Existing law subjects an employer who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements. Existing law authorizes requiring an employer to submit a nondiscrimination program to the Department of Fair Employment and Housing for approval and certification prior to becoming a contractor or subcontractor with the state, as well as requiring the provision of periodic reports of contractor or subcontractor compliance with that program. Existing law authorizes a contractor or subcontractor to file an affirmative action, equal employment, or nondiscrimination program subject to review and approval by a federal compliance agency with the department in lieu of that nondiscrimination program.

This bill would enact the Equal Pay for Equal Work Act of 2016. The bill would require an employer with a contract with the state that amounts to $50,000 or more that either is required by federal regulations to submit an EEO-1 report to the United States Equal Employment Opportunity Commission (EEOC) or has 100 or more employees in the state to submit a nondiscrimination program to the department and to submit periodic reports of its compliance with that program, no more than annually, on a schedule to be determined by the department. The bill would require the department to make these programs and reports available to the Commission on the Status of Women and Girls. The bill would authorize the department to require approval and certification of the program. The bill would permit the department to require other employers to comply with those program and report submission requirements. The bill would require the department to define an employee for these purposes. The bill would require the nondiscrimination program to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data, as specified. The bill would specify that a contractor or subcontractor may submit an EEO-1 report subject to review by the EEOC with the department in lieu of the nondiscrimination program. The bill would specify that its provisions are not to be construed to negate certain exemptions established by regulation that predate its enactment or to require the department to reevaluate the validity of these exemptions, as specified. The bill would make a statement of legislative findings.

Existing law subjects an employer who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements. Existing law authorizes requiring an employer to submit a nondiscrimination program to the Department of Fair Employment and Housing for approval and certification prior to becoming a contractor or subcontractor with the state, as well as requiring the provision of periodic reports of contractor or subcontractor compliance with that program. Existing law authorizes a contractor or subcontractor to file an affirmative action, equal employment, or nondiscrimination program subject to review and approval by a federal compliance agency with the department in lieu of that nondiscrimination program.

This bill would enact the Equal Pay for Equal Work Act of 2016. The bill would require an employer with 100 or more employees in the state and a contract with the state that amounts to $50,000 or more that either is required by federal regulations to submit an EEO-1 report to the United States Equal Employment Opportunity Commission (EEOC) or has 100 or more employees in the state to submit a nondiscrimination program to the department and to submit periodic reports of its compliance with that program, no more than annually, on a schedule to be determined by the department. The bill would require the department to make these programs and reports available to the Commission on the Status of Women and Girls. The bill would authorize the department to require approval and certification of the program. The bill would permit the department to require an employer with fewer than 100 employees in state or a contract with the state that amounts to less than $50,000 other employers to comply with those program and report submission requirements. The bill would require the department to define an employee for these purposes. The bill would require the nondiscrimination program to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data, as specified. The bill would specify that a contractor or subcontractor may submit a certain an EEO-1 report subject to review by the United States Equal Employment Opportunity Commission EEOC with the department in lieu of the nondiscrimination program. The bill would specify that its provisions are not to be construed to negate certain exemptions established by regulation that predate its enactment or to require the department to reevaluate the validity of these exemptions, as specified. The bill would make a statement of legislative findings.

Existing law subjects an employer who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements. Existing law authorizes requiring an employer to submit a nondiscrimination program to the Department of Fair Employment and Housing for approval and certification prior to becoming a contractor or subcontractor with the state, as well as requiring the provision of periodic reports of contractor or subcontractor compliance with that program. Existing law authorizes a contractor or subcontractor to file an affirmative action, equal employment, or nondiscrimination program subject to review and approval by a federal compliance agency with the department in lieu of that nondiscrimination program.

This bill would enact the Equal Pay for Equal Work Act of 2016. The bill would require an employer with 100 or more employees in the state and a contract with the state of 30 days that amounts to $50,000 or more to submit a description of its nondiscrimination program to the department and to submit periodic reports, reports of its compliance with that program, no more than annually, on a schedule to be determined by the department, of its compliance with that program. department. The bill would require the department to make these programs and reports available to the Commission on the Status of Women and Girls. The bill would authorize the department to require approval and certification of the program. The bill would permit the department to require an employer with fewer than 100 employees in state or a contract of with the state that amounts to less than 30 days $50,000 to submit a nondiscrimination report. comply with those program and report submission requirements. The bill would require the department to define an employee for these purposes. The bill would require the nondiscrimination program to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis a description of employment selection procedures, and a workforce analysis, employee compensation data, as specified. The bill would specify that a contractor or subcontractor may submit a certain report subject to review by the United States Equal Employment Opportunity Commission with the department in lieu of the nondiscrimination program. The bill would specify that its provisions are not to be construed to negate certain exemptions established by regulation that predate its enactment or to require the department to reevaluate the validity of these exemptions, as specified. The bill would make a statement of legislative findings.

Existing law subjects an employer who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements. Existing law authorizes requiring an employer to submit a nondiscrimination program to the Department of Fair Employment and Housing for approval and certification prior to becoming a contractor or subcontractor with the state, as well as requiring the provision of periodic reports of contractor or subcontractor compliance with that program.

This bill would enact the Equal Pay for Equal Work Act of 2016. The bill would require an employer with 100 or more employees in the state and a contract with the state of 30 days or more to submit a description of its nondiscrimination program to the department and to submit periodic reports, no more than annually, on a schedule to be determined by the department, of its compliance with that program. The bill would authorize the department to require approval and certification of the program. The bill would permit the department to require an employer with fewer than 100 employees in state or a contract of less than 30 days to submit a nondiscrimination report. The bill would require the department to define an employee for these purposes. The bill would require the nondiscrimination program to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis, as specified. The bill would specify that its provisions are not to be construed to negate certain exemptions established by regulation that predate its enactment or to require the department to reevaluate the validity of these exemptions, as specified. The bill would make a statement of legislative findings.

Existing law subjects an employer who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements. Existing law authorizes requiring an employer to submit a nondiscrimination program to the Department of Fair Employment and Housing for approval and certification prior to becoming a contractor or subcontractor with the state, as well as requiring the provision of periodic reports of contractor or subcontractor compliance with that program.

This bill would enact the Equal Pay for Equal Work Act of 2016. The bill would require an employer with 100 or more employees in the state and a contract with the state of 30 days or more to submit a description of its nondiscrimination program to the department and to submit periodic reports, no more than annually, on a schedule to be determined by the department, of its compliance with that program. The bill would authorize the department to require approval and certification of the program. The bill would permit the department to require an employer with fewer than 100 employees in state or a contract of less than 30 days to submit a nondiscrimination report. The bill would require the department to define an employee for these purposes. The bill would require the nondiscrimination program to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis, as specified. The bill would specify that its provisions are not to be construed to negate certain exemptions established by regulation that predate its enactment or to require the department to reevaluate the validity of these exemptions, as specified. The bill would make a statement of legislative findings.

GOVERNOR'S VETO

GV Bill Id:AB 1890

Author:(Dodd)

As Enrolled Ver:September 2, 2016

2/3 vote

Original Committee Reference: L. & E.

