BILL ANALYSIS Ó
AB 1354
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Date of Hearing: April 22, 2015
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 1354
(Dodd) - As Introduced February 27, 2015
SUBJECT: Discrimination: equal pay: state contracting
SUMMARY: Enacts the Equal Pay for Equal Work Act of 2015,
related to state contracting, as specified. Specifically, this
bill:
1)Provides that, prior to becoming a contractor or subcontractor
with the state, an employer with 100 or more employees shall
submit an "income equality program" to the department for
approval and certification and shall be required to submit
periodic reports of its compliance with that program.
2)Specifies that the "income equality program" shall include the
collection of summary data on the compensation paid to
employees, including data sorted by gender and race, and
include policies designed to ensure income equality and
prevent unlawful discrimination.
3)Make related legislative findings and declarations.
FISCAL EFFECT: Unknown
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COMMENTS: According to the author, this bill seeks to compile
data on gender wage inequity among state contractors and ensure
state contractors have policies for preventing unlawful
discrimination.
Recent Proposed Federal Rule Related to Federal Contractors
On August 6, 2014, the U.S. Department of Labor's Office of
Federal Contract Compliance Programs issued a Notice of Proposed
Rulemaking requiring covered federal contractors and
subcontractors with more than 100 employees to submit an annual
equal pay report on employee compensation. Covered employers
would submit electronically three pieces of information related
to employee compensation:
1) The total number of workers within a specific EEO-1
job category by race, ethnicity and sex;
2) Total W-2 wages defined as the total individual W-2
wages for all workers in the job category by race,
ethnicity and sex; and
3) Total hours worked, defined as the number of hours
worked by all employees in the job category by race,
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ethnicity and sex.
A fact sheet released by the Office of Federal Contract
Compliance states:
"The Equal Pay Report would not collect any individual pay
information, or any information on factors such as education
or experience that may affect pay. OFCCP would protect the
confidentiality of the Equal Pay Report data to the maximum
extent permitted under existing law. The agency plans to
design a web-based portal for reporting and maintaining
compensation information that conforms with applicable
government IT security standards.
The data will enable OFCCP to direct its enforcement resources
toward federal contractors whose summary data suggests
potential pay violations, while reducing the likelihood of
reviewing companies that are less likely to be out of
compliance. OFCCP will also release aggregate summary data on
the race and gender pay gap by industry and EEO-1 category to
enable contractors to review their pay data using the same
metrics as OFCCP and take voluntary compliance measures. By
using existing reporting frameworks contractors already
maintain in electronic payroll records, including W-2
earnings, and the longstanding categories and definitions that
apply to the EEO-1 Report, the agency is avoiding costly new
recordkeeping requirements and minimizing to the extent
feasible the compliance burden on federal contractors and
subcontractors.
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The Equal Pay Report is one component of a larger strategy to
address the reality that, despite five decades of
extraordinary legal and social progress, working women still
earn only 77 cents for every dollar that working men earn. For
African American women and Latinas, the pay gap is even
greater. The proposal fulfills the Secretary of Labor's
responsibility under President Obama's Presidential
Memorandum, 'Advancing Pay Equality Through Compensation Data
Collection,' to develop a rule requiring federal contractors
and subcontractors to submit to DOL summary data on the
compensation paid to their employees, including data by sex
and race."
Existing Requirements Under State Statute and Regulations
Existing state law provides that, prior to becoming a contractor
or subcontractor with the state, an employer may be required to
submit a nondiscrimination program to the Department of
Industrial Relations for approval and certification and may be
required to submit periodic reports of its compliance with that
program. (Government Code Section 12990(b).)
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Even though the statute uses the term "may" the DFEH regulations
provide that all employers who are, or wish to become,
contractors with the state "must" develop and implement a
nondiscrimination program, unless otherwise exempted. (Title 2,
California Code of Regulations, Section 11102).
The regulations further define a nondiscrimination program to
mean "a set of specific and result-oriented procedures to which
a contractor or subcontractor commits itself for the purpose of
insuring equal employment opportunity for all employees or
applicants for employment." (Title 2, California Code of
Regulations, Section 11103(a)).
The regulations further define three distinct elements of such
non-discrimination programs:
1. Analysis of Employment Selection Procedures - the
program must include an identification and analysis of
contractor promotional and entry-level selection procedures
and identify any such procedures that have resulted in
disproportionately inhibiting the employment, promotion or
retention of minorities or women.
