Existing state and federal law prohibits discrimination based on sex. Existing state law, the Unruh Civil Rights Act, prohibits discrimination on a variety of personal characteristics including sex and defines sex to include pregnancy and childbirth. The act provides that sex includes gender and that gender is sex, and that gender includes gender identity and gender expression. Existing law prohibits a business from boycotting or discriminating, among other actions, based on a characteristic protected by the Unruh Civil Rights Act.

Existing law, the Gender Tax Repeal Act of 1995, prohibits a business from discriminating on the basis of a persons gender with respect to the price charged for services of similar or like kind. That existing law does not prohibit price differences based on the amount of time, difficulty, or cost of providing the services. Existing law requires specified businesses, including tailors, barbers and hair salons, and dry cleaners and laundries providing services to individuals, to post a price list in an area conspicuous to customers and to display a clearly visible sign with specified information pertaining to the prohibition on gender-based pricing discrimination.

Existing law prescribes remedies for violations of these prohibitions, which include actual damages, any amount determined by a jury or a court up to a maximum of 3 times the amount of actual damages but in no case less than $4,000, and attorneys fees to be determined by the court.

This bill would enact the Small Business Gender Discrimination in Services Compliance Act, and would define a gender discrimination in pricing services claim as a civil claim in a civil action with respect to a business establishment, including, but not limited to, a claim brought under the Unruh Civil Rights Act or the Gender Tax Repeal Act of 1995, based on an alleged price difference charged for services of similar or like kind against a person because of the persons gender.

The bill would require an attorney, with each demand letter or complaint alleging gender discrimination in pricing services, to provide the defendant or potential defendant with a copy of informational materials pertaining to the prohibition against discrimination in pricing of services. The bill would require those materials to include a specified advisory notice to be adopted by the Judicial Council and a pamphlet or informational materials to be developed by the Department of Consumer Affairs for use by tailors and businesses providing aftermarket clothing alterations, barbers and hair salons, and dry cleaners and laundries providing services to individuals that explain the business rights and obligations under the Gender Tax Repeal Act of 1995.

Existing state and federal law prohibits discrimination based on sex. Existing state law, the Unruh Civil Rights Act, prohibits discrimination on a variety of personal characteristics including sex and defines sex to include pregnancy and childbirth. The act provides that sex includes gender and that gender is sex, and that gender includes gender identity and gender expression. Existing law prohibits a business from boycotting or discriminating, among other actions, based on a characteristic protected by the Unruh Civil Rights Act.

Existing law, the Gender Tax Repeal Act of 1995, prohibits a business from discriminating on the basis of a persons gender with respect to the price charged for services of similar or like kind. That existing law does not prohibit price differences based on the amount of time, difficulty, or cost of providing the services. Existing law requires specified businesses, including tailors, barbers and hair salons, and dry cleaners and laundries providing services to individuals, to post a price list in an area conspicuous to customers and to display a clearly visible sign with specified information pertaining to the prohibition on gender-based pricing discrimination.

Existing law prescribes remedies for violations of these prohibitions, which include actual damages, any amount determined by a jury or a court up to a maximum of 3 times the amount of actual damages but in no case less than $4,000, and attorneys fees to be determined by the court.

This bill would enact the Small Business Gender Discrimination in Services Compliance Act, and would define a gender discrimination in pricing services claim as a civil claim in a civil action with respect to a business establishment, including, but not limited to, a claim brought under the Unruh Civil Rights Act or the Gender Tax Repeal Act of 1995, based on an alleged price difference charged for services of similar or like kind against a person because of the persons gender.

The bill would require an attorney, with each demand letter or complaint alleging gender discrimination in pricing services, to provide the defendant or potential defendant with a copy of informational materials pertaining to the prohibition against discrimination in pricing of services. The bill would require those materials to include a specified advisory notice to be adopted by the Judicial Council and a pamphlet or informational materials to be developed by the Department of Consumer Affairs for use by tailors and businesses providing aftermarket clothing alterations, barbers and hair salons, and dry cleaners and laundries providing services to individuals that explain the business rights and obligations under the Gender Tax Repeal Act of 1995.

Existing state and federal law prohibit prohibits discrimination based on sex. Existing state law, the Unruh Civil Rights Act, prohibits discrimination on a variety of personal characteristics including sex and defines sex to include pregnancy and childbirth. The act provides that sex includes gender and that gender is sex, and that gender includes gender identity and gender expression. Existing law prohibits a business from boycotting or discriminating, among other actions, based on a characteristic protected by the Unruh Civil Rights Act.

Existing law, the Gender Tax Repeal Act of 1995, prohibits a business from discriminating on the basis of a persons gender with respect to the price charged for services of similar or like kind. That existing law does not prohibit price differences based on the amount of time, difficulty, or cost of providing the services. Existing law requires specified businesses, including tailors, barbers and hair salons, and dry cleaners and laundries providing services to individuals, to post a price list in an area conspicuous to customers and to display a clearly visible sign with specified information pertaining to the prohibition on gender-based pricing discrimination.

Existing law prescribes remedies for violations of these prohibitions, which include actual damages, any amount determined by a jury or a court up to a maximum of 3 times the amount of actual damages but in no case less than $4,000, and attorneys fees to be determined by the court.

This bill would enact the Small Business Gender Discrimination in Services Compliance Act, and would define a gender discrimination in pricing services claim as a civil claim in a civil action with respect to a business establishment, including, but not limited to, a claim brought under the Unruh Civil Rights Act or the Gender Tax Repeal Act of 1995, based on an alleged price difference charged for services of similar or like kind against a person because of the persons gender.

The bill would require an attorney, with each demand letter or complaint alleging gender discrimination in pricing services, to provide the defendant or potential defendant with a copy of informational materials pertaining to the prohibition against discrimination in pricing of services. The bill would require those materials to include a specified advisory notice to be adopted by the Judicial Council, a verified answer form to be approved by the Judicial Council, Council and a pamphlet or informational materials to be developed by the Department of Consumer Affairs for use by tailors and businesses providing aftermarket clothing alternations, alterations, barbers and hair salons, and dry cleaners and laundries providing services to individuals that explain the business rights and obligations under the Gender Tax Repeal Act of 1995.

Existing state and federal law prohibit discrimination based on sex. Existing state law, the Unruh Civil Rights Act, commonly referred to as the Unruh Act, prohibits discrimination on a variety of personal characteristics including sex and defines sex to include pregnancy and childbirth. The act provides that sex includes gender and that gender is sex, and that gender includes gender identity and gender expression. Existing law prohibits a business from boycotting or discriminating, among other actions, based on a characteristic protected by the Unruh Act. Existing law prescribes remedies for violations of these prohibitions, which include actual damages, any amount determined by a jury or a court up to a maximum of 3 times the amount of actual damages but in no case less than $4,000, and attorneys fees to be determined by the court.

Existing state and federal law prohibit discrimination based on sex. Existing state law, the Unruh Civil Rights Act, commonly referred to as the Unruh Act, prohibits discrimination on a variety of personal characteristics including sex and defines sex to include pregnancy and childbirth. The act provides that sex includes gender and that gender is sex, and that gender includes gender identity and gender expression. Existing law prohibits a business from boycotting or discriminating, among other actions, based on a characteristic protected by the Unruh Act. Existing law prescribes remedies for violations of these prohibitions, which include actual damages, any amount determined by a jury or a court up to a maximum of 3 times the amount of actual damages but in no case less than $4,000, and attorneys fees to be determined by the court.

Existing law, the Construction-Related Accessibility Standards Compliance Act, requires an attorney to provide a written advisory with each demand letter or complaint, as defined, sent to or served upon a defendant or potential defendant for any construction-related accessibility claim. The act grants a defendant or potential defendant a stay and an early evaluation conference in regard to the demand or complaint in specified instances. Existing law also authorizes a reduction in potential statutory damages for a small business, as defined, for a construction-related accessibility claim.

This bill would enact the Small Business Gender Discrimination Compliance Act, which would apply to any gender discrimination claim, including, but not limited to, an alleged price difference charged based on gender. Generally, the bill would define a small business as one that has employed 25 or fewer employees on average over the past three years and has averaged annual gross receipts of less than $3,500,000 over those years.

