BILL ANALYSIS Ó
AB 1890
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Date of Hearing: April 6, 2016
ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT
Roger Hernández, Chair
AB 1890
(Dodd) - As Introduced February 11, 2016
SUBJECT: Discrimination: equal pay: state contracting
SUMMARY: Enacts the Equal Pay for Equal Work Act of 2016,
related to state contracting, as specified. Specifically, this
bill:
1)Provides that an employer with 100 or more employees in the
state and a contract with the state of 30 days or more shall
submit a description of its nondiscrimination program to the
Department of Fair Employment and Housing, and shall be
required to submit periodic reports (no more than annually) of
its compliance with that program.
2)Specifies that an employer with fewer than 100 employees or a
contract of less than 30 days may be required to submit a
nondiscrimination program.
3)Provides that a nondiscrimination program shall 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.
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4)Specifies that the workforce analysis shall include the
following:
a) The total number of worker with a specific job category
identified by worker race, ethnicity, and sex.
b) The total wages required to be reported on Internal
Revenue Service Form W-2 for all workers in a specific job
category identified by worker race, ethnicity, and sex.
c) The total hours worked on an annual basis for all
workers in a specific job category identified by worker
race, ethnicity, and sex. Exempt employees shall be
presumed to work 40 hours a week for purposes of this
reporting requirement.
5)Provides that an employee in the construction industry covered
by a valid collective bargaining agreement shall be excluded
from the calculation of the employer's total number of
employees for purposes of the nondiscrimination program
requirement.
6)Specifies that this bill shall not be construed to negate
exemptions to specified requirements in existence on January
1, 2017, as specified.
7)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
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worked by all employees in the job category by race,
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
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subcontractors.
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."
Recent Proposed Changes to EEOC Reporting Requirements
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On January 29, 2016, the federal Equal Employment Opportunity
Commission (EEOC) announced proposed changes to its EEO-1
report, which requires employers to submit employee W-2 earnings
and hours worked. Under the proposal, all employers with at
least 100 employees (not just federal contractors) would be
required to comply. In addition, the proposed changes will
require the submission of payroll data broken down by
race/ethnicity, in addition to gender. The data would be made
available to the EEOC and the Office of Federal Contract
Compliance Programs (OFCCP) for enforcement purposes.
The proposed rule was published on February 1, 2016 and
interested parties have 60 days to submit comments.
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).)
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
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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
Supporters argue that pay secrecy and the lack of robust and
reliable data on employee compensation impedes our ability to
effectively enforce our equal pay laws. In 2014, to address this
lack of data, President Obama directed the Secretary of Labor to
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require federal contractors to submit data on employee
compensation. Under the 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 (OFCC).
Supporters note that California has a similar nondiscrimination
reporting program under the Fair Employment and Housing Act. The
Nondiscrimination and Compliance Employment Program (Gov Code §
12990 et seq) is a set of specific and result-oriented
procedures to which a contractor or subcontractor commits itself
to ensure equal employment opportunity for all employees or
applicants for employment.
Supporters state that 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.
PRIOR RELATED LEGISLATION
This bill is substantially similar to AB 1354 from last year.
AB 1354 was vetoed by Governor Brown, who stated the following
in his veto message:
"This bill requires an employer with 100 or more employees to
submit the details of their nondiscrimination program to the
Department of Fair Employment and Housing and to submit
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periodic reports of its compliance with that program prior to
becoming a contractor with the state.
Currently, the department requires all state contractors to
develop and implement a nondiscrimination program meeting
certain requirements and also certify that they have done so,
under penalty of perjury. Furthermore, the department has
existing authority to require a contractor to submit this
information prior to contracting with the state, if
noncompliance is suspected. In light of these factors, I do
not believe this bill is necessary at this time."
REGISTERED SUPPORT / OPPOSITION:
Support
American Association of University Women
CA Conference Board of the Amalgamated Transit Union
California Employment Lawyers Association
California Labor Federation, AFL-CIO
California School Employees Association
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California Teamsters Public Affairs Council
Engineers & Scientists of CA, IFPTE Local 20
National Association of Social Workers - California Chapter
Professional and Technical Engineers, IFPTE Local 21
UNITE-HERE
Utility Workers Union of America
Opposition
None on file.
Analysis Prepared by:Ben Ebbink / L. & E. / (916) 319-2091
AB 1890
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