BILL ANALYSIS                                                                                                                                                                                                    Ó





          SENATE COMMITTEE ON APPROPRIATIONS
                             Senator Ricardo Lara, Chair
                            2015 - 2016  Regular  Session

          SB 1063 (Hall) - Conditions of employment:  wage differential:   
          race or ethnicity
          
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          |Version: April 20, 2016         |Policy Vote: L. & I.R. 4 - 1    |
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          |Urgency: No                     |Mandate: Yes                    |
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          |Hearing Date: April 25, 2016    |Consultant: Robert Ingenito     |
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          This bill meets the criteria for referral to the Suspense File.


          


          Bill  
          Summary: SB 1063 would amend the Equal Pay Act to prohibit  
          employers from paying employees a wage rate less than that paid  
          to employees of a different race or ethnicity for substantially  
          similar work.


          Fiscal  
          Impact: The Department of Industrial Relations (DIR) indicates  
          that the potential increase in workload resulting from the bill  
          is unknown. However, as an order of magnitude, if one percent of  
          the claims currently filed at the Department of Fair Employment  
          and Housing (DFEH) are instead filed with DIR's Labor  








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          Commissioner, the department estimates that the bill could  
          administrative costs of $601,000 in the first year and $570,000  
          in subsequent years (special fund).


          Background: The California Equal Pay Act (Act) was first established in  
          1949 and requires that men and women in the same workplace be  
          given equal pay for equal work.  Nevertheless, studies show that  
          women continued to be paid less than their male counterparts,  
          resulting in what is referred to as the "gender wage gap."

          SB 358 (Jackson), Chapter 546, Statutes of 2015 made various  
          changes to the Act related to gender wage inequality, including  
          standards relating to employer proof of non-discrimination and  
          replacing the qualification for discriminatory treatment while  
          performing "equal work" with "substantially similar work."

          DFEH's mission is to protect Californians from, among other  
          things, employment and housing, discrimination. DFEH is the  
          largest state civil rights agency in the country. It was  
          established by the Legislature in 1959 as the Division of Fair  
          Employment Practices. In 1980, the DFEH was established as an  
          independent department charged with enforcing California's  
          comprehensive employment, housing, public accommodations and  
          public service non-discrimination laws, as well as the State's  
          bias-related hate violence law. DFEH's statutory mandate, among  
          other things, is to protect the people of California from  
          employment discrimination pursuant to the California Fair  
          Employment and Housing Act (FEHA). FEHA specifically, prohibits  
          workplace discrimination and harassment on the basis of race,  
          religious creed, color, national origin, ancestry, physical  
          disability, mental disability, medical condition, genetic  
          information, marital status, sex, gender, gender identity,  
          gender expression, age, sexual orientation, and military and  
          veteran status, or because another person perceives the employee  
          to have one or more of these characteristics.

          Proposed Law: This bill would expand the prohibitions contained  
          in the Equal Pay Act to include discrimination based on race or  
          ethnicity. By adding these provisions, this bill, among other  
          things (1) duplicates the provisions laid down in the Equal Pay  
          Act regarding gender, but restates them to prevent wage rate  
          discrimination based on race or ethnicity, and (2) mirrors the  
          enforcement mechanism and penalties for wage rate discrimination  
          based on gender and includes discrimination based on race or  







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          ethnicity.




          Staff  
          Comments: This bill adopts an identical approach to SB 358 in  
          addressing wage discrimination. Specifically, it places the  
          responsibility on the employer to prove or demonstrate that a  
          wage differential between employees is not occurring as a result  
          of race or ethnicity. Additionally, this bill uses the  
          definitions specified in SB 358 regarding the nature of  
          "business necessity" and "substantially similar work." 
          DIR currently receives zero pay discrimination claims on the  
          basis of race or ethnicity; consequently, it lacks historical  
          data from which to develop an estimate of administrative  
          expenses. Nevertheless, the protections proposed by this bill  
          would affect a significant number of the State's workers. As  
          noted previously, DFEH enforces FEHA, which also has  
          jurisdiction over wage discrimination as well as much broader  
          forms of discrimination. DFEH indicates that it received roughly  
          6,500 claimants in 2015 alleging some form of employment  
          discrimination based on race. DIR cannot estimate (1) how many  
          of these would fall within its purview or (2) whether claimants  
          would go to the DFEH to address these issues or to the DIR's  
          Division of Labor Standards Enforcement.


          Thus, the number of claims DIR would receive as a consequence of  
          this bill is unknown. As an order of magnitude, if DIR receives  
          one percent of the number of claims that DFEH receives, this  
          bill could generate a potential workload costing $601,000 in the  
          first year and $570,000 in subsequent years.


          Employees experiencing discrimination with respect to employment  
          may currently seek relief under FEHA, which provides a variety  
          of options, including back pay, hiring, promotion,  
          reinstatement, out-of-pocket expenses, reasonable accommodation,  
          affirmative relief, actual damages (including damages for  
          emotional distress), punitive damages, and attorney fees and  
          costs.  FEHA covers all protective classes, including race and  
          ethnicity.









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          Any local government costs resulting from the mandate in this  
          measure are not state-reimbursable because the mandate only  
          involves the definition of a crime or the penalty for conviction  
          of a crime.




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