The bill would require an attorney who causes service of a summons and complaint in an action that includes a gender discrimination claim to serve a separate copy of a specified application form and a specified notice to the defendant with the summons and complaint. The bill would require an attorney who appears as counsel for a plaintiff who, representing himself or herself, had previously filed a complaint, to also provide these documents. The bill would permit a small business defendant to file a request for a stay and early evaluation conference in connections with the claim and, if timely filed, the period for filing a response would be tolled. The bill would prescribe requirements for an application for an early evaluation conference and stay by a small business defendant, to include a signed declaration that all alleged gender discrimination violations giving rise to the claim have been corrected.

The bill would require, upon the filing described above, that a court issue an order that, among other things, grants a 90-day stay of proceedings regarding the gender discrimination claim, schedules a mandatory early evaluation conference, as specified, and directs the parties to appear in person to negotiate and enter into a settlement. The order would also require a plaintiff to file with a court and serve on the defendant, as specified, an itemized list of claims, damages, attorneys fees and costs, and the demand for settlement, if any. The bill would prescribe the circumstances pursuant to which a court would lift a stay. The bill would limit how evidence from the conference would be used in a subsequent proceeding. The bill would require that evaluation conferences be conducted by a superior court judge or commissioner or a court early evaluation conference officer, as defined. The bill would require the Judicial Council, among other things, by January 1, 2018, to prepare and post on its Internet Web site instructions and a form for use by a small business defendant in this regard. The bill would prescribe requirements for provisional application forms until those forms are adopted. The bill would provide that its provisions do not apply to actions brought by specified public prosecutors.

The bill would permit a defendant who does not qualify for an early evaluation conference for a small business defendant as described above, or who forgoes those provisions, to request a mandatory evaluation conference. The bill would permit a plaintiff, if the defendant does not make this request in responsive pleadings, to request a mandatory evaluation conference. The bill would prescribe procedural requirements in this regard. The bill would require a court to schedule a mandatory evaluation conference within specified times. The bill would prescribe requirements for the courts notice of conference. The bill would limit how evidence from the conference would be used in a subsequent proceeding. The bill would generally reproduce other provisions connected with the early evaluation conferences described above, including prescribing various duties for Judicial Council and exempting from the bills provisions actions brought by public prosecutors.

The bill would authorize a court, with regard to an award of attorneys fees and costs in a gender discrimination claim, to consider settlement offers made and rejected by the parties without regard to te evidentiary limitations connected to conferences described above. The bill, for unintentional violations, would reduce a small business defendants liability for statutory damages in a gender discrimination claim to a minimum of $1,000 for each offense if the defendant has corrected all gender discrimination violations that are the basis for the claim within 30 days of being served, and to a minimum of $2,000 for each offense if the violation is corrected with 60 days.

(2)Existing law requires specified information to be included in the filing of a complaint related to a construction-related accessibility claim if the complaint is filed by or on behalf of a high-frequency litigant. Existing law defines a high frequency litigant for these purposes. Existing law provides for an additional fee of $1,000 to be paid upon the filing of a complaint containing an allegation of a construction-related accessibility claim by a high frequency litigant.

This bill would create a definition of a high-frequency litigant in connection with gender discrimination claims. The bill would make a statement of legislative findings in this regard.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1615

Author:(Eduardo Garcia)

As Amended Ver:June 27, 2017

Majority vote

Original Committee Reference: JUD.

SUMMARY: Requires an attorney to attach specified forms when sending a demand letter or serving a complaint that alleges gender discrimination in the pricing of services and requires the Judicial Council and Department of Consumer Affairs (DCA) to develop forms and materials, accordingly. Specifically, this bill:

1. Requires an attorney to provide the following items to any demand letter or complaint that alleges gender discrimination in the pricing of services:
   1. A copy of a written advisory notice, as specified. Until such time as the Judicial Council adopts a formal advisory notice, the attorney shall provide a written statement, as specified.
   2. A copy of a pamphlet or other informational materials created by the Department Consumer Affairs.
2. Requires the Judicial Council, on or before January 1, 2019, to adopt the written advisory notice referenced in 1a) above. The advisory notice shall be available in specified languages and provide information about the defendant's legal rights and obligations under the Gender Tax Repeal Act of 1995, a statute that prohibits gender discrimination in the pricing of services.
3. Requires the DCA to develop a pamphlet or other informational materials, referenced in 1b) above, for use by tailors and businesses providing aftermarket clothing alterations, barbers and hair salons, and dry cleaners and laundries providing services to individuals. The pamphlet and informational material shall explain a business' legal rights and obligations under the Gender Tax Repeal Law of 1995 in clear and concise language. Requires DCA to provide the pamphlet or other informational materials to businesses, as specified, and requires DCA to post the pamphlet or other informational materials on its Internet website.

The Senate amendments remove a provision that would have required a plaintiff to attach a verified answer form to the notice and complaint served upon the defendant.

FISCAL EFFECT: According to the Senate Appropriations Committee, pursuant to Senate Rule 28.8, negligible state costs.

COMMENTS: California's Gender Tax Repeal Act of 1995 (Act) prohibits a business establishment from charging different prices for substantially similar services on the basis of the customer's gender. Although the Act's ban on gender-based pricing discrimination applies to all businesses, the legislation was prompted by reports that barbers, hair salons, and dry cleaners charged men and women different prices for substantially the same service. For example, many dry cleaners allegedly charged more to clean a woman's "blouse" than they charged to clean a man's "shirt." Barbers and hair salons allegedly charged more to cut women's hair than to cut men's hair, even where the service provided was almost identical. The Act recognizes that women's and men's clothes do sometimes differ, as do women's and men's hairstyles. As such, the Act expressly allows price differences based upon "the amount of time, difficulty, or cost or providing the service." In addition to prohibiting gender-based price discrimination, the Act also requires certain businesses (tailors, barbers and hair salons, and dry cleaners and laundries that service individuals) to conspicuously disclose pricing lists to customers and to post, where customers are likely to see it, a prescribed statement declaring that gender-based pricing discrimination in services is prohibited by California law.

The existing Gender Tax Repeal Act envisions two types of violations, each with its respective remedies. First, the Act prohibits any business establishment from engaging in gender-based pricing discrimination as defined by the Act. The remedies for a violation of this provision are the same as those provided for violations of the Unruh Civil Rights Act. Specifically, a business establishment that violates this provision is liable for actual damages, and any amount that may be determined by a court or jury, up to a maximum of three times the amount of actual damage, but in no case less than $4,000 and reasonable attorney's fees. Because the demonstrable "actual damage" is likely quite small – the difference between the price of the service – the practical effect of this rule ensure that a violator will be liable for not less than $4,000 for each violation.

In addition, the Act requires certain businesses – tailors, barbers and hair salons, and dry cleaners and laundries that service individuals – to disclose to the customer a written price list that designates the price of each "standard" service (defined as the 15 most frequently requested services). The price list must be posted in a conspicuous place in no less than 14-point boldface type. The business establishment must also provide the customer with a complete written list upon request. In addition to posting and providing a price list, the business must also conspicuously post, in no less than 24-point boldface type, a sign that reads as follows: "California law prohibits any business establishment from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. A complete price list is available upon request." Unlike a violation of the Act's provision generally prohibiting pricing discrimination, a business that violates the disclosure and posting requirements has the opportunity to correct the violation within 30 days of receiving written notice of the violation. A business that fails to correct that violation within 30 days is subject to a civil penalty of $1,000.

According to the author, a handful of unscrupulous attorneys have targeted small, often immigrant-owned businesses by alleging that they violated the law by charging different prices to men and women for a service of "a similar or like kind." In one well-publicized case, a male attorney sends his girlfriend into a hair salon for a haircut. The attorney then goes into the hair salon himself for the haircut. If he is charged a different price, he issues a demand letter threatening to sue the business for violating the law and, if this does not produce a settlement payment, he serves and files a complaint. The attorney has done the same with several dry cleaning businesses. The author contends that in many instances the different prices charged reflected real differences in time, difficulty, and cost of providing the services. However, because the attorney targets small, often immigrant-owned businesses that are not always aware of their rights and obligations under the law, the businesses settle, often for thousands of dollars.

