BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 1890| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 1890 Author: Dodd (D), et al. Amended: 6/21/16 in Senate Vote: 21 SENATE GOVERNMENTAL ORG. COMMITTEE: 8-2, 6/28/16 AYES: Hall, Block, Glazer, Hernandez, Hill, Hueso, Lara, McGuire NOES: Berryhill, Gaines NO VOTE RECORDED: Bates, Galgiani, Vidak SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16 AYES: Lara, Beall, Hill, McGuire, Mendoza NOES: Bates, Nielsen ASSEMBLY FLOOR: 55-23, 6/2/16 - 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 2016 and requires state contractors with 100 or more employees in the state and a contract that amounts to $50,000 or more to submit an annual report to the Department of Fair Employment and Housing (DFEH) that includes summary data on the compensation paid to employees, sorted by gender and race, and a description of the employer's policies designed to ensure pay equity and prevent unlawful discrimination. ANALYSIS: AB 1890 Page 2 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 with the state that amounts to $50,000 or more to submit a nondiscrimination program to the DFEH and periodic reports, no more than annually, of its compliance with that program. 2)Permits DFEH to require an employer with fewer than 100 employees in the state or a contract with the state that amounts to less than $50,000 to submit a nondiscrimination program and if DFEH so requires, the employer must comply with the requirements for employers with 100 or more employees in the state or a contract with the state that amounts to $50,000 or more. 3)Requires DFEH to define an "employee" for purposes of this bill 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 or to otherwise require DFEH to reinterpret the validity of an exemption as a result of these changes. AB 1890 Page 3 5)Stipulates that a nondiscrimination program must include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data, as follows: a) The total number of workers in a specific job category identified by worker, race or national origin, 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 or national origin, and sex; and c) The total hours worked on an annual basis for all workers within a specific job category identified by worker, race or national origin, 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% above the state minimum wage rate shall be excluded from calculation of the employer's total number of employees. 7)Specifies that a contractor or subcontractor may submit a certain report that is subject to review by the United States Equal Employment Opportunity Commission with DFEH, instead of any nondiscrimination program required by this bill. 8)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 more wholly address the problem. Background Purpose of AB 1890. According to the author's office, this bill AB 1890 Page 4 seeks to compile data on gender wage inequity among state contractors, as specified, and ensure state contractors have policies in place for preventing 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 79 cents for every dollar that a man earns. In 2015, that wage disparity amounted to an average annual wage gap of $10,762 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 an average of 60 cents of what white, non-Hispanic male workers earn, and Latinas averaged just 55 cents for every dollar paid to white, non-Hispanic men in the same year. 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 2014 through the AB 1890 Page 5 compilation of data on gender wage inequity among state contractors and will ensure state contractors have policies for preventing unlawful discrimination. Comments This bill is similar to AB 1354 (Dodd of 2015) which was vetoed by the Governor. The Governor's veto message stated, "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." Related/Prior Legislation AB 1354 (Dodd, 2015) would have enacted the Equal Pay for Equal Work Act of 2015 and require 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 to submit an annual report of its compliance with that program. (Vetoed by Governor) FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No According to Senate Appropriations Committee, 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) Additionally, major DFEH General Fund cost pressures, to the extent the 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 AB 1890 Page 6 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. SUPPORT: (Verified 8/12/16) American Association of University Women American Civil Liberties Union of California California Chapters of the National Electric Contractors Association California Conference Board of the Amalgamated Transit Union California Employment Lawyers Association California Labor Federation California Legislative Conference of the Plumbing, Heating and Piping Industry California Professional Firefighters California School Employees Association, AFL-CIO California Teamsters Public Affairs Council Engineers & Scientists of California, IFPTE Local 20, AFL-CIO International Longshore and Warehouse Union National Association of Social Workers, California Chapter Professional and Technical Engineers, IFPTE Local 21, AFL-CIO UNITE-HERE, AFL-CIO United Contractors Utility Workers Union of America, AFL-CIO Women in Non Traditional Employment Roles OPPOSITION: (Verified 8/12/16) California Association of Health Underwriters Western Electrical Contractors Association 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 AB 1890 Page 7 compiling the data will prompt some businesses to make necessary changes." ARGUMENTS IN OPPOSITION: Opponents have expressed concern with certain provisions that treat signatory and non-signatory construction contractors differently. Also, opponents believe AB 1890 "goes further than federal requirements and adds new paperwork and reporting mandates on a broader group of employers." ASSEMBLY FLOOR: 55-23, 6/2/16 AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, 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, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon NOES: Achadjian, Travis Allen, Baker, Brough, Dahle, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk NO VOTE RECORDED: Bigelow, Beth Gaines Prepared by:Arthur Terzakis / G.O. / (916) 651-1530 8/15/16 19:36:09 **** END ****