councilmember Danny Wan -  City of Oakland
          Councilmember Kriss Worthington - City of Berkeley
          County of Santa Cruz, Board of Supervisors
          Human Rights/Fair Housing Commission of the City and County  
          of San Francisco
          Human Rights Campaign
          Lambda Legal Defense
          Legal Aid Society: Employment Law Center
          Lighthouse Community Center
          National Center for Lesbian Rights
          National Organization for Women
          Older Women's League
          People for the American Way
          Professional Engineers in California Government
          Supervisor Mark Leno - City and County of San Francisco
          Supervisor Richard Gordon - County of San Mateo

           OPPOSITION  :    (Verified  8/26/02)

          Alliance of Catholic Healthcare
          Association of Independent California Colleges and  
          Universities
          Concerned Women for America
          California Catholic Conference







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          California Chamber of Commerce
          Campaign for California Families Committee on Moral  
          Concerns
          Capitol Resource Institute
          Committee on Moral Concerns
          Consulting Engineers and Land Surveyors of California
          Department of Finance
          National Federation of Independent Business
          Pacific Union College
          Santa Clara University
          Seventh Day Adventist Church State Council
          Thomas Aquinas College
          University of San Diego

           ARGUMENTS IN SUPPORT  :    Proponents contend that since  
          employee benefits usually comprise 30% to 40% of total  
          employee compensation, not providing the same benefits to  
          families of unmarried employees is a form of discrimination  
          that should not be tolerated.  Further, they contend that  
          the use of marital status as the sole basis upon which  
          family benefits may be provided has the effect of entirely  
          excluding the families of lesbians and gay men.  
          According to the Human Rights Campaign, roughly 4,500  
          employers nationally offer domestic partners benefits,  
          including one-third of Fortune 500 companies. [HRC,  State  
          of the Workplace for Lesbian, Gay, Bisexual and Transgender  
          Americans (March 2002).] The City and County of San  
          Francisco adopted an "equal benefits ordinance" in 1997  
          (requiring contractors to provide equal benefits to  
          domestic partners) and the Cities of Los Angeles, Berkeley,  
          Oakland and the County of San Mateo have all adopted  
          similar ordinances.  As an employer, the State of  
          California provides domestic partner benefits.

           ARGUMENTS IN OPPOSITION  :    For example, the Seventh Day  
          Adventist Church State Council, a public interest  
          organization, states that while it did not oppose the bills  
          that established domestic partnerships and the framework  
          that provided domestic partners with specific legal and  
          financial benefits, it opposes AB 1080 in that it "coerces  
          state contractors to violate deeply held religious  
          convictions or abandon the services provided to the  
          citizens of California?It is not the business of government  
          to interfere with and punish sincerely held religious  







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          beliefs?There are state contractors in virtually every  
          category that are sufficiently committed to their  
          traditional religious values, that they will not compromise  
          their faith.  The practical impact of this bill will prove  
          disastrous for many of our neediest citizens?Thousands of  
          Californians will lose access to vitally important  
          services." 

          In short, under this bill state agencies would no longer be  
          able to enter contracts made with faith-based organizations  
          to provide social and other services to certain  
          populations, unless those faith-based organizations provide  
          equal benefits to domestic partner employees, in violation  
          of their beliefs against homosexuality.  Thus, opponents  
          argue, AB 1080 would have "a chilling effect on the  
          willingness of any private entity to become a state  
          contractor" at a time when across the country, state and  
          federal government officials are realizing the need to  
          increase partnerships with private and religious social  
          service providers as a vitally important addition to the  
          services provided by public agencies.

          The Committee on Moral Concerns opposes this bill for the  
          following reasons:

          "Of over 7,000 publicly traded corporations in America less  
          than 200 offer domestic partner coverage.  Over 97% do not.  
           There are 7 million private companies, but according to  
          the bill's author, only 4,000 offer domestic partner  
          coverage.  Over 99% do not.  This bill may force California  
          to limit its vendor competition to 1-2% of available  
          bidders.  Price and quality of goods and services would no  
          longer be the priority.  This bill is bad for California.

          "This bill will force vendors and contractors to make one  
          of 3 choices.  First, a few companies may choose to  
          increase their labor costs and add domestic partner  
          coverage, passing the cost on to the state and all their  
          other customers.  This is inflationary and hurts the  
          economy.

          "More likely, since the cost of insurance and other  
          benefits is constantly increasing, many (most?) companies  
          will reduce or eliminate family benefits.  Some other  







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          domestic partner bills have little direct impact on married  
          couples and heterosexual families.  This bill, however,  
          will directly cause harm to thousands of working families  
          by eliminating health insurance, prescription benefits,  
          dental coverage, etc.  The bill, therefore is very  
          anti-family."

          RJG:jk  8/26/02   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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