BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 703|
|Office of Senate Floor Analyses | |
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THIRD READING
Bill No: SB 703
Author: Leno (D)
Introduced:6/1/15
Vote: 21
SENATE GOVERNMENTAL ORG. COMMITTEE: 7-3, 4/14/15
AYES: Hall, Block, Galgiani, Hernandez, Hill, Lara, McGuire
NOES: Berryhill, Gaines, Vidak
NO VOTE RECORDED: Hueso
SENATE JUDICIARY COMMITTEE: 5-1, 4/21/15
AYES: Jackson, Hertzberg, Leno, Monning, Wieckowski
NOES: Anderson
NO VOTE RECORDED: Moorlach
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Public contracts: prohibitions: discrimination
SOURCE: Author
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 $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 $100,000 or more that are entered into on or after
January 1, 2016.
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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
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.
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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
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 United States 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
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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 ensuring 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.
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.
11)Makes it explicit that the bill's provisions do not create
any new enforcement responsibility for DGS or any other
contracting agency.
Background
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Purpose of SB 703. According to the author's office, this bill
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, 2003)
which prohibited 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, 2004) which mandated that
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, 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
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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) 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
According to the Senate Appropriations Committee, minor costs to
DGS to compile, update, and post a list of contracts for goods
and services valued at $100,000 or more. This information is
readily available on the Financial Information System for
California Web site (General Fund). Additionally, minor
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one-time administrative costs to DGS to update the State
Contracting Manual and update standard bid and contract language
to incorporate a certification of compliance (General Fund).
SUPPORT: (Verified 5/29/15)
American Civil Liberties Union of California
American Federation of Labor and Congress of Industrial
Organizations
American Federation of State, County and Municipal Employees
California Communities United Institute
Equality California
National Center for Lesbian Rights
Transgender Law Center
OPPOSITION: (Verified 5/29/15)
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 bill 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 bill rewards companies that do not discriminate with the
opportunity to do business with the state and prohibits 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 bill expands existing enforcement provisions in state
contracting by adding requirements that DGS provide an Internet
Web based database listing all contracts subject to the above
provision.
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.
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Prepared by:Arthur Terzakis / G.O. / (916) 651-1530
6/1/15 15:42:47
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