BILL ANALYSIS Ó
SB 703
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Date of Hearing: July 1, 2015
ASSEMBLY COMMITTEE ON ACCOUNTABILITY AND ADMINISTRATIVE REVIEW
Rudy Salas, Chair
SB
703 (Leno) - As Amended June 1, 2015
SENATE VOTE: 25-13
SUBJECT: Public contracts: prohibitions: discrimination.
SUMMARY: 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.
Specifically, 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 the Department of General Services (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 existing law governing health
plan and health insurance non-discriminatory practices
(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; or,
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;
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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; or,
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 complies with this 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 this 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.
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11)Makes it explicit that the bill's provisions do not create
any new enforcement responsibility for DGS or any other
contracting agency.
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.
FISCAL EFFECT: 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 one-time administrative costs to DGS to
update the State Contracting Manual and update standard bid and
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contract language to incorporate a certification of compliance
(General Fund).
COMMENTS: 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), Chapter
752, Statutes 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), Chapter
488, Statutes of 2004, which mandates 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), Chapter 421, Statutes of 2005,
known as the California Insurance Gender Nondiscrimination Act,
which bans 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 and, 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
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transgender people.
According to the author's office, eight other states and the
District of Columbia have prohibited 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. California's health care program for the
poor, 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.
REGISTERED SUPPORT / OPPOSITION:
Support
National Center for Lesbian Rights (sponsor)
Transgender Law Center (sponsor)
American Civil Liberties Union of California
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American Federation of Labor and Congress of Industrial
Organizations
American Federation of State, County and Municipal Employees
California Communities United Institute
Equality California
Opposition
None on file
Analysis Prepared by:William Herms / A. & A.R. / (916)
319-3600