SUMMARY: Enacts the Equal Pay for Equal Work Act of 2016, related to state contracting, as specified.

The Senate amendments:

1. Add co-authors.
2. Provide that the bill applies to an employer with a contract with the state that amounts to $50,000 or more that either a) is required by federal regulations to submit a specified report to the United States Equal Opportunity Commission or b) has 100 or more employees in the state.
3. Require the Department of Fair Employment and Housing (DFEH) to make specified programs and reports available to the Commission on the Status of Women and Girls.
4. Specify that DFEH may also require an employer that is not described above to submit a nondiscrimination program.
5. Make other related and conforming changes.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill would result in DFEH administrative costs of approximately $350,000 annually to collect and store specified workforce data on state contractors, and to process additional Public Records Act requests for that data. In addition, this bill would result in major DFEH General Fund cost pressures, to the extent the department exercises the authority to require approval and certification of contractors' nondiscrimination programs. There could be additional information technology costs of approximately $1 million one-time and $160,000 ongoing, if DFEH were to collect and sort data on contractors' workers by job category, race/national origin, gender, wages, and hours worked.

COMMENTS: According to the author, this bill seeks to compile data on gender wage inequity among state contractors and ensure state contractors have policies for preventing unlawful discrimination.

Supporters argue that pay secrecy and the lack of robust and reliable data on employee compensation impede our ability to effectively enforce our equal pay laws. In 2014, to address this lack of data, President Barack Obama directed the Secretary of Labor to require federal contractors to submit data on employee compensation. Under the terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs (OFCC).

Supporters note that California has a similar nondiscrimination reporting program under the Fair Employment and Housing Act. The Nondiscrimination and Compliance Employment Program is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure equal employment opportunity for all employees or applicants for employment.

Supporters state that this bill aims to achieve the same goal as the 2014 Presidential Memorandum – to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.

This bill is substantially similar to AB 1354 (Dodd) of 2015. The bill was vetoed by Governor Brown.

GOVERNOR'S VETO MESSAGE:

I am returning Assembly Bill 1890 without my signature.

This bill requires a firm with a state contract valued at $50,000 or more that is required to submit an EEO-I report to the U.S. Equal Employment Opportunity Commission to also annually submit that report, or a nondiscrimination program meeting specified requirements, to the Department of Fair Employment and Housing.

The Office of Compliance Programs within the Department of Fair Employment and Housing already has access to EE0-1 reports submitted to the federal government by California employers. Additionally, and as I stated last year, the Department currently requires all state contractors to develop and implement a nondiscrimination program and has broad authority to investigate, approve, certify, decertify, monitor and enforce the obligation of state contractors not to discriminate. For these reasons, I do not believe this bill is necessary.

Analysis Prepared by: Benjamin Ebbink / L. & E. / (916) 319-2091 FN: 0005097

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1890

Author:(Dodd)

As Amended Ver:August 17, 2016

Majority vote

Original Committee Reference: L. & E.

SUMMARY: Enacts the Equal Pay for Equal Work Act of 2016, related to state contracting, as specified.

The Senate amendments:

1. Add co-authors.
2. Provide that the bill applies to an employer with a contract with the state that amounts to $50,000 or more that either a) is required by federal regulations to submit a specified report to the United States Equal Opportunity Commission or b) has 100 or more employees in the state.
3. Require the Department of Fair Employment and Housing (DFEH) to make specified programs and reports available to the Commission on the Status of Women and Girls.
4. Specify that DFEH may also require an employer that is not described above to submit a nondiscrimination program.
5. Make other related and conforming changes.

FISCAL EFFECT: According to the Senate Appropriations Committee, this bill would result in DFEH administrative costs of approximately $350,000 annually to collect and store specified workforce data on state contractors, and to process additional Public Records Act requests for that data. In addition, this bill would result in major DFEH General Fund cost pressures, to the extent the department exercises the authority to require approval and certification of contractors' nondiscrimination programs. There could be additional information technology costs of approximately $1 million one-time and $160,000 ongoing, if DFEH were to collect and sort data on contractors' workers by job category, race/national origin, gender, wages, and hours worked.

COMMENTS: According to the author, this bill seeks to compile data on gender wage inequity among state contractors and ensure state contractors have policies for preventing unlawful discrimination.

Supporters argue that pay secrecy and the lack of robust and reliable data on employee compensation impede our ability to effectively enforce our equal pay laws. In 2014, to address this lack of data, President Barack Obama directed the Secretary of Labor to require federal contractors to submit data on employee compensation. Under the terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs (OFCC).

Supporters note that California has a similar nondiscrimination reporting program under the Fair Employment and Housing Act. The Nondiscrimination and Compliance Employment Program is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure equal employment opportunity for all employees or applicants for employment.

Supporters state that this bill aims to achieve the same goal as the 2014 Presidential Memorandum – to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.

This bill is substantially similar to AB 1354 (Dodd) of 2015. AB 1354 was vetoed by Governor Brown.

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0004474

 THIRD READING  

Bill No: AB 1890

Author:

: 8/17/16

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 8-2, 6/28/16

AYES: Hall, Block, Glazer, Hernandez, Hill, Hueso, Lara, McGuire

NOES: Berryhill, Gaines

NO VOTE RECORDED: Bates, Galgiani, Vidak

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 55-23, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill enacts the Equal Pay for Equal Work Act of 2016 and requires an employer with a state contract that amounts to $50,000 or more that either is required by federal regulations to submit a federal nondiscrimination report, as specified, or has 100 or more employees in the state to submit an annual report to the Department of Fair Employment and Housing (DFEH) that includes summary data on the compensation paid to employees, sorted by gender and race, and a description of the employer’s policies designed to ensure pay equity and prevent unlawful discrimination.

Senate Floor Amendments of 8/17/16 clarify that employers with a state contract that are required to submit a federal nondiscrimination report, as specified, may submit a copy of that report to the DFEH and be deemed in compliance with the requirements of this bill.

ANALYSIS:

Existing law:

1. Authorizes state agencies to enter into contracts for the acquisition of goods or services upon approval by the Department of General Services 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. Subjects an employer, who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements.
   
3. Provides that prior to becoming a contractor or subcontractor with the state, an employer may be required to submit a nondiscrimination program to the DFEH for approval and certification and also may be required to submit periodic reports of its compliance with that program.

This bill:

1. Requires any employer with a state contract that amounts to $50,000 or more that either is required by federal regulations to submit a federal nondiscrimination report, as specified, or has 100 or more employees in the state to submit a nondiscrimination program to the DFEH and periodic reports, no more than annually, of its compliance with that program.
   
2. Permits DFEH to require an employer that is described in item #1 above to submit a nondiscrimination program and if DFEH so requires, the employer must comply with the requirements for employers described in item #1 above.
   
3. Requires DFEH to define an “employee” for purposes of this bill and provides that DFEH may require approval and certification of a nondiscrimination program.
   
