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 ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: April 20, 2016 |Policy Vote: L. & I.R. 4 - 1 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: April 25, 2016 |Consultant: Robert Ingenito | | | | ----------------------------------------------------------------- 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 SB 1063 (Hall) Page 1 of ? 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 SB 1063 (Hall) Page 2 of ? 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. SB 1063 (Hall) Page 3 of ? 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. -- END --