BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION
Senator Isadore Hall, III
Chair
2015 - 2016 Regular
Bill No: SB 703 Hearing Date: 4/14/2015
-----------------------------------------------------------------
|Author: |Leno |
|-----------+-----------------------------------------------------|
|Version: |2/27/2015 |
-----------------------------------------------------------------
------------------------------------------------------------------
|Urgency: |No |Fiscal: |Yes |
------------------------------------------------------------------
-----------------------------------------------------------------
|Consultant:|Arthur Terzakis |
| | |
-----------------------------------------------------------------
SUBJECT: Public contracts: prohibitions: discrimination
DIGEST: This bill adds a new section of law to the Public
Contract Code that prohibits a state agency from entering into
contracts for the acquisition of goods or services of one
hundred thousand dollars ($100,000) or more with a contractor
that discriminates between employees on the basis of gender
identity in the provision of benefits. This bill also requires
the Department of General Services (DGS) to maintain an easily
accessible list on its Internet Web site of contracts for the
acquisition of goods and services in the amount of one hundred
thousand dollars ($100,000) or more that are entered into on or
after January 1, 2016.
ANALYSIS:
Existing law:
1)Authorizes state agencies to enter into contracts for the
acquisition of goods or services upon approval by DGS 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)Sets forth various requirements and prohibitions for those
contracts, including, but not limited to, a prohibition on
entering into contracts for the acquisition of goods or
services of $100,000 or more with a contractor that
SB 703 (Leno) Page 2 of ?
discriminates between spouses and domestic partners or
same-sex and different-sex couples in the provision of
benefits.
3)Provides that a contract entered into in violation of those
requirements and prohibitions is void and authorizes the state
or any person acting on behalf of the state to bring a civil
action seeking a determination that a contract is in violation
and therefore void.
4)Makes a willful violation of the above requirements and
prohibitions a misdemeanor.
This bill:
1)Prohibits 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 that, in the provision of benefits,
discriminates between employees on the basis of an employee's
or dependent's actual or perceived gender identity, including,
but not limited to, the employee's or dependent's
identification as transgender.
2)Requires DGS to maintain an easily accessible list on its
Internet Web site of contracts for the acquisition of goods or
services in the amount $100,000 or more that are entered into
on or after January 1, 2016.
3)Provides that the term "contract" includes contracts with a
cumulative amount of $100,000 or more per contractor in each
fiscal year.
4)Provides that an employee health plan is discriminatory if the
plan is not consistent with specified sections of law (Section
1365.5 of the Health and Safety Code and Section 10140 of the
Insurance Code).
5)Stipulates that the transgender nondiscrimination requirements
referenced above shall apply only to those portions of a
contractor's operations that occur under any of the following
conditions:
a) Within the state of California.
b) On real property outside the state if the property is
SB 703 (Leno) Page 3 of ?
owned by the state or if the state has a right to occupy
the property, and if the contractor's presence at that
location is connected to a contract with the state.
c) Elsewhere in the U.S. where work related to a state
contract is being performed.
6)Requires contractors to treat as confidential, to the maximum
extent allowed by law or by the requirement of the
contractor's insurance provider, any request by an employee or
applicant for employment benefits or any documentation of
eligibility for benefits submitted by an employee or applicant
for employment.
7)Provides that the requirements of this bill may be waived
under any of the following circumstances:
a) There is only one prospective contractor willing to
enter into a specific contract with the state agency.
b) The contract is necessary to respond to an emergency
that endangers public health, welfare, or safety, or the
contract is necessary for the provision of essential
services and no entity that complies with the requirements
is capable of immediately responding to the emergency.
c) The requirements violate, or are inconsistent with, the
terms and conditions of a grant, subvention, or agreement
and the agency has made a good faith effort to change those
terms and conditions.
d) The contractor is providing wholesale or bulk water,
power, or natural gas, or ancillary services, as required
for assuring reliable services in accordance with good
utility practice, if the purchase of the same cannot
practicably be accomplished through standard competitive
bidding procedures and the contractor is not providing
direct retail services to end users.
8)Stipulates that a contractor shall not be deemed to
discriminate in the provision of benefits if: (a) the
contractor, in providing the benefits, pays the actual costs
incurred in obtaining the benefit or (b) the contractor is
unable to provide a certain benefit, despite taking reasonable
measures to do so.
SB 703 (Leno) Page 4 of ?