4. Makes it explicit that this bill does not negate existing exemptions created by DFEH through the exercise of its regulatory authority or to otherwise require DFEH to reinterpret the validity of an exemption as a result of these changes.
   
5. Stipulates that a nondiscrimination program must include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data, as follows:
   
   1. The total number of workers in a specific job category identified by worker, race or national origin, and sex;
      
   2. Total wages required to be reported on Internal Revenue Service Form W-2 for all workers within a specific job category identified by worker, race or national origin, and sex; and
      
   3. The total hours worked on an annual basis for all workers within a specific job category identified by worker, race or national origin, and sex. (Exempt employees shall be presumed to work 40 hours per week for purposes of this reporting requirement.)
      
6. Stipulates that an employee in the construction industry covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime worked, and regular hourly pay of not less than 30% above the state minimum wage rate shall be excluded from calculation of the employer’s total number of employees.
   
7. Specifies that a contractor or subcontractor may submit a certain report that is subject to review by the United States Equal Employment Opportunity Commission with DFEH, instead of any nondiscrimination program required by this bill.
   
8. Makes various findings and declarations relative to the fact that disparities in pay for women have numerous negative impacts and states legislative intent to promote pay equity and nondiscrimination and to obtain better data on pay equity to more wholly address the problem.

Background

Purpose of AB 1890. According to the author’s office, this bill seeks to compile data on gender wage inequity among state contractors, as specified, and ensure state contractors have policies in place for preventing unlawful discrimination. The author’s office notes that union construction contractors who are subject to a collective bargaining agreement will be exempt from the requirements of this bill due to the fact that they have no say on what gender or race of employees they will receive from the hiring hall.

The author’s office references data from the United States Census Bureau which found full-time working women, on average, over the last decade, have continued to earn only 79 cents for every dollar that a man earns. In 2015, that wage disparity amounted to an average annual wage gap of $10,762 between full-time working men and full-time working women – the disparity is even greater for women of color, with African American women earning only an average of 60 cents of what white, non-Hispanic male workers earn, and Latinas averaged just 55 cents for every dollar paid to white, non-Hispanic men in the same year.

The author’s office points out that on August 6, 2014, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs issued a Notice of Proposed Rulemaking requiring federal contractors and subcontractors to submit data on employee compensation. Under terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs. Information would include total number of workers within a specific job category, total W-2 wages for all workers on the job and total hours worked, broken down by race, ethnicity and sex.

The proposal fulfills the Secretary of Labor’s responsibility under President Obama’s Presidential Memorandum, “Advancing Pay Equality Through Compensation Data Collection,” to develop a rule requiring federal contractors and subcontractors to submit to the Department of Labor summary data on the compensation paid to their employees, including data by sex and race.

According to the author’s office, this bill builds on the same goal as President Obama's actions from 2014 through the compilation of data on gender wage inequity among state contractors and will ensure state contractors have policies for preventing unlawful discrimination.

Related/Prior Legislation

AB 1354 (Dodd, 2015) would have enacted the Equal Pay for Equal Work Act of 2015 and require an employer with 100 or more employees in the state and a contract of 30 days or more, prior to becoming a contractor or subcontractor with the state, to submit a nondiscrimination program to the DFEH and to submit an annual report of its compliance with that program. (Vetoed by Governor)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to Senate Appropriations Committee, DFEH administrative costs of approximately $350,000 annually to collect and store specified workforce data on state contractors, and to process additional Public Records Act requests for that data. (General Fund)

Additionally, major DFEH General Fund cost pressures, to the extent the department exercises the authority to require approval and certification of contractors’ nondiscrimination programs. DFEH would require substantial staff augmentations to support those efforts. There could be additional information technology costs of approximately $1 million one-time and $160,000 ongoing, if DFEH were to collect and sort data on contractors’ workers by job category, race/national origin, gender, wages, and hours worked. These cost pressures could be substantially higher if DFEH further extended the requirements of the bill to subcontractors and to smaller businesses.

SUPPORT:

(Verified 8/18/16)

American Association of University Women

American Civil Liberties Union of California

California Chapters of the National Electric Contractors Association

California Conference Board of the Amalgamated Transit Union

California Employment Lawyers Association

California Labor Federation

California Legislative Conference of the Plumbing, Heating and Piping Industry

California Professional Firefighters

California School Employees Association, AFL-CIO

California Teamsters Public Affairs Council

Engineers & Scientists of California, IFPTE Local 20, AFL-CIO

International Longshore and Warehouse Union

National Association of Social Workers, California Chapter

Professional and Technical Engineers, IFPTE Local 21, AFL-CIO

UNITE-HERE, AFL-CIO

United Contractors

Utility Workers Union of America, AFL-CIO

Women in Non Traditional Employment Roles

OPPOSITION: (Verified 8/18/16)

California Association of Health Underwriters

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: Proponents note that “the existing nondiscrimination and compliance employment program established in Government Code Section 12990 is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure employment opportunity for all employees or applicants for employment. This bill would build upon the existing nondiscrimination reporting program to require state contractors to provide summary data on employee compensation. This bill aims to achieve the same goal as the 2014 Presidential Memorandum – to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.”

ARGUMENTS IN OPPOSITION: Opponents have expressed concern with certain provisions that treat signatory and non-signatory construction contractors differently. Also, opponents believe AB 1890 “goes further than federal requirements and adds new paperwork and reporting mandates on a broader group of employers.”

ASSEMBLY FLOOR: 55-23, 6/2/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Brough, Dahle, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Bigelow, Beth Gaines

Prepared by:

8/18/16 16:50:27

**** END ****

 THIRD READING  

Bill No: AB 1890

Author:

:

Vote:

SENATE GOVERNMENTAL ORG. COMMITTEE: 8-2, 6/28/16

AYES: Hall, Block, Glazer, Hernandez, Hill, Hueso, Lara, McGuire

NOES: Berryhill, Gaines

NO VOTE RECORDED: Bates, Galgiani, Vidak

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 55-23, 6/2/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill enacts the Equal Pay for Equal Work Act of 2016 and requires state contractors with 100 or more employees in the state and a contract that amounts to $50,000 or more to submit an annual report to the Department of Fair Employment and Housing (DFEH) that includes summary data on the compensation paid to employees, sorted by gender and race, and a description of the employer’s policies designed to ensure pay equity and prevent unlawful discrimination.

ANALYSIS:

Existing law:

1. Authorizes state agencies to enter into contracts for the acquisition of goods or services upon approval by the Department of General Services 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. Subjects an employer, who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements.
   
3. Provides that prior to becoming a contractor or subcontractor with the state, an employer may be required to submit a nondiscrimination program to the DFEH for approval and certification and also may be required to submit periodic reports of its compliance with that program.

This bill:

1. Requires an employer with 100 or more employees in the state and a contract with the state that amounts to $50,000 or more to submit a nondiscrimination program to the DFEH and periodic reports, no more than annually, of its compliance with that program.
   
2. Permits DFEH to require an employer with fewer than 100 employees in the state or a contract with the state that amounts to less than $50,000 to submit a nondiscrimination program and if DFEH so requires, the employer must comply with the requirements for employers with 100 or more employees in the state or a contract with the state that amounts to $50,000 or more.
   
