BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 703


                                                                    Page  1





          SENATE THIRD READING


          SB  
          703 (Leno)


          As Amended  August 31, 2015


          Majority vote


          SENATE VOTE:  25-13


           ------------------------------------------------------------------ 
          |Committee       |Votes|Ayes                  |Noes                |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Accountability  |6-3  |Salas, Burke,         |Lackey, Brough,     |
          |                |     |Frazier, Irwin,       |                    |
          |                |     |Medina, Rodriguez     |                    |
          |                |     |                      |Beth Gaines         |
          |                |     |                      |                    |
          |----------------+-----+----------------------+--------------------|
          |Appropriations  |12-5 |Gomez, Bloom, Bonta,  |Bigelow, Chang,     |
          |                |     |Calderon, Nazarian,   |Gallagher, Jones,   |
          |                |     |Eggman, Eduardo       |Wagner              |
          |                |     |Garcia, Holden,       |                    |
          |                |     |Quirk, Rendon, Weber, |                    |
          |                |     |Wood                  |                    |
          |                |     |                      |                    |
          |                |     |                      |                    |
           ------------------------------------------------------------------ 










                                                                     SB 703


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          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) Provides that the term "contract" includes contracts with a  
             cumulative amount of $100,000 or more per contractor in each  
             fiscal year.


           3) 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  
             (Health and Safety Code Section 1365.5 and Insurance Code  
             Section 10140).


           4) 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.








                                                                     SB 703


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           5) 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.
           6) 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; 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.


           7) 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  








                                                                     SB 703


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             reasonable measures to do so.
           8) 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 the  
             Department of General Services (DGS) or other contracting  
             agency, the contractor provides proof that it has complied,  
             or is in the process of complying.


           9) 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.


           10)Makes it explicit that this bill's provisions do not create  
             any new enforcement responsibility for DGS or any other  
             contracting agency.


          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, by adding contracting requirements on bidders, this  
          bill would to some extent reduce the number of bidders on state  
          contracts, thus reducing competition and possibly increasing  
          costs.  The cost of these impacts is unknown, but given that the  
          state contracts for several billion dollars for goods and  
          services exceeding $100,000 annually, costs could be in the  
          hundreds of thousands to millions of dollars annually. [General  
          Fund and numerous special funds] Over time, assuming more  
          contractors come into compliance, the cost impact of this bill  
          would diminish. 


          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  








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          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 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. 




          Analysis Prepared by:                                             
                          William Herms / A. & A.R. / (916) 319-3600  FN:  
          0001706