This bill requires an attorney that sends a demand letter or serves a complaint alleging gender-based pricing discrimination to include a Judicial Council advisory notice that explains the business' rights and obligations under the law and a pamphlet or other informational materials developed by the DCA. The bill requires that the Judicial Council and DCA, on or before January 1, 2019, develop and approve these respective forms. As for the advisory notice, until the Judicial Council adopts the form, the bill requires the attorney to provide an equivalent statement to the defendant or potential defendant.

The author believes that this measure will provide small businesses with essential information that will allow them to better comply with the law and, as important, allow them to more confidently resist the pressure tactics of an unscrupulous lawyer attempting to exploit their lack of knowledge.

Analysis Prepared by: Thomas Clark / JUD. / (916) 319-2334 FN: 0001146

 CONSENT  

Bill No: AB 1615

Author:

:

Vote:

SENATE JUDICIARY COMMITTEE: 7-0, 6/20/17

AYES: Jackson, Moorlach, Anderson, Hertzberg, Monning, Stern, Wieckowski

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 69-0, 5/18/17 (Consent) - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST:

This bill instructs the Department of Consumer Affairs to develop and distribute informational materials describing the rights and obligations of California businesses relating to charging different prices for services based on the gender of the customer being served. In addition, this bill requires anyone bringing a legal claim against a business for gender discriminatory pricing to provide that business with informational materials and a responsive legal pleading form at the outset of the lawsuit.

ANALYSIS:

Existing law:

1. Prohibits any business establishment, pursuant to the Unruh Civil Rights Act, from denying any person the full and equal accommodations, advantages, facilities, privileges, or services of the business establishment on the basis of that person’s sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status. (Civ. Code Sec. 51.)
2. Prohibits a business establishment of any kind from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person’s gender. (Civ. Code Sec. 51.6(b).)
3. Permits price differences based specifically upon the amount of time, difficulty, or cost of providing the services. (Civ. Code Sec. 51.6(c).)
4. Provides that a business establishment that discriminates in the pricing of services based on gender is liable for each and every offense for the actual damages, and any amount that may be determined by a jury, or a court sitting without a jury, to a maximum of three times the amount of actual damage but in no case less than four thousand dollars and reasonable attorney's fees. (Civil Code Section 51.6 (d) and Section 52 (a).)
5. Provides that any business that violates the Unruh Civil Rights Act or engages in gender discriminatory pricing in violation of the Gender Tax Repeal Act of 1995 is liable for each and every offense for the actual damages, and any amount that may be determined by a jury, or a court sitting without a jury, to a maximum of three times the amount of actual damage but in no case less than four thousand dollars and reasonable attorney's fees. (Civ. Code Secs. 51.6(d) and 52(a).)
6. Requires the following businesses to clearly and conspicuously disclose and post pricing lists, as specified:
   1. Tailors or businesses providing aftermarket clothing alterations;
   2. Barbers and hair salons; and
   3. Dry cleaners and laundries that provide services to individuals. (Civ. Code Sec. 51.6 (f)(1)-(3).)
7. Requires tailors, businesses providing aftermarket clothing alterations, barbers, hair salons, dry cleaners, and laundries that provide services to individuals to display in a conspicuous place at least one clearly visible sign, printed in no less than 24-point bold face type, which reads: “California law prohibits any business establishment from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. A complete price list is available upon request.” (Civ. Code Sec. 51.6(f)(4).)
8. Subjects any business that fails to correct a posting or price list violation within 30 days of receiving written notice of the violation to liability for a civil penalty of $1,000. (Civ. Code Sec. 51.6(f)(5).)

This bill:

1. Requires the Judicial Council, on or before January 1, 2019, to adopt the written advisory notice for businesses informing them of their rights and obligations under the Gender Tax Repeal Act of 1995, a statute that prohibits gender discrimination in the pricing of services. The advisory notice will be available in multiple, specified languages.
2. Requires the Department of Consumer Affairs to develop a pamphlet and informational material for use by tailors, businesses providing aftermarket clothing alterations, barbers, hair salons, dry cleaners, and laundries providing services to individuals. The pamphlet and informational material explains businesses’ legal rights and obligations under the Gender Tax Repeal Law of 1995 in clear and concise language. The Department will be required to provide the pamphlet or other informational materials to the affected businesses at the time of licensing, licensing renewals, inspections, or all of the above. The Department will also be required to post the pamphlet or other informational materials on its Internet web site.
3. Requires an attorney to provide the following items together with any demand letter or complaint alleging gender discrimination in the pricing of services:
   1. A copy of the advisory notice regarding businesses’ rights and obligations under the Gender Tax Repeal Act. Until such time as the Judicial Council adopts the formal advisory notice, the attorney shall provide a written statement, as specified; and
   2. A copy of a pamphlet or other informational materials created by the Department of Consumer Affairs.

Background

The Unruh Civil Rights Act outlaws, among other things, discrimination based on gender in the provision of public accommodations. (Civ. Code Sec. 51.) The Gender Tax Repeal Act of 1995 more specifically prohibits businesses from charging different rates for similar services based on gender alone. (Civ. Code Sec. 51.6.)

This bill, which will be known as the Small Business Gender Discrimination in Services Compliance Act, seeks to achieve greater compliance with these requirements while trying to dissuade “shake down” lawsuits. To increase awareness about the requirements of the Gender Tax Repeal Act, this bill requires the Department of Consumer Affairs to develop information materials for distribution to business where gender-based pricing is common, such as tailors, alterations, barbers, hair salons, dry cleaners, and laundries, during licensing and inspections. To hinder the possibility of “shake down” lawsuits, this bill requires potential plaintiffs to provide a notice with informational materials together with any demand letter or complaint seeking damages in relation to a violation of the Gender Tax Repeal Act.

Comments

Examples of the problem the bill seeks to address

The author of this bill reports that a handful of unscrupulous attorneys have utilized the Gender Tax Repeal Act in unexpected and unintended ways. According to the author, these attorneys target small, immigrant-owned businesses and proceed to allege that the business has violated the law by charging different prices to men and women for a service of “a similar or like kind.” The attorneys then demand that the business pay the attorneys to settle the case. Otherwise, the attorneys threaten, they will sue the businesses in court.

There is, indeed, at least one well-publicized case of this happening. According to media reports based on police statements, between April and June 2016, an attorney in Riverside, California initiated legal disputes with 11 small businesses, all under either Asian or Latino ownership, apparently following the same general pattern in each instance.^[1]

First, the attorney sent his wife into the business to request a particular service, such as a haircut at a hair salon. Shortly thereafter, the attorney himself entered the business and asked for the same service. A few days later, if he had been charged less for the service than his wife, the attorney would deliver court documents to the business on behalf of his wife as his client. The documents accused the business of violating California civil rights laws prohibiting gender discrimination, including the Gender Tax Repeal Act. For example, one lawsuit alleged an $8 difference in haircuts for men and women. Another lawsuit against a dry cleaner claimed a $2 difference between cleaning a woman’s blouse and a man’s shirt. Based on these types of violations, the attorney demanded anywhere from $20,000 to $123,000 in penalties, but offered to settle the case for just $10,000.

A police investigation ensued. In the meantime, several of the businesses obtained legal counsel and even organized protests outside the attorney’s law offices. On April 20, 2017, the attorney and his wife were arrested on charges of extortion and burglary.

The attorney has defended his actions on the grounds that he is helping to stop gender based pricing discrimination as the law is intended to do. “These lawsuits do help eradicate invidious discrimination based on sex,” he is reported to have said. Regarding the allegation that he targeted small businesses, the attorney is quoted as responding that: “[t]he corporate entities we visited tend to follow the law.”^[2]

The author believes that this bill will provide small businesses with essential information that will allow them to better comply with the law and, at the same time, facilitate the ability of small business owners to respond effectively when they are accused of violations.