3. Requires DFEH to define an “employee” for purposes of this bill and provides that DFEH may require approval and certification of a nondiscrimination program.
   
4. Makes it explicit that this bill does not negate existing exemptions created by DFEH through the exercise of its regulatory authority or to otherwise require DFEH to reinterpret the validity of an exemption as a result of these changes.
   
5. Stipulates that a nondiscrimination program must include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data, as follows:
   
   1. The total number of workers in a specific job category identified by worker, race or national origin, and sex;
      
   2. Total wages required to be reported on Internal Revenue Service Form W-2 for all workers within a specific job category identified by worker, race or national origin, and sex; and
      
   3. The total hours worked on an annual basis for all workers within a specific job category identified by worker, race or national origin, and sex. (Exempt employees shall be presumed to work 40 hours per week for purposes of this reporting requirement.)
      
6. Stipulates that an employee in the construction industry covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime worked, and regular hourly pay of not less than 30% above the state minimum wage rate shall be excluded from calculation of the employer’s total number of employees.
   
7. Specifies that a contractor or subcontractor may submit a certain report that is subject to review by the United States Equal Employment Opportunity Commission with DFEH, instead of any nondiscrimination program required by this bill.
   
8. Makes various findings and declarations relative to the fact that disparities in pay for women have numerous negative impacts and states legislative intent to promote pay equity and nondiscrimination and to obtain better data on pay equity to more wholly address the problem.

Background

Purpose of AB 1890. According to the author’s office, this bill seeks to compile data on gender wage inequity among state contractors, as specified, and ensure state contractors have policies in place for preventing unlawful discrimination. The author’s office notes that union construction contractors who are subject to a collective bargaining agreement will be exempt from the requirements of this bill due to the fact that they have no say on what gender or race of employees they will receive from the hiring hall.

The author’s office references data from the United States Census Bureau which found full-time working women, on average, over the last decade, have continued to earn only 79 cents for every dollar that a man earns. In 2015, that wage disparity amounted to an average annual wage gap of $10,762 between full-time working men and full-time working women – the disparity is even greater for women of color, with African American women earning only an average of 60 cents of what white, non-Hispanic male workers earn, and Latinas averaged just 55 cents for every dollar paid to white, non-Hispanic men in the same year.

The author’s office points out that on August 6, 2014, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs issued a Notice of Proposed Rulemaking requiring federal contractors and subcontractors to submit data on employee compensation. Under terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs. Information would include total number of workers within a specific job category, total W-2 wages for all workers on the job and total hours worked, broken down by race, ethnicity and sex.

The proposal fulfills the Secretary of Labor’s responsibility under President Obama’s Presidential Memorandum, “Advancing Pay Equality Through Compensation Data Collection,” to develop a rule requiring federal contractors and subcontractors to submit to the Department of Labor summary data on the compensation paid to their employees, including data by sex and race.

According to the author’s office, this bill builds on the same goal as President Obama's actions from 2014 through the compilation of data on gender wage inequity among state contractors and will ensure state contractors have policies for preventing unlawful discrimination.

Comments

This bill is similar to AB 1354 (Dodd of 2015) which was vetoed by the Governor. The Governor’s veto message stated, “Currently, the department requires all state contractors to develop and implement a nondiscrimination program meeting certain requirements and also certify that they have done so, under penalty of perjury. Furthermore, the department has existing authority to require a contractor to submit this information prior to contracting with the state, if noncompliance is suspected. In light of these factors, I do not believe this bill is necessary at this time.”

Related/Prior Legislation

AB 1354 (Dodd, 2015) would have enacted the Equal Pay for Equal Work Act of 2015 and require an employer with 100 or more employees in the state and a contract of 30 days or more, prior to becoming a contractor or subcontractor with the state, to submit a nondiscrimination program to the DFEH and to submit an annual report of its compliance with that program. (Vetoed by Governor)

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

According to Senate Appropriations Committee, DFEH administrative costs of approximately $350,000 annually to collect and store specified workforce data on state contractors, and to process additional Public Records Act requests for that data. (General Fund)

Additionally, major DFEH General Fund cost pressures, to the extent the department exercises the authority to require approval and certification of contractors’ nondiscrimination programs. DFEH would require substantial staff augmentations to support those efforts. There could be additional information technology costs of approximately $1 million one-time and $160,000 ongoing, if DFEH were to collect and sort data on contractors’ workers by job category, race/national origin, gender, wages, and hours worked. These cost pressures could be substantially higher if DFEH further extended the requirements of the bill to subcontractors and to smaller businesses.

SUPPORT:

(Verified 8/12/16)

American Association of University Women

American Civil Liberties Union of California

California Chapters of the National Electric Contractors Association

California Conference Board of the Amalgamated Transit Union

California Employment Lawyers Association

California Labor Federation

California Legislative Conference of the Plumbing, Heating and Piping Industry

California Professional Firefighters

California School Employees Association, AFL-CIO

California Teamsters Public Affairs Council

Engineers & Scientists of California, IFPTE Local 20, AFL-CIO

International Longshore and Warehouse Union

National Association of Social Workers, California Chapter

Professional and Technical Engineers, IFPTE Local 21, AFL-CIO

UNITE-HERE, AFL-CIO

United Contractors

Utility Workers Union of America, AFL-CIO

Women in Non Traditional Employment Roles

OPPOSITION: (Verified 8/12/16)

California Association of Health Underwriters

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: Proponents note that “the existing nondiscrimination and compliance employment program established in Government Code Section 12990 is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure employment opportunity for all employees or applicants for employment. This bill would build upon the existing nondiscrimination reporting program to require state contractors to provide summary data on employee compensation. This bill aims to achieve the same goal as the 2014 Presidential Memorandum – to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.”

ARGUMENTS IN OPPOSITION: Opponents have expressed concern with certain provisions that treat signatory and non-signatory construction contractors differently. Also, opponents believe AB 1890 “goes further than federal requirements and adds new paperwork and reporting mandates on a broader group of employers.”

ASSEMBLY FLOOR: 55-23, 6/2/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Jones-Sawyer, Levine, Linder, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Brough, Dahle, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Maienschein, Mathis, Mayes, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron, Wilk

NO VOTE RECORDED: Bigelow, Beth Gaines

Prepared by:

8/15/16 19:36:09

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 1890 (Dodd) - Discrimination: equal pay: state contracting

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 1890 would require employers with 100 or more employees and a state contract of $50,000 or more to submit a nondiscrimination program, including specified aggregated workforce data, and periodic compliance reports to the Department of Fair Employment and Housing (DFEH). The bill would also authorize DFEH to require other state contractors to comply with these provisions, and to require approval and certification of nondiscrimination programs.

