BILL ANALYSIS                                                                                                                                                                                                    Ó




           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                       AB 1354|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 


                                   THIRD READING 


          Bill No:  AB 1354
          Author:   Dodd (D), et al.
          Amended:  8/31/15 in Senate
          Vote:     21  

           SENATE GOVERNMENTAL ORG. COMMITTEE:  9-3, 7/14/15
           AYES:  Hall, Block, Galgiani, Glazer, Hernandez, Hill, Hueso,  
            Lara, McGuire
           NOES:  Gaines, Runner, Vidak
           NO VOTE RECORDED:  Berryhill

           SENATE APPROPRIATIONS COMMITTEE:  5-2, 8/27/15
           AYES:  Lara, Beall, Hill, Leyva, Mendoza
           NOES:  Bates, Nielsen

           ASSEMBLY FLOOR:  55-23, 6/3/15 - See last page for vote

           SUBJECT:   Discrimination:  equal pay:  state contracting


          SOURCE:    Author

          DIGEST:    This bill enacts the Equal Pay for Equal Work Act of  
          2015 and requires an employer with 100 or more employees and a  
          contract of 30 days or more, prior to becoming a contractor or  
          subcontractor with the state, to submit a nondiscrimination  
          program to the Department of Fair Employment and Housing (DFEH)  
          and to submit periodic reports, no more than annually, of its  
          compliance with that program. 

          ANALYSIS:
          
          Existing law:

          1)Authorizes state agencies to enter into contracts for the  








                                                                    AB 1354  
                                                                    Page  2



            acquisition of goods or services upon approval by the  
            Department of General Services and establishes rules governing  
            the awarding of contracts by state agencies, including general  
            requirements for competitive bidding on contracts for the  
            acquisition of goods or services.

          2)Subjects an employer, who is, or wishes to become, a  
            contractor with the state for public works, or for goods or  
            services, to various nondiscrimination requirements. 

          3)Provides that prior to becoming a contractor or subcontractor  
            with the state, an employer may be required to submit a  
            nondiscrimination program to the DFEH for approval and  
            certification and also may be required to submit periodic  
            reports of its compliance with that program.

          This bill:

          1)Requires an employer with 100 or more employees and a contract  
            of 30 days or more, prior to becoming a contractor or  
            subcontractor with the state, to submit a nondiscrimination  
            program to the DFEH and periodic reports, no more than  
            annually, of its compliance with that program.

          2)Provides that an employer with fewer than 100 employees or a  
            contract of less than 30 days may be required to submit a  
            nondiscrimination program and if so required shall comply with  
            the requirements for employers with 100 or more employees.

          3)Requires DFEH to define an "employee" for purposes of the  
            Equal Pay for Equal Work Act of 2015 and provides that DFEH  
            may require approval and certification of a nondiscrimination  
            program.

          4)Makes it explicit that this bill does not negate existing  
            exemptions created by DFEH through the exercise of its  
            regulatory authority.

          5)Stipulates that a nondiscrimination program must include  
            policies and procedures designed to ensure equal employment  
            opportunities for all applicants and employees, an analysis of  
            employment selection procedures, and a "workforce analysis"  








                                                                    AB 1354  
                                                                    Page  3



            that includes the following:

             a)   The total number of workers with a specific job category  
               identified by worker race, ethnicity, and sex;

             b)   Total wages required to be reported on Internal Revenue  
               Service Form W-2 for all workers within a specific job  
               category identified by worker race, ethnicity, and sex; and

             c)   The total hours worked on an annual basis for all  
               workers within a specific job category identified by worker  
               race, ethnicity, and sex.  (Exempt employees shall be  
               presumed to work 40 hours per week for purposes of this  
               reporting requirement.)

          6)Makes various findings and declarations relative to the fact  
            that disparities in pay for women have numerous negative  
            impacts and states legislative intent to promote pay equity  
            and nondiscrimination and to obtain better data on pay equity  
            to fully address the problem.  

          Background
          
          Purpose of AB 1354.  According to the author's office, this bill  
          requires state contractors with 100 or more employees and a  
          contract of 30 days or more to submit an annual report to the  
          DFEH that includes summary data on the compensation paid to  
          employees sorted by sex and race, and a description of the  
          employer's policies designed to ensure pay equity and prevent  
          unlawful discrimination.

          The author's office references data from the United States  
          Census Bureau which found full-time working women, on average,  
          over the last decade, have continued to earn only 77 cents for  
          every dollar that a man earns.  In 2013, that wage disparity  
          amounted to an average annual wage gap of $10,876 between  
          full-time working men and full-time working women - the  
          disparity is even greater for women of color, with African  
          American women earning only 64% of what white, non-Hispanic male  
          workers earn, and Latinas averaged just 56%. 

          The author's office points out that on August 6, 2014, the U.S.  