Reasons for the focus on specific types of businesses

Under the Gender Tax Repeal Act of 1995, California businesses may not charge different prices for substantially similar services on the basis of the customer’s gender. The rule applies to all businesses, but it was targeted most specifically at certain industries, hair, laundry, and dry cleaning services in particular, based on reports that those businesses charged men and women different prices for substantially the same service. (See, Senate Judiciary Committee Analysis to AB 1100, Speier, Chapter 866, Statutes of 1995, p. 3.)

Related/Prior Legislation

AB 1576 (Levine, 2017) extends the existing prohibition on gender-based discriminatory pricing of services, to goods as well. AB 1576 is currently on the Assembly Floor inactive file.

SB 899 (Hueso, 2016) would have extended the existing prohibition on gender-based discriminatory pricing of services, to certain goods as well. SB 899 died in the Assembly Committee on the Judiciary.

AB 1088 (Jackson, Chapter 312, Statutes of 2001) added provisions to the Gender Tax Repeal Act requiring certain businesses to post price lists and notification of the prohibition on gender-based pricing discrimination.

AB 1100 (Speier, Chapter 866, Statutes of 1995) enacted the Gender Tax Repeal Act which prohibited discriminatory pricing on the basis of gender.

AB 594 (Unruh, Chapter 1866, Statutes of 1959), known as the Unruh Civil Rights Act, prohibited discrimination in public accommodations.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

SUPPORT: (Verified 7/10/17)

Imperial Valley LGBT Resource Center

OPPOSITION: (Verified 7/10/17)

None received

ARGUMENTS IN SUPPORT: According to the author:

AB 1615 educates and protects small businesses from lawyers who are exploiting California’s Gender Tax Repeal Act of 1995 to obtain quick settlements. These small business owners, who are often immigrants and are unclear about their rights and obligations, settle lawsuits or pay money that is demanded on an informal basis, rather than disputing the allegations and going to court. AB 1615 seeks to educate small businesses about their obligations under the law, as well as their rights to charge different prices for different services and correct notice violations.

Specifically, this bill would require that specified forms and information be attached to a demand letter or complaint. The bill also requires the Department of Consumer Affairs to develop and distribute relevant informational material. It also requires the Judicial Council to develop an advisory and answer form.

This bill will let businesses know exactly what their rights and obligations are under the law so that they are not exploited into agreeing to a settlement even though they may not have violated the law.

ASSEMBLY FLOOR: 69-0, 5/18/17

AYES: Acosta, Travis Allen, Arambula, Baker, Berman, Bigelow, Bloom, Bocanegra, Bonta, Brough, Burke, Caballero, Cervantes, Chávez, Chen, Chiu, Choi, Chu, Cooley, Cooper, Cunningham, Dababneh, Dahle, Daly, Eggman, Flora, Fong, Gallagher, Cristina Garcia, Eduardo Garcia, Gomez, Gonzalez Fletcher, Gray, Grayson, Harper, Irwin, Jones-Sawyer, Kalra, Kiley, Lackey, Levine, Limón, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Muratsuchi, Nazarian, Obernolte, O'Donnell, Patterson, Quirk, Quirk-Silva, Reyes, Ridley-Thomas, Rodriguez, Rubio, Salas, Steinorth, Mark Stone, Thurmond, Ting, Voepel, Waldron, Weber, Wood

NO VOTE RECORDED: Aguiar-Curry, Calderon, Chau, Frazier, Friedman, Gipson, Gloria, Holden, Mullin, Santiago, Rendon

Prepared by:

7/12/17 9:27:45

**** END ****

1. Police: Riverside Attorney Targeted Immigrant Businesses In Extortion Scheme (Apr. 21, 2017) CBSLA <http://losangeles.cbslocal.com/2017/04/21/police-riverside-attorney-targets-immigrant-businesses-in-extortion-scheme/> (as of June 11, 2017). ↑

2. DeAtley, Riverside: Lawyer Sues Small Businesses Alleging Gender Price Discrimination (July 23, 2016) The Press-Enterprise <http://www.pe.com/2016/07/23/riverside-lawyer-sues-small-businesses-alleging-gender-price-discrimination/> (as of June 11, 2017). ↑

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2017-2018 Regular Session

Bill No: AB 1615 (Author:Eduardo Garcia)

Version: April 6, 2017

Hearing Date: June 20, 2017

Fiscal: Yes

Urgency: No

Consultant: TSG

SUBJECT

Gender discrimination: civil actions

DESCRIPTION

This bill would instruct the Department of Consumer Affairs to develop and distribute informational materials describing the rights and obligations of California businesses relating to charging different prices for services based on the gender of the customer being served. In addition, this bill would require anyone bringing a legal claim against a business for gender discriminatory pricing to provide that business with informational materials and a responsive legal pleading form at the outset of the lawsuit.

BACKGROUND

The Unruh Civil Rights Act outlaws, among other things, discrimination based on gender in the provision of public accommodations. (Civ. Code Sec. 51.) The Gender Tax Repeal Act of 1995 more specifically prohibits businesses from charging different rates for similar services based on gender alone. (Civ. Code Sec. 51.6.)

This bill, which would be known as the Small Business Gender Discrimination in Services Compliance Act, would seek to achieve greater compliance with these requirements through two related strategies. First, the bill would try to generate greater awareness among certain businesses of the prohibition against charging different prices based on gender alone by requiring the Department of Consumer Affairs to develop information materials for distribution to those businesses during licensing and inspections. Second, the bill would incentivize rapid compliance by requiring plaintiffs’ attorneys to provide businesses with what effectively amounts to warning and an opportunity to cure the violation before they bring suit.

CHANGES TO EXISTING LAW

Existing law, pursuant to the Unruh Civil Rights Act, prohibits any business establishment from denying any person the full and equal accommodations, advantages, facilities, privileges, or services of the business establishment on the basis of that person’s sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status. (Civ. Code Sec. 51.)

Existing law prohibits a business establishment of any kind from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person’s gender. (Civ. Code Sec. 51.6(b).)

Existing law permits price differences based specifically upon the amount of time, difficulty, or cost of providing the services. (Civ. Code Sec. 51.6(c).)

Existing law provides that a business establishment that discriminates in the pricing of services based on gender is liable for each and every offense for the actual damages, and any amount that may be determined by a jury, or a court sitting without a jury, to a maximum of three times the amount of actual damage but in no case less than four thousand dollars and reasonable attorney's fees. (Civil Code Section 51.6 (d) and Section 52 (a).)

Existing law provides that any business that violates the Unruh Civil Rights Act or engages in gender discriminatory pricing in violation of the Gender Tax Repeal Act of 1995 is liable for each and every offense for the actual damages, and any amount that may be determined by a jury, or a court sitting without a jury, to a maximum of three times the amount of actual damage but in no case less than four thousand dollars and reasonable attorney's fees. (Civ. Code Secs. 51.6(d) and 52(a).)

Existing law requires the following businesses to clearly and conspicuously disclose and post pricing lists, as specified:

• tailors or businesses providing aftermarket clothing alterations;
• barbers and hair salons;
• dry cleaners and laundries that provide services to individuals. (Civ. Code Sec. 51.6 (f)(1)-(3).)

Existing law requires tailors, businesses providing aftermarket clothing alterations, barbers, hair salons, dry cleaners, and laundries that provide services to individuals to display in a conspicuous place at least one clearly visible sign, printed in no less than 24-point bold face type, which reads: “California law prohibits any business establishment from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. A complete price list is available upon request.” The bill would subject any business that fails to correct a posting or price list violation within 30 days of receiving written notice of the violation to liability for a civil penalty of $1,000. (Civil Code Section 51.6 (f) (4)-(5).)

This bill would require the Judicial Council, on or before January 1, 2019, to adopt the written advisory notice for businesses informing them of their rights and obligations under the Gender Tax Repeal Act of 1995, a statute that prohibits gender discrimination in the pricing of services. The advisory notice would be available in multiple, specified languages.

This bill would require the Judicial Council, on or before January 1, 2019, to develop and adopt a verified answer form that businesses can use to respond to demand letters or lawsuits against them that are based on allegations of violating the General Tax Repeal Act. The answer form would have to be written in clear and concise language and would have to provide instructions to the defendant on how to file the form as an answer to the complaint.

