BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1354 (Dodd) - Discrimination: equal pay: state contracting
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|Version: July 7, 2015 |Policy Vote: G.O. 9 - 3 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 17, 2015 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1354 would require employers with 100 or more
employees to submit a nondiscrimination program, including a
specified workforce analysis, to the Department of Fair
Employment and Housing (DFEH) prior to becoming a contractor or
subcontractor with the state. Contractors and subcontractors
would also be required to submit periodic compliance reports and
DFEH would be authorized to require approval and certification
of nondiscrimination programs.
Fiscal
Impact:
Minor and absorbable DFEH costs to receive nondiscrimination
programs and to define "employee" for purposes of the bill.
AB 1354 (Dodd) Page 1 of
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(General Fund)
Major DFEH General Fund cost pressures, potentially in the
millions annually. If DFEH exercised authority to require
approval and certification contractors' nondiscrimination
programs, it would require approximately 80 PY of consultant
staff, plus supervisory staff and administrative support, to
support such a program. In addition, to collect and sort data
on contractors' workers by job category, race, gender,
ethnicity, wages, and hours worked, DFEH would need to
purchase a new software system at a one-time cost of
approximately $1 million, with ongoing costs of approximately
$160,000 annually (General Fund). These cost pressures could
be substantially higher if DFEH further extended the
requirements to subcontractors and to smaller businesses.
Potential increase in state contracting costs (various funds),
to the extent contractors and subcontractors build the costs
to prepare a nondiscrimination program and workforce analysis
into bid prices. Contracting costs could also be impacted by
a reduction in eligible contractors or subcontractors, to the
extent some businesses fail to comply with the bill's
requirements and are deemed ineligible to contract with the
state. Reduced competition for state contracts could lead to
higher prices.
Background: Existing law, the Unruh Civil Rights Act, generally prohibits
discrimination on the basis of sex, race, color, religion,
ancestry, national origin, disability, medical condition,
marital status, or sexual orientation, and provides civil
remedies for violations of its provisions. Existing law also
prohibits discrimination in the provision of health care and
insurance benefits on the basis of numerous factors, including
sex, domestic partner status, or gender, gender identity, and
gender expression. Existing law authorizes state agencies to
enter into contracts for the acquisition of goods or services
and establishes rules governing the awarding of contracts by
state agencies, including general requirements for competitive
bidding. Businesses that wish to contract with the state must
comply with various nondiscrimination requirements.
Existing law specifies that employers may be required to submit
a nondiscrimination program to DFEH for approval and
certification prior to becoming a contractor or subcontractor
AB 1354 (Dodd) Page 2 of
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with the state. An employer may also be required to submit
periodic reports of compliance with that program. DFEH does not
currently approve and certify contractor and subcontractor
nondiscrimination programs.
In response to a Presidential Memorandum pertaining to pay
equity, the Office of Federal Contract Compliance Programs
(OFCCP) under the U.S. Department of Labor issued a Notice of
Proposed Rulemaking on August 6, 2014 that would require certain
federal contractors and subcontractors that have more than 100
employees to submit an annual "Equal Pay Report" on employee
compensation to the OFCCP. The rulemaking is designed to
require affected entities to supplement an existing Employer
Information Report with summary information on compensation paid
to employees, as contained in W-2 forms, by sex, race,
ethnicity, and specified job categories, as well as other
relevant data points such as hours worked, and the number of
employees. The OFCCP intends to compile the data electronically
and use the information to target compliance enforcement
efforts. The comment period for this proposed rulemaking closed
on January 5, 2015. It is unclear when a final rule will be
adopted.
Proposed Law:
AB 1354 would enact the Equal Pay for Equal Work Act of 2015.
Specifically, this bill would:
Require an employer with 100 or more employees to submit a
nondiscrimination program to DFEH and periodic reports, no
more than annually, on compliance with that program, prior to
becoming a contractor or subcontractor with the state.
Specify that an employer with fewer than 100 employees may
also be required to submit a nondiscrimination program and
comply with the bill's requirements.
Authorize DFEH to require approval and certification of a
nondiscrimination program.
Require DFEH to define "employee" for purposes of these
requirements.
Require a nondiscrimination program to include policies and
procedures that ensure equal employment opportunities for all
applicants and employees, an analysis of employment selection
AB 1354 (Dodd) Page 3 of
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procedures, and a workforce analysis that includes:
o An equal pay report that includes the total number
of workers in a specific job category identified by
worker race, ethnicity, and gender.
o Total wages reported on W-2 forms for all workers in
a specific job category identified by worker race,
ethnicity, and gender.
o The total annual hours worked for all workers in a
specific job category identified by worker race,
ethnicity, and gender. Exempt employees are presumed to
have a 40-hour work week for purposes of this report.
Staff
Comments: This bill would require companies that wish to
contract with the state to prepare and submit to DFEH a
nondiscrimination program, including specified workforce data
that could be used to identify wage disparities by race,
ethnicity, and gender. Insofar as the bill is permissive with
respect to DFEH authority to approve and certify
nondiscrimination programs, and there are no requirements for
DFEH to compile or analyze the aggregated worker data submitted
by employers, the bill would only impose minor and absorbable
costs onto DFEH to receive nondiscrimination programs and
self-reported compliance efforts and to define "employee" for
purposes of the employer requirements. Although DFEH currently
has the authority to require employers to submit
nondiscrimination programs for certification and approval prior
to contracting with the state, the department has not exercised
that authority to date.
AB 1354 contains a provision indicating that the Legislature
intends this bill to promote pay equity and nondiscrimination,
and to obtain better data on pay equity to more wholly address
the problem. In order for the workforce data submitted by
employers to be used to meaningfully address pay equity issues,
DFEH would need to collect and compile the information in a
sortable database that could be used in nondiscrimination
enforcement efforts or to better inform policymakers in order to
affect change. DFEH indicates that, although the bill does not
explicitly require collection of aggregated data, if it were to
compile electronic contractor and subcontractor workforce data,
it would need a new software system with sortable capabilities
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at a one-time cost of approximately $1 million, and ongoing
costs of approximately $160,000. Absent such a system, the
workforce information would likely be simply collected by DFEH
and filed in hard copy.
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