BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1080| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 445-6614 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 1080 Page 2 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 AB 1080 Page 3 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, AB 1080 Page 4 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 AB 1080 Page 5 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 AB 1080 Page 6 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 AB 1080 Page 7 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 AB 1080 Page 8 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 AB 1080 Page 9 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 **** END ****