This bill would require the Department of Consumer Affairs to develop a pamphlet and informational material for use by tailors, businesses providing aftermarket clothing alterations, barbers, hair salons, dry cleaners, and laundries providing services to individuals. The pamphlet and informational material would explain businesses’ legal rights and obligations under the Gender Tax Repeal Law of 1995 in clear and concise language. The Department would be required to provide the pamphlet or other informational materials to the affected businesses at the time of licensing, licensing renewals, inspections, or all of the above. The Department would also be required to post the pamphlet or other informational materials on its Internet web site.

This bill would require an attorney to provide the following items together with any demand letter or complaint alleging gender discrimination in the pricing of services:

• a copy of the advisory notice regarding businesses’ rights and obligations under the Gender Tax Repeal Act. Until such time as the Judicial Council adopts the formal advisory notice, the attorney shall provide a written statement, as specified;
• a blank copy of the verified answer form adopted by the Judicial Council; and
• a copy of a pamphlet or other informational materials created by the Department of Consumer Affairs.

COMMENT

1. Stated need for the bill

According to the author:

AB 1615 educates and protects small businesses from lawyers who are exploiting California’s Gender Tax Repeal Act of 1995 to obtain quick settlements. These small business owners, who are often immigrants and are unclear about their rights and obligations, settle lawsuits or pay money that is demanded on an informal basis, rather than disputing the allegations and going to court. AB 1615 seeks to educate small businesses about their obligations under the law, as well as their rights to charge different prices for different services and correct notice violations.

Specifically, this bill would require that specified forms and information be attached to a demand letter or complaint. The bill also requires the Department of Consumer Affairs to develop and distribute relevant informational material. It also requires the Judicial Council to develop an advisory and answer form.

This bill will let businesses know exactly what their rights and obligations are under the law so that they are not exploited into agreeing to a settlement even though they may not have violated the law.

2. Examples of the problem the bill seeks to address

The author of the bill reports that a handful of unscrupulous attorneys have utilized the Gender Tax Repeal Act in unexpected and unintended ways. According to the author, these attorneys target small, immigrant-owned businesses and proceed to allege that the business has violated the law by charging different prices to men and women for a service of “a similar or like kind.” The attorneys then demand that the business pay the attorneys to settle the case. Otherwise, the attorneys threaten, they will sue the businesses in court.

There is, indeed, at least one well-publicized case of this happening. According to media reports based on police statements, between April and June 2016, an attorney in Riverside, California initiated legal disputes with 11 small businesses, all under either Asian or Latino ownership, apparently following the same general pattern in each instance.^[1]

First, the attorney sent his wife into the business to request a particular service, such as a haircut at a hair salon. Shortly thereafter, the attorney himself entered the business and asked for the same service. A few days later, if he had been charged less for the service than his wife, the attorney would deliver court documents to the business on behalf of his wife as his client. The documents accused the business of violating California civil rights laws prohibiting gender discrimination, including the Gender Tax Repeal Act. For example, one lawsuit alleged an $8 difference in haircuts for men and women. Another lawsuit against a dry cleaner claimed a $2 difference between cleaning a woman’s blouse and a man’s shirt. Based on these types of violations, the attorney demanded anywhere from $20,000 to $123,000 in penalties, but offered to settle the case for just $10,000.

A police investigation ensued. In the meantime, several of the businesses obtained legal counsel and even organized protests outside the attorney’s law offices. On April 20, 2017, the attorney and his wife were arrested on charges of extortion and burglary.

The attorney has defended his actions on the grounds that he is helping to stop gender based pricing discrimination as the law is intended to do. “These lawsuits do help eradicate invidious discrimination based on sex,” he is reported to have said. Regarding the allegation that he targeted small businesses, the attorney is quoted as responding that: “[t]he corporate entities we visited tend to follow the law.”^[2]

The author believes that this bill will provide small businesses with essential information that will allow them to better comply with the law and, at the same time, facilitate the ability of small business owners to respond in court when they are accused of violations.

3. Reasons for the focus on specific types of businesses

Under the Gender Tax Repeal Act of 1995, California businesses may not charge different prices for substantially similar services on the basis of the customer’s gender. The rule applies to all businesses, but it was targeted most specifically at certain industries, hair, laundry, and dry cleaning services in particular, based on reports that those businesses charged men and women different prices for substantially the same service. (See, Senate Judiciary Committee Analysis to AB 1100, Speier, Ch. 866, Stats.1995, p. 3.)

4. Unintended consequences of using a Judicial Council forms in this context

Over the years, the Judicial Council has developed a number of legal forms intended to facilitate and streamline the legal process, particularly for litigants who are proceeding without an attorney, and might not otherwise be familiar with the format and content required for certain court documents. The use of these forms is mandatory in some instances and optional in others. The full set of these forms is available online at the Judicial Council’s Web site.

While there are forms for a general denial (PLD-050), forms for an answer to a personal injury, property damage, or wrongful death complaint (PLD-PI-003), forms for replying to an eviction lawsuit (UD-050), and forms for responding to a breach of contract claim (PLD-C-010). Committee staff is aware of only one form, DAL-002, that serves a similar function to the form contemplated by this bill: responding to a very specific type of civil rights complaint. There may be good reason for this.

On the one hand, as against a lawsuit narrowly limited to allegations that the business has violated the Gender Tax Repeal Act, such a form might indeed make it simpler and cheaper for the business to defend itself. Yet such a lawsuit would be exceedingly rare: any demand or complaint alleging a violation of the Gender Tax Repeal Act is likely to contain additional causes of action as well, most obviously a violation of the Unruh Civil Rights Act prohibiting discrimination based on gender. The complaint would probably also contain a cause of action under the Unfair Competition Law (Bus. & Prof. Code Sec. 17200 et seq.) and very possibly a good many other things. Providing a small business confronting such a lawsuit with a simple form that encourages the defendant to complete it and file it with the court would be profoundly misleading, since it would leave the other causes of action unaddressed.

Moreover, as appealing as it might sound in theory to bypass the hassle and expense associated with obtaining legal counsel in the face of a lawsuit that seems frivolous, in practice, encouraging a business simply to fill out and file a legal pleading on its own, without the benefit of legal assistance, might frequently do the business more harm than good. Even a form spelling out all of the defenses available to the business under the statute, as the form proposed by this bill would do, will miss out on numerous other potential defenses and even counter-claims that the business owner might have and to which the business would be alerted by competent counsel.

Finally, even if filling out and filing a form answer in response to a civil lawsuit would protect a small business against a default judgment, it would not stop the lawsuit from proceeding to its next phase; a raft of discovery or a motion for judgment on the pleadings is almost sure to follow.

5. Proposed Amendments

This bill contains two elements. The first is the development and distribution of informational materials in a variety of languages common throughout California, with the aim of spreading greater awareness about the requirements of the Gender Tax Repeal Act. This element has dual policy advantages. It would engender greater compliance among businesses by alerting those who may not have known of the laws on account of language barriers or simply because the laws had not previously come to their attention. At the same time, by educating businesses on what pricing practices are permissible, it should make it harder for unscrupulous attorneys to bluff their way to unwarranted settlements.

The second element of this bill is the creation of a Judicial Council form for use in answering lawsuits based on the Gender Tax Repeal Act and a requirement that this form accompany any demand letter or complaint that demands remedies under the Gender Tax Repeal Act. For the reasons set forth in this analysis, such a form, while well-intended, presents a number of possible problems. With that in mind, the Committee may wish to amend the bill in print as follows:

Amendment 1

On page 6, in line 4, strike out “paragraph (1) of”

Amendment 2

On page 6, in line 6, strike out “paragraph (1) of”

Amendment 3

On page 6, strike out lines 8 and 9, in line 10, strike out “(3)” and insert:

(2)

Amendment 4

On page 6, in line 13, strike out “(1)”

Amendment 5

On page 8, strikes out lines 18 to 40, inclusive, and on page 9, strike out lines 1 to 4, inclusive

Amendment 6

On page 18, in line 32, strike out “of the Civil Code”

Amendment 7

On page 19, in line 1, strike out “subdivision (f),” and insert:

subdivision (f) of Section 51.6

Support: Imperial Valley LGBT Resource Center

Opposition: None known

HISTORY

Source: Author

Related Pending Legislation:

AB 1576 (Levine, 2017) would extend the existing prohibition on gender-based discriminatory pricing of services, to goods as well. AB 1576 is currently on the Assembly Floor inactive file.

