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 Page 2 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 Page 3 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 Page 4 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 SB 703 Page 5 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