Fiscal Impact:

• DFEH administrative costs of approximately $350,000 annually to collect and store specified workforce data on state contractors, and to process additional Public Records Act requests for that data. (General Fund)
  
• Major DFEH General Fund cost pressures, to the extent the department exercises the authority to require approval and certification of contractors’ nondiscrimination programs. DFEH would require substantial staff augmentations to support those efforts. There could be additional information technology costs of approximately $1 million one-time and $160,000 ongoing, if DFEH were to collect and sort data on contractors’ workers by job category, race/national origin, gender, wages, and hours worked. These cost pressures could be substantially higher if DFEH further extended the requirements of the bill to subcontractors and to smaller businesses. (see staff comments)

Background:

Existing law, the Unruh Civil Rights Act, generally prohibits discrimination on the basis of sex, race, color, religion, ancestry, national origin, disability, medical condition, marital status, or sexual orientation, and provides civil remedies for violations of its provisions. Existing law also prohibits discrimination in the provision of health care and insurance benefits on the basis of numerous factors, including sex, domestic partner status, or gender, gender identity, and gender expression. Existing law authorizes state agencies to enter into contracts for the acquisition of goods or services and establishes rules governing the awarding of contracts by state agencies, including general requirements for competitive bidding. Businesses that wish to contract with the state must comply with various nondiscrimination requirements.

Existing law specifies that employers may be required to submit a nondiscrimination program to DFEH for approval and certification prior to becoming a contractor or subcontractor with the state. An employer may also be required to submit periodic reports of compliance with that program. DFEH does not currently approve and certify contractor and subcontractor nondiscrimination programs.

In response to a Presidential Memorandum pertaining to pay equity, the Office of Federal Contract Compliance Programs (OFCCP) under the U.S. Department of Labor issued a Notice of Proposed Rulemaking on August 6, 2014 that would require certain federal contractors and subcontractors that have more than 100 employees to submit an annual “Equal Pay Report” on employee compensation to the OFCCP. The rulemaking is designed to require affected entities to supplement an existing Employer Information Report with summary information on compensation paid to employees, as contained in W-2 forms, by sex, race, ethnicity, and specified job categories, as well as other relevant data points such as hours worked, and the number of employees. The OFCCP intends to compile the data electronically and use the information to target compliance enforcement efforts. The final proposal is currently open for public comment until August 15, 2016. It is unclear when a final rule will be adopted.

Proposed Law:

AB 1890 would enact the Equal Pay for Equal Work Act of 2016. Specifically, this bill would:

• Require an employer with 100 or more employees that has a state contract of $50,000 or more to submit a nondiscrimination program to DFEH and periodic reports, no more than annually, on compliance with that program, prior to becoming a contractor or subcontractor with the state.
• Authorize DFEH to also require employers with fewer than 100 employees and a contract of less than $50,000 to submit a nondiscrimination report and other requirements for larger employers, as specified.
• Require DFEH to make any nondiscrimination programs and reports available to the Commission on the Status of Women and Girls.
• Authorize DFEH to require approval and certification of a nondiscrimination program.
• Require DFEH to define “employee” for purposes of these requirements.
• Specify that an employee in the construction industry covered by a valid collective bargaining agreement that includes specified provisions are excluded from the calculation of the number of employees for purposes of the bill’s requirements.
• Authorize an employer to submit a specified employee compensation report subject to review and approval by a federal compliance agency to DFEH in lieu of a nondiscrimination program.
• Require a nondiscrimination program to include policies and procedures that ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data that includes:
  • The total number of workers in a specific job category identified by worker race or national origin, and sex.
  • The total wages reported on W-2 forms for all workers in a specific job category identified by worker race or national origin, and sex.
  • The total annual hours worked for all workers in a specific job category identified by worker race or national origin, and sex, as specified.

Related Legislation:

This bill is similar to AB 1354 (Dodd), which was vetoed by Governor Brown last year. The veto message included the following statement:

Currently, the department requires all state contractors to develop and implement a nondiscrimination program meeting certain requirements and also certify that they have done so, under penalty of perjury. Furthermore, the department has existing authority to require a contractor to submit this information prior to contracting with the state, if noncompliance is suspected. In light of these factors, I do not believe this bill is necessary at this time.

Staff Comments:

This bill would require specified employers that contract with the state to prepare and submit to DFEH a nondiscrimination program, including specified workforce data that could be used to identify wage disparities by race, ethnicity, and gender. Insofar as the bill is permissive with respect to DFEH authority to approve and certify nondiscrimination programs, and there are no requirements for DFEH to compile or analyze the aggregated worker data submitted by employers, the bill would only impose minor direct costs onto DFEH to receive nondiscrimination programs and self-reported compliance efforts. To the extent the bill authorizes DFEH to require approval and certification of contractors’ nondiscrimination programs, however, the bill would create major cost pressures. Staff notes DFEH currently has the authority to require employers to submit nondiscrimination programs for approval and certification prior to contracting with the state, but the department has not exercised that authority to date.

AB 1890 contains a provision indicating that the Legislature intends this bill to promote pay equity and nondiscrimination, and to obtain better data on pay equity to more wholly address the problem. In order for the workforce data submitted by employers to be used to meaningfully address pay equity issues, DFEH would need to collect and compile the information in a sortable database that could be used in nondiscrimination enforcement efforts or to better inform policymakers in order to affect change. DFEH indicates that, although the bill does not explicitly require collection of aggregated data, if it were to compile electronic contractor and subcontractor workforce data, it would need a new software system with sortable capabilities at a one-time cost of approximately $1 million, and ongoing costs of approximately $160,000. Absent such a system, the workforce information would likely be simply collected by DFEH and filed in hard copy.

As an option to submitting a nondiscrimination program, the bill authorizes contractors to submit an “EEO-1” report subject to review by the U.S. Equal Employment Opportunity Commission. As outlined in the background above, this report would include aggregated workforce data that could be used by the federal government target compliance enforcement efforts against employers who contract with the federal government. The federal contractor requirements are not yet finalized.

The bill could also have secondary impacts that may potentially increase in state contracting costs, to the extent contractors and subcontractors build the costs to prepare a nondiscrimination program and compile aggregated workforce data into bid prices. Contracting costs could also be impacted by a reduction in eligible contractors or subcontractors, to the extent some businesses fail to comply with the bill’s requirements and are deemed ineligible to contract with the state. Reduced competition for state contracts could lead to higher bid prices.

-- END --

SENATE COMMITTEE ON GOVERNMENTAL ORGANIZATION

Senator Isadore Hall, III

Chair

2015 - 2016 Regular

Bill No: AB Hearing Date: 6/28/2016

SUBJECT:

DIGEST: This bill enacts the Equal Pay for Equal Work Act of 2016 and requires state contractors with 100 or more employees in the state and a contract that amounts to $50,000 or more to submit an annual report to the Department of Fair Employment and Housing (DFEH) that includes summary data on the compensation paid to employees, sorted by gender and race, and a description of the employer’s policies designed to ensure pay equity and prevent unlawful discrimination.

ANALYSIS:

Existing law:

1. Authorizes state agencies to enter into contracts for the acquisition of goods or services upon approval by the Department of General Services 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. Subjects an employer, who is, or wishes to become, a contractor with the state for public works, or for goods or services, to various nondiscrimination requirements.
   