                                                                    AB 1354  
                                                                    Page  4



          Department of Labor's Office of Federal Contract Compliance  
          Programs issued a Notice of Proposed Rulemaking requiring  
          federal contractors and subcontractors to submit data on  
          employee compensation.  Under terms of the proposed rule,  
          companies that have more than 100 employees and hold federal  
          contracts or subcontracts worth $50,000 or more for at least 30  
          days would have to submit an annual Equal Pay Report on employee  
          compensation to the Office of Federal Contract Compliance  
          Programs.  Information would include total number of workers  
          within a specific job category, total W-2 wages for all workers  
          on the job and total hours worked, broken down by race,  
          ethnicity and sex. 

          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 the Department of Labor summary data on the compensation paid  
          to their employees, including data by sex and race.   

          According to the author's office, this bill builds on the same  
          goal as President Obama's actions from last year through the  
          compilation of data on gender wage inequity among state  
          contractors and will ensure state contractors have policies for  
          preventing unlawful discrimination.

          Prior/Related Legislation
          
          AB 1960 (Dickinson, Chapter 861, Statutes of 2012) required the  
          Department of General Services to report on business  
          participation levels by lesbian, gay, bisexual, and transgender  
          owners in contracts, as specified, beginning January 1, 2013.

          AB 17 (Kehoe, Chapter 752, Statutes of 2003), among other  
          things, prohibited a state agency from entering into a contract  
          for the acquisition of goods or services in the amount of  
          $100,000 or more with a contractor who, in the provision of  
          benefits, discriminates between employees with spouses and  
          employees with domestic partners, or discriminates between the  
          domestic partners and spouses of those employees, except under  
          specified circumstances. 
            








                                                                    AB 1354  
                                                                    Page  5



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



          According to the Senate Appropriations Committee: 

          1)Minor and absorbable DFEH costs to receive nondiscrimination  
            programs and to define "employee" for purposes of this bill.   
            (General Fund)

          2)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.

          3)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 this bill's  
            requirements and are deemed ineligible to contract with the  
            state.  Reduced competition for state contracts could lead to  
            higher prices.

          SUPPORT:  (Verified  8/28/15)

          American Association of University Women
          California Employment Lawyers Association
          California Labor Federation
          California Nurses Association
          Consumer Attorneys of California








                                                                    AB 1354  
                                                                    Page  6



          Equal Rights Advocates
          National Women's Law Center
          9to5, National Association of Working Women
          North Bay Labor Council, AFL-CIO
          Women in Non Traditional Employment Roles

          OPPOSITION:  (Verified  8/28/15)

          Air Conditioning Sheet Metal Association
          Airconditioning & Refrigeration Contractors Association
          Associated Builders and Contractors of California
          Associated General Contractors
          California Business Properties Association
          California Chamber of Commerce
          California Legislative Conference of the Plumbing, Heating and  
          Piping Industry
          California Manufacturers and Technology Association
          Finishing Contractors Association of Southern California
          National Electrical Contractors Association - California  
          Chapters
          National Federation of Independent Business
          United Contractors
          Wall and Ceiling Alliance

          ARGUMENTS IN SUPPORT:  Proponents note that "the existing  
          nondiscrimination and compliance employment program established  
          in Government Code Section 12990 is a set of specific and  
          result-oriented procedures to which a contractor or  
          subcontractor commits itself to ensure employment opportunity  
          for all employees or applicants for employment.  This bill would  
          build upon the existing nondiscrimination reporting program to  
          require state contractors to provide summary data on employee  
          compensation.  This bill aims to achieve the same goal as the  
          2014 Presidential Memorandum - to help employers take proactive  
          measures to ensure fair pay for their employees.  Simply  
          compiling the data will prompt some businesses to make necessary  
          changes." 

          ARGUMENTS IN OPPOSITION:    Opponents argue that "current law  
          already requires state contractors to submit a nondiscrimination  
          program to the DFEH for all protected classifications under the  
          Fair Employment and Housing Act.  These required reports include  








                                                                    AB 1354  
                                                                    Page  7



          the contractor's policies on antidiscrimination and an analysis  
          of employment selection procedures based on gender and race.  In  
          addition, under existing law they must provide DFEH with a  
          'workforce analysis' that lists each job title, ranks the  
          employees from lowest to highest paid, as well as the total  
          number of male and female employees in those job titles, and the  
          wage rate of minorities in each job title."  Additionally,  
          opponents note, "Existing law also precludes contractors who are  
          subject to a collective bargaining agreement from engaging in  
          any discrimination based upon gender or race, including  
          inequitable compensation for performing the same job." 


          ASSEMBLY FLOOR:  55-23, 6/3/15
          AYES:  Alejo, Bloom, Bonilla, Bonta, Brown, Burke, Calderon,  
            Campos, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh,  
            Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia,  
            Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández,  
            Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low,  
            Maienschein, McCarty, Medina, Mullin, Nazarian, O'Donnell,  
            Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas,  
            Santiago, Mark Stone, Ting, Weber, Wilk, Williams, Wood,  
            Atkins
          NOES:  Achadjian, Travis Allen, Baker, Bigelow, Brough, Dahle,  
            Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim,  
            Lackey, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson,  
            Steinorth, Wagner, Waldron
          NO VOTE RECORDED:  Chang, Thurmond

          Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
          8/31/15 17:12:30


                                   ****  END  ****