2. Workforce Analysis - the program must contain a
workforce analysis, which includes job titles, total number
of incumbents by gender and race, and the wage rate or
salary range for each job title.
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3. Utilization Analysis - A utilization analysis evaluates
the major job groups at a facility in order to determine
whether women and minorities are being underutilized when
compared to the availability. The regulations specify that
this analysis is only required for employers with 250 or
more employees.
As mentioned above, the regulations contain specified exemptions
to these requirements, including for contractors with fewer than
50 employees who provide alternative information. (Title 2,
California Code of Regulations, Section 11111).
A contractor that does not comply with these requirements may be
subject to sanctions "including but not limited to cancellation,
termination, or suspension of the contract in whole or in part,
by the contract awarding agency or decertification from future
opportunities to contract with the State of California by the
DFEH." (Title 2, California Code of Regulations, Section
11107).
ARGUMENTS IN SUPPORT
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According to the author, in order to build on the same goal as
President Obama's actions from last year, this bill aims to help
employers take proactive measures to ensure fair pay for their
employees. Simply compiling the data will hopefully prompt some
businesses to make necessary changes.
Supporters argue that aggregate data on the wage gap women face
is available. However, more nuanced data breaking down job
category wages by gender and race has been not widely gathered.
In order to appropriately target efforts to reduce and eliminate
the wage gap, this data need to be collected. Requiring wage
transparency ensures that employers are held accountable for
maintaining pay structures in compliance with equal pay laws.
ARGUMENTS IN OPPOSITION
Opponents, including the California Chamber of Commerce, state
that this bill will place an additional barrier to state
contractors and expose them to enforcement actions for alleged
discrimination that is already addressed by existing law.
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As a preliminary matter, they note that the term "income
equality program" is undefined and, therefore, it is ambiguous
as to what information should or needs to be included other than
data regarding compensation and anti-discrimination policies.
Moreover, existing law already requires state contractors to
submit a "nondiscrimination program" to the DFEH that must
contain specific procedures to insure equal employment
opportunity for all protected classifications under the Fair
Employment and Housing Act, including gender and race.
Specifically, the report must include the contractor's
anti-discrimination policies, employment selection procedures,
any existing practices that have resulted in disparate treatment
to those protected classifications, a workforce analysis that
lists each job title identified in an applicable collective
bargaining agreement that ranks the employees from lowest to
highest paid, as well as the total number of male and female
employees in those job titles, and finally an analysis that
identifies the wage rate or salary range of minorities in each
job title.
Therefore, opponents contend that existing law already precludes
a contractor from engaging in any discrimination based upon
gender or race, including inequitable compensation for
performing the same or similar job. To the extent this bill is
simply duplicating the information already required in a
nondiscrimination program, it is unnecessary and will add an
additional layer to a contractor's bid with the state. To the
extent this bill is seeking more information from contractors,
it is unclear as to what the scope of that information is or how
it will indicate income inequality based upon summary data of
compensation.
COMMITTEE STAFF COMMENTS
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As opponents note, existing regulations largely require certain
state contractors to provide much of the information required by
this bill.
However, there have been some concerns raised about the
effectiveness of the current regulatory structure and whether
DFEH is adequately mandating and enforcing the current state
contractor requirements. Therefore, codifying certain elements
(and placing a greater priority on gender pay issues) may serve
to re-invigorate this program.
However, should this bill move forward, the author may wish to
work with stakeholders to integrate the requirements of this
bill with the existing nondiscrimination program requirement
under current law in order to avoid duplication or contradiction
between the statutory and regulatory language. In addition,
some of the terms used in this bill are fairly vague. The
author may wish to work with stakeholders to develop definitions
and more specific language as added clarity would likely be
helpful to all stakeholders.
REGISTERED SUPPORT / OPPOSITION:
Support
9to5, National Association of Working Women and California
Chapter
American Association of University of Women
California Employment Lawyers Association (co-sponsor)
California Labor Federation, AFL-CIO
Consumer Attorneys of California
Equal Rights Advocates (co-sponsor)
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Legal Aid Society
National Women's Law Center
North Bay Labor Council, AFL-CIO
Women in Non Traditional Employment Roles
Opposition
Associated Builders and Contractors of California
Associated General Contractors
California Business Properties Association
California Chamber of Commerce
California Manufacturers and Technology Association
National Federation of Independent Business
Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091
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