Prior Legislation:

SB 899 (Hueso, 2016) would have extended the existing prohibition on gender-based discriminatory pricing of services, to certain goods as well. SB 899 died in the Assembly Committee on the Judiciary.

AB 1088 (Jackson, Chapter 312, Statutes of 2001) added provisions to the Gender Tax Repeal Act requiring certain businesses to post price lists and notification of the prohibition on gender-based pricing discrimination.

AB 1100 (Speier, Chapter 866, Statutes of 1995) enacted the Gender Tax Repeal Act which prohibited discriminatory pricing on the basis of gender.

AB 594 (Unruh, Chapter 1866, Statutes of 1959), known as the Unruh Civil Rights Act, prohibited discrimination in public accommodations.

Prior Vote:

Assembly Floor (Ayes 69, Noes 0)

Assembly Appropriations Committee (Ayes 17, Noes 0)

Assembly Judiciary Committee (Ayes 8, Noes 0)

**************

1. Police: Riverside Attorney Targeted Immigrant Businesses In Extortion Scheme (Apr. 21, 2017) CBSLA <http://losangeles.cbslocal.com/2017/04/21/police-riverside-attorney-targets-immigrant-businesses-in-extortion-scheme/> (as of June 11, 2017). ↑

2. DeAtley, Riverside: Lawyer Sues Small Businesses Alleging Gender Price Discrimination (July 23, 2016) The Press-Enterprise <http://www.pe.com/2016/07/23/riverside-lawyer-sues-small-businesses-alleging-gender-price-discrimination/> (as of June 11, 2017). ↑

Date of Hearing: May 10, 2017

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez Fletcher, Chair

ABPCA Bill Id:AB 1615

Author:(Eduardo Garcia) – As Amended Ver:April 6, 2017

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

SUMMARY:

This bill makes various requirements related to civil complaints alleging gender discrimination in the pricing of services. Specifically this bill:

1. Requires an attorney to attach specified forms when sending a demand letter or serving a complaint that alleges gender discrimination in the pricing of services.
2. Requires the Judicial Council to adopt a written advisory notice that provides information about the defendant's legal rights and obligations under the Gender Tax Repeal Act of 1995, a statute that prohibits gender discrimination in the pricing of services. The advisory notice must be available in specified languages. This bill also requires Judicial Council to adopt a verified answer form providing instructions to the defendants on how to use the form as an answer to the complaint. Both the notice and answer form must be adopted by Judicial Council on or before January 1, 2019.
3. Requires the Department of Consumer Affairs (DCA) to develop a pamphlet or other informational materials by specified businesses that provide services to individuals. The pamphlet and informational material must explain a business' legal rights and obligations under the Gender Tax Repeal Law of 1995 in clear and concise language. This bill also requires DCA to provide the pamphlet or other informational materials to businesses, as specified, and requires the department to post the pamphlet or other informational materials on its internet website.

FISCAL EFFECT:

1. Costs to Judicial Council in the tens of thousands of dollars to develop the required advisory notice and verified answer form.
2. Minor and absorbable costs to DCA to develop the required pamphlet or informational materials and distribute them.

COMMENTS:

1. Background. Existing law prohibits a business establishment of any kind from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. However, nothing in this provision prohibits price differences based specifically upon the amount of time, difficulty, or cost of providing the services.
2. Purpose. According to the author, it can be unclear whether a service provided to men and women is sufficiently "similar or of like kind" to require the same price to be charged for the service. The author claims that some lawyers and plaintiffs exploit this ambiguity, often targeting small, immigrant-owned businesses that are not always familiar with the law, in order to obtain quick settlements. The author contends that many of these businesses have not violated the law because the law allows them to charge different prices based upon the genuine differences in the service provided. However, when business owners are unclear about their rights and obligations, they may settle these lawsuits or pay money that is demanded on an informal basis, rather than disputing the allegations and going to court. This bill seeks to educate small businesses about their obligations under the law, as well as their rights to charge different prices and correct notice violations, when appropriate.

Analysis Prepared by: Jessica Peters / APPR. / (916) 319-2081

Date of Hearing: April 4, 2017

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

ABPCA Bill Id:AB 1615

Author:(Eduardo Garcia) – As Introduced Ver:February 17, 2017

As Proposed to be Amended

SUBJECT: Gender discrimination: pricing of services: civil actions

KEY ISSUES:

1. Should informational materials ABOUT a state law prohibIting gender discriminaiton in the pricing of services, and self-help forms that faciliate a response to a civil complaint, be developed and be requried to be provided to businesses that are sued for violations of this law?
2. should an attorney who sends a demand letter or serves a complaint alleging gender discriminatIon in the pricing of services BE REQUIRED TO provide the recipient of the letter or complaint with an advisory notice, answer form, and related information that explains defendant's rights and obligations under the law?

SYNOPSIS

California's Gender Tax Repeal Act of 1995 (Act) prohibits a business from charging different prices for substantially similar services on the basis of the customer's gender. Although the ban on gender-based pricing discrimination applies to all businesses, the legislation was prompted by reports that barbers, hair salons, and dry cleaners charged men and women different prices for the same service. For example, many dry cleaners reportedly charged more to clean a woman's "blouse" than a man's "shirt," while many barbers and hair salons allegedly charged more to cut women's hair than men's hair. The Act recognizes that clothing and hairstyles of women and men often differ. As such, the Act expressly allows price differences based upon "the amount of time, difficulty, or cost or providing the service." In addition to prohibiting gender-based price discrimination, the Act also requires certain businesses (tailors, barbers and hair salons, and dry cleaners and laundries that service individuals) to conspicuously disclose pricing lists to customers and to post, where customers are likely to see it, a prescribed statement declaring that gender-based pricing discrimination in services is prohibited by California law. According to the author, it is unclear whether a service provided to men and women is sufficiently "similar or of like kind" to require the same price to be charged for the service. The author claims that some lawyers and plaintiffs exploit this ambiguity, often targeting small, immigrant-owned businesses that are not always familiar with the Act, in order to obtain quick settlements. The author contends that many of these businesses have not violated the law because the law allows them to charge different prices based upon the genuine differences in the service provided. However, when business owners are unclear about their rights and obligations, they settle these lawsuits or pay money that is demanded on an informal basis, rather than disputing the allegations and going to court. This bill seeks to educate small businesses about their obligations under the law, as well as their rights to charge different prices and correct notice violations, when appropriate. Specifically, the bill would require that specified forms and information be attached to a demand letter or complaint. The bill also requires the Department of Consumer Affairs to develop and distribute relevant informational material. It also requires the Judicial Council to develop an advisory and answer form, advising businesses of their rights and obligations, and facilitating an answer to a lawsuit. There is no opposition to this sensible, educational approach. The author wishes to take amendments today in this Committee. The summary and analysis below reflect those amendments.

SUMMARY: Requires an attorney to attach specified forms when sending a demand letter or serving a complaint that alleges gender discrimination in the pricing of services and requires the Judicial Council and Department of Consumer Affairs to develop forms and materials, accordingly. Specifically, this bill:

1. Requires an attorney to provide the following items to any demand letter or complaint that alleges gender discrimination in the pricing of services:
   1. A copy of a written advisory notice, as specified. Until such time as the Judicial Council adopts a formal advisory notice, the attorney shall provide a written statement, as specified.
   2. A verified answer form, as specified.
   3. A copy of a pamphlet or other informational materials created by the Department Consumer Affairs.
2. Requires the Judicial Council, on or before January 1, 2019, to adopt the written advisory notice referenced in 1) a) above. The advisory notice shall be available in specified languages and provide information about the defendant's legal rights and obligations under the Gender Tax Repeal Act of 1995, a statute that prohibits gender discrimination in the pricing of services.
3. Requires the Judicial Council, on or before January 1, 2019, to adopt the verified answer form referenced in 1) b) above. The answer form shall be written in clear and concise language and shall provide instructions to the defendant on how to file the form as an answer to the complaint.
4. Requires the Department of Consumer Affairs to develop a pamphlet or other informational materials, referenced in 1) c) above, for use by tailors and businesses providing aftermarket clothing alterations, barbers and hair salons, and dry cleaners and laundries providing services to individuals. The pamphlet and informational material shall explain a business' legal rights and obligations under the Gender Tax Repeal Law of 1995 in clear and concise language. Requires the department to provide the pamphlet or other informational materials to businesses, as specified, and requires the department to post the pamphlet or other informational materials on its Internet website.