3. Provides that prior to becoming a contractor or subcontractor with the state, an employer may be required to submit a nondiscrimination program to the DFEH for approval and certification and also may be required to submit periodic reports of its compliance with that program.

This bill:

1. Requires an employer with 100 or more employees in the state and a contract with the state that amounts to $50,000 or more to submit a nondiscrimination program to the DFEH and periodic reports, no more than annually, of its compliance with that program.
   
2. Permits DFEH to require an employer with fewer than 100 employees in the state or a contract with the state that amounts to less than $50,000 to submit a nondiscrimination program and if DFEH so requires, the employer must comply with the requirements for employers with 100 or more employees in the state or a contract with the state that amounts to $50,000 or more.
   
3. Requires DFEH to define an “employee” for purposes of this bill and provides that DFEH may require approval and certification of a nondiscrimination program.
   
4. Makes it explicit that this bill does not negate existing exemptions created by DFEH through the exercise of its regulatory authority or to otherwise require DFEH to reinterpret the validity of an exemption as a result of these changes.
   
5. Stipulates that a nondiscrimination program must include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, a description of employment selection procedures, and employee compensation data, as follows:
   
   1. The total number of workers in a specific job category identified by worker, race or national origin, and sex;
      
   2. Total wages required to be reported on Internal Revenue Service Form W-2 for all workers within a specific job category identified by worker, race or national origin, and sex; and
      
   3. The total hours worked on an annual basis for all workers within a specific job category identified by worker, race or national origin, and sex. (Exempt employees shall be presumed to work 40 hours per week for purposes of this reporting requirement.)
      
6. Stipulates that an employee in the construction industry covered by a valid collective bargaining agreement that expressly provides for the wages, hours of work, and working conditions of employees, premium wage rates for all overtime worked, and regular hourly pay of not less than 30% above the state minimum wage rate shall be excluded from calculation of the employer’s total number of employees.
   
7. Specifies that a contractor or subcontractor may submit a certain report that is subject to review by the United States Equal Employment Opportunity Commission with DFEH, instead of any nondiscrimination program required by this bill.
   
8. Makes various findings and declarations relative to the fact that disparities in pay for women have numerous negative impacts and states legislative intent to promote pay equity and nondiscrimination and to obtain better data on pay equity to more wholly address the problem.

Background

Purpose of AB 1890. According to the author’s office, this bill seeks to compile data on gender wage inequity among state contractors, as specified, and ensure state contractors have policies in place for preventing unlawful discrimination. The author’s office notes that union construction contractors who are subject to a collective bargaining agreement will be exempt from the requirements of this bill due to the fact that they have no say on what gender or race of employees they will receive from the hiring hall.

The author’s office references data from the United States Census Bureau which found full-time working women, on average, over the last decade, have continued to earn only 79 cents for every dollar that a man earns. In 2015, that wage disparity amounted to an average annual wage gap of $10,762 between full-time working men and full-time working women – the disparity is even greater for women of color, with African American women earning only an average of 60 cents of what white, non-Hispanic male workers earn, and Latinas averaged just 55 cents for every dollar paid to white, non-Hispanic men in the same year.

The author’s office points out that on August 6, 2014, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs issued a Notice of Proposed Rulemaking requiring federal contractors and subcontractors to submit data on employee compensation. Under terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs. Information would include total number of workers within a specific job category, total W-2 wages for all workers on the job and total hours worked, broken down by race, ethnicity and sex.

The proposal fulfills the Secretary of Labor’s responsibility under President Obama’s Presidential Memorandum, “Advancing Pay Equality Through Compensation Data Collection,” to develop a rule requiring federal contractors and subcontractors to submit to the Department of Labor summary data on the compensation paid to their employees, including data by sex and race.

According to the author’s office, this bill builds on the same goal as President Obama's actions from 2014 through the compilation of data on gender wage inequity among state contractors and will ensure state contractors have policies for preventing unlawful discrimination.

Staff comments. This bill is similar to AB 1354 (Dodd of 2015) which was vetoed by the Governor. The Governor’s veto message stated, “Currently, the department requires all state contractors to develop and implement a nondiscrimination program meeting certain requirements and also certify that they have done so, under penalty of perjury. Furthermore, the department has existing authority to require a contractor to submit this information prior to contracting with the state, if noncompliance is suspected. In light of these factors, I do not believe this bill is necessary at this time.”

Prior/Related Legislation

AB 1354 (Dodd, 2015) would have enacted the Equal Pay for Equal Work Act of 2015 and require an employer with 100 or more employees in the state and a contract of 30 days or more, prior to becoming a contractor or subcontractor with the state, to submit a nondiscrimination program to the DFEH and to submit an annual report of its compliance with that program. (Vetoed)

AB 1960 (Dickinson, Chapter 861, Statutes of 2012) required the Department of General Services to report on business participation levels by lesbian, gay, bisexual, and transgender (LGBT) owners in contracts, as specified, beginning January 1, 2013.

AB 17 (Kehoe, Chapter 752, Statutes of 2003), among other things, prohibited 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 who, in the provision of benefits, discriminates between employees with spouses and employees with domestic partners, or discriminates between the domestic partners and spouses of those employees, except under specified circumstances.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT:

American Association of University Women

American Civil Liberties Union of California

California Chapters of the National Electric Contractors Association

California Conference Board of the Amalgamated Transit Union

California Employment Lawyers Association

California Labor Federation

California Legislative Conference of the Plumbing, Heating and Piping Industry

California School Employees Association, AFL-CIO

California Teamsters Public Affairs Council

Engineers & Scientists of California, IFPTE Local 20, AFL-CIO

International Longshore and Warehouse Union

National Association of Social Workers, California Chapter

Professional and Technical Engineers, IFPTE Local 21, AFL-CIO

UNITE-HERE, AFL-CIO

United Contractors

Utility Workers Union of America, AFL-CIO

OPPOSITION:

Western Electrical Contractors Association

ARGUMENTS IN SUPPORT: Proponents note that “the existing nondiscrimination and compliance employment program established in Government Code Section 12990 is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure employment opportunity for all employees or applicants for employment. This bill would build upon the existing nondiscrimination reporting program to require state contractors to provide summary data on employee compensation. This bill aims to achieve the same goal as the 2014 Presidential Memorandum – to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.”

ARGUMENTS IN OPPOSITION: Opponents have expressed concern with Section 12990 (b) (1) (B) found on page 4, lines 24-31, and claim that this section treats signatory and non-signatory construction contractors differently.

