BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
AB 1890 (Dodd) - Discrimination: equal pay: state contracting
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|Version: June 21, 2016 |Policy Vote: G.O. 8 - 2 |
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|Urgency: No |Mandate: No |
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|Hearing Date: August 1, 2016 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: AB 1890 would require employers with 100 or more
employees and a state contract of $50,000 or more to submit a
nondiscrimination program, including specified aggregated
workforce data, and periodic compliance reports to the
Department of Fair Employment and Housing (DFEH). The bill
would also authorize DFEH to require other state contractors to
comply with these provisions, and to require approval and
certification of nondiscrimination programs.
Fiscal
Impact:
DFEH administrative costs of approximately $350,000 annually
to collect and store specified workforce data on state
contractors, and to process additional Public Records Act
requests for that data. (General Fund)
Major DFEH General Fund cost pressures, to the extent the
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department exercises the authority to require approval and
certification of contractors' nondiscrimination programs.
DFEH would require substantial staff augmentations to support
those efforts. There could be additional information
technology costs of approximately $1 million one-time and
$160,000 ongoing, if DFEH were to collect and sort data on
contractors' workers by job category, race/national origin,
gender, wages, and hours worked. These cost pressures could
be substantially higher if DFEH further extended the
requirements of the bill to subcontractors and to smaller
businesses. (see staff comments)
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
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
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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 final proposal is currently open for public
comment until August 15, 2016. It is unclear when a final rule
will be adopted.
Proposed Law:
AB 1890 would enact the Equal Pay for Equal Work Act of 2016.
Specifically, this bill would:
Require an employer with 100 or more employees that has a
state contract of $50,000 or more 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.
Authorize DFEH to also require employers with fewer than 100
employees and a contract of less than $50,000 to submit a
nondiscrimination report and other requirements for larger
employers, as specified.
Require DFEH to make any nondiscrimination programs and
reports available to the Commission on the Status of Women and
Girls.
Authorize DFEH to require approval and certification of a
nondiscrimination program.
Require DFEH to define "employee" for purposes of these
requirements.
Specify that an employee in the construction industry covered
by a valid collective bargaining agreement that includes
specified provisions are excluded from the calculation of the
number of employees for purposes of the bill's requirements.
Authorize an employer to submit a specified employee
compensation report subject to review and approval by a
federal compliance agency to DFEH in lieu of a
nondiscrimination program.
Require a nondiscrimination program to include policies and
procedures that ensure equal employment opportunities for all
applicants and employees, a description of employment
selection procedures, and employee compensation data that
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includes:
o The total number of workers in a specific job
category identified by worker race or national origin,
and sex.
o The total wages reported on W-2 forms for all
workers in a specific job category identified by worker
race or national origin, and sex.
o The total annual hours worked for all workers in a
specific job category identified by worker race or
national origin, and sex, as specified.
Related
Legislation: This bill is similar to AB 1354 (Dodd), which was
vetoed by Governor Brown last year. The veto message included
the following statement:
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.
Staff
Comments: This bill would require specified employers that
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 direct costs onto
DFEH to receive nondiscrimination programs and self-reported
compliance efforts. To the extent the bill authorizes DFEH to
require approval and certification of contractors'
nondiscrimination programs, however, the bill would create major
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cost pressures. Staff notes DFEH currently has the authority to
require employers to submit nondiscrimination programs for
approval and certification prior to contracting with the state,
but the department has not exercised that authority to date.
AB 1890 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
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.
As an option to submitting a nondiscrimination program, the bill
authorizes contractors to submit an "EEO-1" report subject to
review by the U.S. Equal Employment Opportunity Commission. As
outlined in the background above, this report would include
aggregated workforce data that could be used by the federal
government target compliance enforcement efforts against
employers who contract with the federal government. The federal
contractor requirements are not yet finalized.
The bill could also have secondary impacts that may potentially
increase in state contracting costs, to the extent contractors
and subcontractors build the costs to prepare a
nondiscrimination program and compile aggregated workforce data
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 bid prices.
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