EXISTING LAW:

1. Prohibits, under the Unruh Civil Rights Act, any business establishment from denying any person the full and equal accommodations, advantages, facilities, privileges, or services of the business establishment on the basis of that person's sex, race, color, religion, ancestry, national origin, disability, medical condition, genetic information, marital status, sexual orientation, citizenship, primary language, or immigration status. Provides that any business that violates this provision is liable for each and every offense for the actual damages, and any amount that may be determined by a jury, or a court sitting without a jury, to a maximum of three times the amount of actual damage but in no case less than four thousand dollars and reasonable attorney's fees. (Civil Code Sections 51 and 52 (a).)
2. Prohibits a business establishment of any kind from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. Specifies, however, that nothing in this provision prohibits price differences based specifically upon the amount of time, difficulty, or cost of providing the services. (Civil Code Section 51.6 (b) and (c).)
3. Provides that a business establishment that violates 2) above is liable for each and every offense for the actual damages, and any amount that may be determined by a jury, or a court sitting without a jury, to a maximum of three times the amount of actual damage but in no case less than four thousand dollars and reasonable attorney's fees. (Civil Code Section 51.6 (d) and Section 52 (a).)
4. Requires the following businesses to clearly and conspicuously disclose and post pricing lists, as specified:
   1. Tailors or businesses providing aftermarket clothing alterations.
   2. Barbers and hair salons.
   3. Dry cleaners and laundries that provide services to individuals. (Civil Code Section 51.6 (f)(1)-(3).)
5. Requires business establishments described in 4) above to display in a conspicuous place at least one clearly visible sign, printed in no less than 24-point bold face type, which reads: "California law prohibits any business establishment from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. A complete price list is available upon request." Specifies that a business that fails to correct a posting or price list violation within 30 days of receiving written notice of the violation is liable for a civil penalty of $1000. (Civil Code Section 51.6 (f) (4)-(5).)

FISCAL EFFECT: As currently in print this bill is keyed fiscal.

COMMENTS: California's Gender Tax Repeal Act of 1995 (Act) prohibits a business establishment from charging different prices for substantially similar services on the basis of the customer's gender. Although the Act's ban on gender-based pricing discrimination applies to all businesses, the legislation was prompted by reports that barbers, hair salons, and dry cleaners charged men and women different prices for substantially the same service. For example, many dry cleaners allegedly charged more to clean a woman's "blouse" than they charged to clean a man's "shirt." Barbers and hair salons allegedly charged more to cut women's hair than to cut men's hair, even where the service provided was almost identical. The Act recognizes that women's and men's clothes do sometimes differ, as do women's and men's hairstyles. As such, the Act expressly allows price differences based upon "the amount of time, difficulty, or cost or providing the service." In addition to prohibiting gender-based price discrimination, the Act also requires certain businesses (tailors, barbers and hair salons, and dry cleaners and laundries that service individuals) to conspicuously disclose pricing lists to customers and to post, where customers are likely to see it, a prescribed statement declaring that gender-based pricing discrimination in services is prohibited by California law.

Remedies under the Gender Tax Repeal Act: As noted above, the existing Gender Tax Repeal Act envisions two types of violations, each with its respective remedies. First, the Act prohibits any business establishment from engaging in gender-based pricing discrimination as defined by the Act. The remedies for a violation of this provision are the same as those provided for violations of the Unruh Civil Rights Act. Specifically, a business establishment that violates this provision is liable for actual damages, and any amount that may be determined by a court or jury, up to a maximum of three times the amount of actual damage, but in no case less than $4,000 and reasonable attorney's fees. Because the demonstrable "actual damage" is likely quite small – the difference between the price of the service – the practical effect of this rule ensure that a violator will be liable for not less than $4,000 for each violation.

In addition, the Act requires certain businesses – tailors, barbers and hair salons, and dry cleaners and laundries that service individuals – to disclose to the customer a written price list that designates the price of each "standard" service (defined as the 15 most frequently requested services). The price list must be posted in a conspicuous place in no less than 14-point boldface type. The business establishment must also provide the customer with a complete written list upon request. In addition to posting and providing a price list, the business must also conspicuously post, in no less than 24-point boldface type, a sign that reads as follows: "California law prohibits any business establishment from discriminating, with respect to the price charged for services of similar or like kind, against a person because of the person's gender. A complete price list is available upon request." Unlike a violation of the Act's provision generally prohibiting pricing discrimination, a business that violates the disclosure and posting requirements has the opportunity to correct the violation within 30 days of receiving written notice of the violation. A business that fails to correct that violation within 30 days is subject to a civil penalty of $1,000.

According to the author, a handful of unscrupulous attorneys have targeted small, often immigrant-owned businesses by alleging that they violated the law by charging different prices to men and women for a service of "a similar or like kind." In one well-publicized case, a male attorney sends his girlfriend (who later became his wife) into a hair salon for a haircut. The attorney then goes into the hair salon himself for the haircut. If he is charged a different price, he issues a demand letter threatening to sue the business for violating the law and, if this does not produce a settlement payment, he serves and files a complaint. The attorney has done the same with several dry cleaning businesses. The author contends that in many instances the different prices charged reflected real differences in time, difficulty, and cost of providing the services. However, because the attorney targets small, often immigrant-owned businesses that are not always aware of their rights and obligations under the law, the businesses settle, often for thousands of dollars.

The author believes that this measure will provide small businesses with essential information that will allow them to better comply with the law and, as important, allow them to more confidently resist the pressure tactics of an unscrupulous lawyer attempting to exploit their lack of knowledge. Specifically, this bill requires an attorney that sends a demand letter or serves a complaint alleging gender-based pricing discrimination to include three additional items with the letter or complaint: a Judicial Council advisory notice that explains the business' rights and obligations under the law; a verified Judicial Council answer form that the defendant can use to file an answer to the complaint; and, once it is developed, a pamphlet or other informational materials developed by the Department of Consumer Affairs (DCA). The bill requires that the Judicial Council and DCA, on or before January 1, 2019, develop and approve these respective forms. As for the advisory notice, until the Judicial Council adopts the form, the bill requires the attorney to provide an equivalent statement to the defendant or potential defendant.

Proposed Author Amendments: As currently in print this bill would create a complex formula for discouraging potentially meritless gender-based pricing discrimination claims by modeling recent legislation relating to complaints alleging failure to comply with construction-related accessibility standards. In addition to requiring that specified forms be attached to a summons and complaint, the in-print version of this bill would also require an "early evaluation conference" and allow a defendant to seek a 90-day stay of the action with an opportunity to correct the violation. Also, like the construction-related accessibility statute, the bill in print would impose additional restrictions on a "high frequency litigant" – defined as a plaintiff who has filed 10 or more complaints in a 12-month period.

However, because construction-related accessibility defects and the resulting consequences of a violation are significantly different and arguably more complex than pricing discrimination or a violation of posting requirements, the author decided to scuttle the approach reflected in the bill as introduced and replace it with the approach set forth in this analysis. The amendments taken in this Committee, therefore, substantially amend or delete most of the substantive provisions of the bill in print, as follows:

SECTION 1. Part 2.55 (commencing with Section 55.61) is added to Division 1 of the Civil Code, to read:

PART 2.55. Small Business Gender Discrimination Compliance in Services Act

55.61. This part shall be known, and may be cited, as the Small Business Gender Discrimination in Services Compliance Act.  Notwithstanding any other law, the provisions of this part shall apply to any gender discrimination claim based wholly or in part on an alleged price difference charged based on charged for services of similar or like kind, against a person because of the person’s gender, including, but not limited to, any claim brought under Section 51 or 51.6.