ASSEMBLY THIRD READING

ATR Bill Id:AB 1890

Author:(Dodd)

As Amended Ver:May 31, 2016

Majority vote

SUMMARY: Enacts the Equal Pay for Equal Work Act of 2016, related to state contracting, as specified. Specifically, this bill:

1. Provides that an employer with 100 or more employees in the state and a contract with the state of 30 days or more shall submit a description of its nondiscrimination program to the Department of Fair Employment and Housing (DFEH), and shall be required to submit periodic reports (no more than annually) of its compliance with that program.
2. Specifies that an employer with fewer than 100 employees or a contract of less than 30 days may be required to submit a nondiscrimination program.
3. Provides that a nondiscrimination program shall include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis.
4. Specifies that the workforce analysis shall include the following:
   1. The total number of worker with a specific job category identified by worker race, ethnicity, and sex.
   2. The total wages required to be reported on Internal Revenue Service Form W-2 for all workers in a specific job category identified by worker race, ethnicity, and sex.
   3. The total hours worked on an annual basis for all workers in a specific job category identified by worker race, ethnicity, and sex. Exempt employees shall be presumed to work 40 hours a week for purposes of this reporting requirement.
5. Provides that an employee in the construction industry covered by a valid collective bargaining agreement shall be excluded from the calculation of the employer's total number of employees for purposes of the nondiscrimination program requirement.
6. Specifies that this bill shall not be construed to negate exemptions to specified requirements in existence on January 1, 2017, as specified.
7. Make related legislative findings and declarations.

FISCAL EFFECT: According to the Assembly Appropriations Committee, the DFEH estimates General Fund administrative costs of approximately $350,000 to collect and store nondiscrimination program information and process anticipated Public Record Act requests. In addition, this bill would result in significant General Fund cost pressures, potentially in the millions of dollars annually, to the extent DFEH choses to require approval and certification of contractors’ nondiscrimination programs.

COMMENTS: According to the author, this bill seeks to compile data on gender wage inequity among state contractors and ensure state contractors have policies for preventing unlawful discrimination.

Supporters argue that pay secrecy and the lack of robust and reliable data on employee compensation impede our ability to effectively enforce our equal pay laws. In 2014, to address this lack of data, President Barack Obama directed the Secretary of Labor to require federal contractors to submit data on employee compensation. Under the terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs (OFCC).

Supporters note that California has a similar nondiscrimination reporting program under the Fair Employment and Housing Act. The Nondiscrimination and Compliance Employment Program is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure equal employment opportunity for all employees or applicants for employment.

Supporters state that this bill aims to achieve the same goal as the 2014 Presidential Memorandum – to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.

This bill is substantially similar to AB 1354 (Dodd) of 2015. AB 1354 was vetoed by Governor Brown.

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091 FN: 0003087

Date of Hearing: April 13, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1890

Author:(Dodd) – As Introduced Ver:February 11, 2016

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill creates the Equal Pay for Equal Work Act of 2016 to specify certain nondiscrimination policies in state contracting. Specifically, this bill:

1. Requires an employer with 100 or more employees in California, and a state contract of 30 days or more, to submit a description of its nondiscrimination program to the Department of Fair Employment and Housing (DFEH) and periodic reports (no more than annually) of its compliance with that program.
2. Specifies that an employer with fewer than 100 employees, or a contract of less than 30 days, may be required to submit a nondiscrimination program.
3. Authorizes DFEH to require approval and certification of a nondiscrimination program and requires DFEH to define employee for purposes of this bill.
4. Requires a nondiscrimination program to include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis, as specified.
5. Excludes an employee in the construction industry covered by a valid collective bargaining agreement from the calculation of the employer's total number of employees for purposes of the nondiscrimination program requirement.
6. Specifies that this bill shall not be construed to negate exemptions to specified requirements in existence on January 1, 2017, as specified.

FISCAL EFFECT:

1. The Department of Fair Employment and Housing estimates General Fund administrative costs of approximately $350,000 to collect and store nondiscrimination program information and process anticipated Public Record Act (PRA) requests.

The department indicates they currently process 300 to 400 PRA requests each month. A budget proposal is pending before the Legislature to provide the department $148,000 GF and two positions for existing PRA workload.

1. Significant General Fund cost pressures, potentially in the millions of dollars annually, to the extent DFEH choses to require approval and certification of contractors’ nondiscrimination programs. Costs are also associated with compliance monitoring to ensure state contractors have policies for preventing unlawful discrimination.

COMMENTS:

1. Purpose. Existing state law provides that, prior to becoming a contractor or subcontractor with the state, an employer may be required to submit a nondiscrimination program to DFEH for approval and certification, and may be required to submit periodic reports of its compliance with that program. This bill seeks to strengthen this law by requiring an employer with 100 or more employees in the state, and a state contract of 30 days or more, to submit a description of its nondiscrimination program to DFEH.
2. Background. The Department of Fair Employment and Housing (DFEH) receives, investigates, conciliates, mediates, and prosecutes complaints of alleged violations of the Fair Employment and Housing Act (FEHA), Unruh Civil Rights Act, Disabled Persons Act, and Ralph Civil Rights Act. At the core of the DFEH's mission is the mandate to provide thorough, timely and fair investigations of discrimination complaints received from the public.

Current DFEH regulations go beyond the permissive state statutes with regard to nondiscrimination programs. Specifically, DFEH regulations provide that all employers who are, or wish to become, contractors with the state "must" develop and implement a nondiscrimination program, unless otherwise exempted. (Title 2, California Code of Regulations, Section 11102).

1. Prior legislation. This bill is substantially similar to AB 1354 (Dodd) of 2015 which was vetoed by Governor Brown. According to the veto message:

"Currently, the department requires all state contractors to develop and implement a nondiscrimination program meeting certain requirements and also certify that they have done so, under penalty of perjury. Furthermore, the department has existing authority to require a contractor to submit this information prior to contracting with the state, if noncompliance is suspected. In light of these factors, I do not believe this bill is necessary at this time."

Analysis Prepared by: Misty Feusahrens / APPR. / (916) 319-2081

Date of Hearing: April 6, 2016

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Roger Hernández, Chair

ABPCA Bill Id:AB 1890 (

Author:Dodd) – As Introduced Ver:February 11, 2016

SUBJECT: Discrimination: equal pay: state contracting

SUMMARY: Enacts the Equal Pay for Equal Work Act of 2016, related to state contracting, as specified. Specifically, this bill:

1. Provides that an employer with 100 or more employees in the state and a contract with the state of 30 days or more shall submit a description of its nondiscrimination program to the Department of Fair Employment and Housing, and shall be required to submit periodic reports (no more than annually) of its compliance with that program.
2. Specifies that an employer with fewer than 100 employees or a contract of less than 30 days may be required to submit a nondiscrimination program.
3. Provides that a nondiscrimination program shall include policies and procedures designed to ensure equal employment opportunities for all applicants and employees, an analysis of employment selection procedures, and a workforce analysis.
4. Specifies that the workforce analysis shall include the following:
   1. The total number of worker with a specific job category identified by worker race, ethnicity, and sex.
   2. The total wages required to be reported on Internal Revenue Service Form W-2 for all workers in a specific job category identified by worker race, ethnicity, and sex.
   3. The total hours worked on an annual basis for all workers in a specific job category identified by worker race, ethnicity, and sex. Exempt employees shall be presumed to work 40 hours a week for purposes of this reporting requirement.
5. Provides that an employee in the construction industry covered by a valid collective bargaining agreement shall be excluded from the calculation of the employer's total number of employees for purposes of the nondiscrimination program requirement.
6. Specifies that this bill shall not be construed to negate exemptions to specified requirements in existence on January 1, 2017, as specified.
7. Make related legislative findings and declarations.