9)Requires every contract subject to this bill to contain a
statement by which the contractor certifies that the
contractor is in compliance with the bill's provisions. If a
contractor falsely certifies compliance, the contract with
that contractor shall be subject to certain penalties and
remedies unless, within a time period specified by DGS or
other contracting agency, the contractor provides proof that
it has complied, or is in the process of complying.
10)Stipulates that the bill's provisions shall be construed so
as not to conflict with applicable federal laws, rules, or
regulations. Also, contains a severability provision, as
specified.
Background
Purpose of SB 703: According to the author's office, this
measure is simply intended to prohibit state agencies from doing
business with companies that discriminate between the benefits
offered to transgender employees and other employees. The
author's office notes that discrimination in the provision of
employee benefits has a tremendous economic cost impact. For
example, when workers are denied health coverage or excluded
from medically necessary procedures, costs are pushed on to
state funded programs and services. One mechanism that has been
used to combat these costs and to reduce discrimination is the
state's market power through the contracting it does with the
private sector.
The author's office points out that California has a long
history of ensuring that state agencies do not discriminate in
the provision of employee benefits, including health insurance
through a series of bills and administrative actions.
Specifically, the author's office cites AB 17 (Kehoe) of 2003
which prohibits state agencies from doing business with
companies that discriminate in the benefits offered between
employees with spouses and employees with registered domestic
partners and also AB 2208 (Kehoe) of 2004 which mandates that
SB 703 (Leno) Page 5 of ?
California health care service plans and health insurers provide
equal benefits to domestic partners as to spouses. The author's
office also references AB 1586 (Koretz) of 2006, known as the
California Insurance Gender Nondiscrimination Act, which
outlawed discriminatory exclusions by health care service plans
and health insurers based on an individual's gender identity.
In 2012 the California Department of Insurance issued
regulations to implement AB 1586 (Koretz). Also, in 2013, the
Department of Managed Health Care similarly issued a letter to
all plans under its jurisdiction, ordering them to remove
blanket exclusions of coverage targeting health care needed by
transgender people.
Furthermore, the author's office notes that eight other states
and the District of Columbia have banned transgender exclusions
in health insurance and over 25% of Fortune 500 companies have
also followed suit by offering equal health care benefits for
transgender employees. Medi-Cal has also covered health care
needed by transgender individuals since the 1970s and the
federal Medicare system removed its discriminatory transgender
exclusion in 2014.
The author's office contends that despite these advances in
prohibiting discrimination, companies that contract with the
State of California that self-insure under federal law, or that
are based out-of-state, may offer insurance plans that don't
comply with the same gender nondiscrimination requirements
applied to other companies operating in California. Transgender
employees at these companies are unfairly denied health coverage
afforded to other employees.
Prior/Related Legislation
AB 1586 (Koretz), Chapter 421, Statutes of 2005. Prohibited
plans and insurers from denying an individual a plan contract or
policy, or coverage for a benefit included in the contract
policy, based on the person's sex, as defined.
AB 2208 (Kehoe), Chapter 488, Statutes of 2004. Required a
health care service plan and a health insurer to provide
coverage to the registered domestic partner of an employee,
subscriber, insured, or policyholder that is equal to the
coverage it provides to the spouse of those persons.
AB 17 (Kehoe), Chapter 752, Statutes of 2003. Among other
SB 703 (Leno) Page 6 of ?
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: Yes
SUPPORT:
American Civil Liberties Union of California
American Federation of State, County and Municipal Employees
California Communities United Institute
Equality California
National Center for Lesbian Rights
Transgender Law Center
OPPOSITION:
None received
ARGUMENTS IN SUPPORT: Proponents state that over the past
decade, California has prohibited discrimination in the
provision of employee benefits, including health insurance,
through a series of bills and administrative actions. This
measure is intended to build on previous nondiscrimination law
and ensure that California does business only with companies
that provide equal benefits. Proponents emphasize that
treating transgender employees differently is discrimination -
this measure would reward companies that do not discriminate
with the opportunity to do business with the state and prohibit
a state agency from entering into a contract in the amount of
$100,000 or more with a contractor who discriminates based on an
employee's transgender status. Additionally, proponents note
that this measure would expand existing enforcement provisions
in State contracting by adding requirements that the Department
of General Services provide an Internet Web based database
listing all contracts subject to the above provision and also
would establish a method for receiving, investigating, and
resolving complaints of non-compliance.
SB 703 (Leno) Page 7 of ?
Proponents claim that reducing discrimination is beneficial to
both employers and employees, and by only contracting with
entities that don't discriminate, California will improve the
quality of goods and services purchased with public dollars.
DUAL REFERRAL: Senate Judiciary Committee