55.62. (a) For purposes of this part, the following definitions apply:

(1) “Gender discrimination in pricing services claim” means any civil claim in a civil action with respect to a business establishment, including, but not limited to, a claim brought under Section 51 or 51.6, based wholly or in part on an alleged price difference charged based on charged for services of similar or like kind, against a person because of the person’s gender.

(2) “Application for stay and early evaluation conference” means an application to be filed with the court that meets the requirements of subdivision (c) of Section 55.63.

(3) “Small business defendant” means a defendant who is a small business described in subdivision (b) of Section 55.66, and who declares that all violations have been corrected, or will be corrected, within 30 days of being served with the gender discrimination complaint.

(b) Unless otherwise indicated, terms used in this part relating to civil procedure have the same meanings that those terms have in the Code of Civil Procedure.

(2) “Demand letter” means a pre-litigation written document that is provided to a business alleging gender discrimination in pricing services claim and demanding money, whether or not the attorney intends to file a complaint, or eventually files a complaint, in state court.

56.63 (a) (1) (b) An attorney shall provide the following items with each demand letter or complaint sent to or served upon a defendant or potential defendant alleging gender discrimination in pricing services, including, but not limited to, a claims brought pursuant to Section 51 or 51.6:

1. A copy of the written advisory notice as specified in paragraph (1) of subdivision (c). Until such time as the Judicial Council adopts this notice, the attorney shall provide a written statement that replicates in the advisory notice described in paragraph (1) of subdivision (c).
2. A verified answer form as specified in paragraph (2) of subdivision (c).
3. A copy of the pamphlet or other informational material specified in Section 55.63, after the pamphlet or material is developed by the Department of Consumer Affairs.

(c) On or before January 1, 2019, the Judicial Council shall adopt the following:

1. A written advisory notice that shall be used by a plaintiff's attorney to comply with the requirements of paragraph (1) of subdivision (b). The advisory form shall be available in English, Spanish, Chinese, Vietnamese, and Korean, and shall include a statement that the advisory form is available in additional languages, and the Judicial Council Internet web address where the different versions of the advisory form are located. The advisory notice shall state the following:

ADVISORY NOTICE TO DEFENDANT

STATE LAW REQUIRES THAT YOU GET THIS IMPORTANT ADVISORY INFORMATION FOR BUSINESSES

This information is available in English, Spanish, Chinese, Vietnamese, and Korean through the Judicial Council of California. Persons with visual impairments can get assistance in viewing this form through the Judicial Council Internet Web site at www.courts.ca.gov.

California law requires that you receive this information because the demand letter or court complaint you received with this document claims that you have discriminated, with respect to the price charged for services of similar or like kind, against a person because of that person’s gender.

YOU HAVE IMPORTANT LEGAL OBLIGATIONS. State law requires that businesses charge the same price for the same services, or services of the same or similar kind, regardless of the customer’s gender. In addition, state law requires that certain business establishments clearly and conspicuously disclose to their customers in writing the pricing for each standard service provided. The posting requirement applies to the following businesses:

(1) Tailors or businesses providing aftermarket clothing alterations.

(2) Barbers or hair salons.

(3) Dry cleaners and laundries providing services to individuals.

YOU HAVE IMPORTANT LEGAL RIGHTS. The allegations made in the accompanying demand letter or court complaint do not mean that you are required to pay any money unless and until a court finds you liable. Moreover, RECEIPT OF A DEMAND LETTER OR COURT COMPLAINT AND THIS ADVISORY DOES NOT NECESSARILY MEAN YOU WILL BE FOUND LIABLE FOR ANYTHING.

You have the right to seek assistance or advice about this demand letter or complaint from any person of your choice. If you have insurance, you may also wish to contact your insurance provider. Your best interest may be served by seeking legal advice or representation from an attorney, but you may also represent yourself and file the necessary court papers to protect your interests if you are served with a court complaint. If you have hired an attorney to represent you, you should immediately notify your attorney.

ADDITIONAL THINGS YOU SHOULD KNOW

WHEN YOU CAN AND CANNOT CHARGE DIFFERENT PRICES: The Gender Tax Repeal Act of 1995 (California Civil Code Section 51.6) prohibits a business from charging a different price for the same service because of the gender of person receiving the service. However, you may charge different prices based specifically upon the amount of time, difficulty, or cost of providing the services.

POSTING PRICES: The Gender Tax Repeal Act of 1995 also requires that certain businesses clearly disclose to the customer in writing the price of each standard service provided. This pricing disclosure is required for the following businesses: tailors or businesses providing aftermarket clothing alterations; barbers or hair salons; dry cleaners and laundries providing service to individuals. The price list must be posted in a place where customers will likely see it and it must be in no less than 14-point boldface font. A business must also provide a written copy of the prices to the customer if one is requested by the customer. Finally, a business must clearly and conspicuous display a sign, in no less than 24-point font, that reads:

"CALIFORNIA LAW PROHIBITS ANY BUSINESS ESTABLISHMENT FROM DISCRIMINATING, WITH RESPECT TO THE PRICE CHARGED FOR SERVICES OF SIMILAR OR LIKE KIND, AGAINST A PERSON BECAUSE OF THE PERSON’S GENDER. A COMPLETE PRICE LIST IS AVAILABLE UPON REQUEST.”

RIGHT TO CORRECT A POSTING VIOLATION ONLY: If you receive a written notice claiming that you have failed to properly post any of the above information, you have 30 days to correct the violation. If you fail to correct the violation you will be liable for a civil penalty of $1,000. (Note that the 30-day period to correct applies only to posting violations, not to discriminatory pricing violations.)

1. A verified answer form shall be approved by the Judicial Council on or before January 1, 2019, that shall be used by the plaintiff's attorney to comply with paragraph (2) of subdivision (b), on which a defendant may respond to the complaint in the event a complaint is filed. The answer form shall be written in plain language and allow the defendant to state any relevant information affecting the defendant’s liability or damages including, but not limited to, the following:

(A) Specific denials of the allegations in the complaint, including whether the plaintiff has demonstrated that.

(B) Potential affirmative defenses available to the defendant, including:

(i) That any difference in price was not based on the gender of the customer but on the time, difficulty, or cost of providing the service.

(ii) That the services were not of similar or like kind.

1. That the business disclosed a price list and sign in the manner prescribed in subdivision (f) of Section 51.6
2. That the business provided plaintiff with a price list upon request in the manner prescribed in subdivision (f) of Section 51.6
3. Any other affirmative defense the defendant wishes to assert.
4. The verified answer form shall provide instructions to a defendant about how to file the form as an answer to the complaint. The form shall also notify the defendant that he or she may use the completed form as an informal response to a demand letter or for settlement discussion purposes.
5. The Judicial Council shall post the answer form on the Judicial Council Internet Web site.

(d) This section does not apply to an action brought by the Attorney General or any district attorney, city attorney, or county counsel.

Section 55.63. (a) On or before January 1, 2019, the Department of Consumer Affairs shall develop a pamphlet or other informational materials for use by the following business establishments: tailors and businesses providing aftermarket clothing alterations; barbers and hair salons; and dry cleaners and laundries providing services to individuals. The pamphlet shall explain the business' rights and obligations under Civil Code Section 51.6 in clear and concise language. Specifically, the pamphlet must explain that the business is prohibited from charging different prices for services of similar or like kind based on the customers gender, unless the price difference is based upon the amount of time, difficulty, or cost of providing the services; that the business disclose a price list and sign in the manner prescribed in subdivision (f) of Section 51.6. The pamphlet should explain that a business has 30 days to correct any violation of the posting requirements in subdivision (f), and that a business that fails to correct within 30 days of receiving notice of the violation will be subject to a civil penalty of $1000. The department may include any other information that would help the business comply with Section 51.6.

(b) The department shall provide the pamphlet or other information materials required by paragraph (1) to an affected business establishment at the time that the business establishment applies for or renews a license, or it should be provided to a business establishment at the time of any inspection, or at both times. The department shall post a copy of the pamphlet or other informational materials on its Internet website.

REGISTERED SUPPORT / OPPOSITION:

Support

None on file

Opposition

None on file

Analysis Prepared by: Thomas Clark / JUD. / (916) 319-2334