FISCAL EFFECT: Unknown

COMMENTS: According to the author, this bill seeks to compile data on gender wage inequity among state contractors and ensure state contractors have policies for preventing unlawful discrimination.

Recent Proposed Federal Rule Related to Federal Contractors

On August 6, 2014, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs issued a Notice of Proposed Rulemaking requiring covered federal contractors and subcontractors with more than 100 employees to submit an annual equal pay report on employee compensation. Covered employers would submit electronically three pieces of information related to employee compensation:

1. The total number of workers within a specific EEO-1 job category by race, ethnicity and sex;
2. Total W-2 wages defined as the total individual W-2 wages for all workers in the job category by race, ethnicity and sex; and
3. Total hours worked, defined as the number of hours worked by all employees in the job category by race, ethnicity and sex.

A fact sheet released by the Office of Federal Contract Compliance states:

"The Equal Pay Report would not collect any individual pay information, or any information on factors such as education or experience that may affect pay. OFCCP would protect the confidentiality of the Equal Pay Report data to the maximum extent permitted under existing law. The agency plans to design a web-based portal for reporting and maintaining compensation information that conforms with applicable government IT security standards.

The data will enable OFCCP to direct its enforcement resources toward federal contractors whose summary data suggests potential pay violations, while reducing the likelihood of reviewing companies that are less likely to be out of compliance. OFCCP will also release aggregate summary data on the race and gender pay gap by industry and EEO-1 category to enable contractors to review their pay data using the same metrics as OFCCP and take voluntary compliance measures. By using existing reporting frameworks contractors already maintain in electronic payroll records, including W-2 earnings, and the longstanding categories and definitions that apply to the EEO-1 Report, the agency is avoiding costly new recordkeeping requirements and minimizing to the extent feasible the compliance burden on federal contractors and subcontractors.

The Equal Pay Report is one component of a larger strategy to address the reality that, despite five decades of extraordinary legal and social progress, working women still earn only 77 cents for every dollar that working men earn. For African American women and Latinas, the pay gap is even greater. The proposal fulfills the Secretary of Labor’s responsibility under President Obama’s Presidential Memorandum, 'Advancing Pay Equality Through Compensation Data Collection,' to develop a rule requiring federal contractors and subcontractors to submit to DOL summary data on the compensation paid to their employees, including data by sex and race."

Recent Proposed Changes to EEOC Reporting Requirements

On January 29, 2016, the federal Equal Employment Opportunity Commission (EEOC) announced proposed changes to its EEO-1 report, which requires employers to submit employee W-2 earnings and hours worked. Under the proposal, all employers with at least 100 employees (not just federal contractors) would be required to comply. In addition, the proposed changes will require the submission of payroll data broken down by race/ethnicity, in addition to gender. The data would be made available to the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) for enforcement purposes.

The proposed rule was published on February 1, 2016 and interested parties have 60 days to submit comments.

Existing Requirements Under State Statute and Regulations

Existing state law provides that, prior to becoming a contractor or subcontractor with the state, an employer may be required to submit a nondiscrimination program to the Department of Industrial Relations for approval and certification and may be required to submit periodic reports of its compliance with that program. (Government Code Section 12990(b).)

Even though the statute uses the term "may" the DFEH regulations provide that all employers who are, or wish to become, contractors with the state "must" develop and implement a nondiscrimination program, unless otherwise exempted. (Title 2, California Code of Regulations, Section 11102).

The regulations further define a nondiscrimination program to mean "a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself for the purpose of insuring equal employment opportunity for all employees or applicants for employment." (Title 2, California Code of Regulations, Section 11103(a)).

The regulations further define three distinct elements of such non-discrimination programs:

1. Analysis of Employment Selection Procedures – the program must include an identification and analysis of contractor promotional and entry-level selection procedures and identify any such procedures that have resulted in disproportionately inhibiting the employment, promotion or retention of minorities or women.
   
2. Workforce Analysis – the program must contain a workforce analysis, which includes job titles, total number of incumbents by gender and race, and the wage rate or salary range for each job title.
   
3. Utilization Analysis – A utilization analysis evaluates the major job groups at a facility in order to determine whether women and minorities are being underutilized when compared to the availability. The regulations specify that this analysis is only required for employers with 250 or more employees.

As mentioned above, the regulations contain specified exemptions to these requirements, including for contractors with fewer than 50 employees who provide alternative information. (Title 2, California Code of Regulations, Section 11111).

A contractor that does not comply with these requirements may be subject to sanctions “including but not limited to cancellation, termination, or suspension of the contract in whole or in part, by the contract awarding agency or decertification from future opportunities to contract with the State of California by the DFEH.” (Title 2, California Code of Regulations, Section 11107).

ARGUMENTS IN SUPPORT

Supporters argue that pay secrecy and the lack of robust and reliable data on employee compensation impedes our ability to effectively enforce our equal pay laws. In 2014, to address this lack of data, President Obama directed the Secretary of Labor to require federal contractors to submit data on employee compensation. Under the terms of the proposed rule, companies that have more than 100 employees and hold federal contracts or subcontracts worth $50,000 or more for at least 30 days would have to submit an annual Equal Pay Report on employee compensation to the Office of Federal Contract Compliance Programs (OFCC).

Supporters note that California has a similar nondiscrimination reporting program under the Fair Employment and Housing Act. The Nondiscrimination and Compliance Employment Program (Gov Code § 12990 et seq) is a set of specific and result-oriented procedures to which a contractor or subcontractor commits itself to ensure equal employment opportunity for all employees or applicants for employment.

Supporters state that this bill aims to achieve the same goal as the 2014 Presidential Memorandum — to help employers take proactive measures to ensure fair pay for their employees. Simply compiling the data will prompt some businesses to make necessary changes.

PRIOR RELATED LEGISLATION

This bill is substantially similar to AB 1354 from last year. AB 1354 was vetoed by Governor Brown, who stated the following in his veto message:

"This bill requires an employer with 100 or more employees to submit the details of their nondiscrimination program to the Department of Fair Employment and Housing and to submit periodic reports of its compliance with that program prior to becoming a contractor with the state. 

Currently, the department requires all state contractors to develop and implement a nondiscrimination program meeting certain requirements and also certify that they have done so, under penalty of perjury. Furthermore, the department has existing authority to require a contractor to submit this information prior to contracting with the state, if noncompliance is suspected. In light of these factors, I do not believe this bill is necessary at this time." 

REGISTERED SUPPORT / OPPOSITION:

Support

American Association of University Women

CA Conference Board of the Amalgamated Transit Union

California Employment Lawyers Association

California Labor Federation, AFL-CIO

California School Employees Association

California Teamsters Public Affairs Council

Engineers & Scientists of CA, IFPTE Local 20

National Association of Social Workers – California Chapter

Professional and Technical Engineers, IFPTE Local 21

UNITE-HERE

Utility Workers Union of America

Opposition

None on file.

Analysis Prepared by: Ben Ebbink / L. & E. / (916) 319-2091