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: 9/2/15 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 in the state 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. Senate Floor Amendments of 9/2/15 clarify that "employees" are those employed in this state and add an exemption for employees hired directly out of a hiring hall (collective bargaining agreement employees). AB 1354 Page 2 ANALYSIS: Existing law: 1)Authorizes state agencies to enter into contracts for the 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 in the state 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 in the state 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 AB 1354 Page 3 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" 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)Stipulates that an employee in the construction industry covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime worked, and regular hourly pay of not less than 30% of the state minimum wage rate shall be excluded from calculation of the employer's total number of employees. 7)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 in the state 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 AB 1354 Page 4 description of the employer's policies designed to ensure pay equity and prevent unlawful discrimination. The author's office notes that union construction contractors who are subject to a collective bargaining agreement will be exempt from the requirements of this bill due to the fact that they have no say on what gender or race of employees they will receive from the hiring hall. 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. 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 AB 1354 Page 5 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. 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. AB 1354 Page 6 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 9/3/15) American Association of University Women California Employment Lawyers Association California Labor Federation California Nurses Association Consumer Attorneys of California 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 9/3/15) Air Conditioning Sheet Metal Association Air Conditioning & Refrigeration Contractors Association Associated General Contractors California Legislative Conference of the Plumbing, Heating and Piping Industry Finishing Contractors Association of Southern California National Electrical Contractors Association - California Chapters 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 AB 1354 Page 7 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 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 AB 1354 Page 8 Prepared by:Arthur Terzakis / G.O. / (916) 651-1530 9/3/15 14:30:51 **** END ****