BILL ANALYSIS                                                                                                                                                                                                    Ó



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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


















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