Date of Hearing: August 14, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

SBPCA Bill Id:SB 171

Author:(Jackson) – As Amended Ver:July 5, 2019

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

SUMMARY:

This bill requires certain employers to submit a report each year to the Department of Fair Employment and Housing (DFEH) with pay data for specified job categories broken down by race, ethnicity and sex. Specifically, this bill:

1. Requires, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer with at least 100 employees that is required to submit a federal Equal Employment Opportunity Commission (EEOC) Employer Information Report (EEO-1) to submit a similar pay data report to DFEH. This report must include the number of employees, by demographic characteristic, in specified job categories and the number of employees by demographic characteristic in each of the pay bands used by the Occupational Employment Statistics (OES) survey as well as the number of employees by demographic characteristics in specified occupational types.
2. Provide that if an employer submits to the DFEH a copy of its EEO-1 report containing the same or substantially similar pay data required under this section, then the employer is in compliance.
3. Prohibits any DFEH employee or officer from making public any identifiable information obtained prior to the institution of an investigation or enforcement proceeding under California’s Equal Pay Act or the anti-discrimination provision of the Fair Employment and Housing Act.
4. Permits DFEH to develop and publicize aggregate reports based on the data obtained from employers, provided DFEH generates these reports to prevent association of any data with an individual or business.

FISCAL EFFECT:

Significant ongoing General Fund costs to DFEH in the range of $1 million to $5 million to implement a new data collection system, including making the necessary hardware and IT upgrades, and to continue managing this data collection process.

COMMENTS:

1. Background. The EEOC, for decades, has required employer submission of workforce demographic information to help it administer and enforce anti-discrimination laws in employment. In 2016, the Obama Administration announced its intent to revise the reporting rule to also require the submission of employee pay data by race and gender beginning in 2018. In August 2017, the federal Office of Management and Budget halted implementation of the proposed rule and initiated an extensive review process of all proposed revisions. In March 2019, a federal court lifted the stay on implementation of the revised reporting rule, noting that OMB lacked a reasonable explanation for blocking the rule. While the March ruling is under appeal by the Department of Justice, the EEOC’s current position is that employers are expected to submit the revised EEO-1 Report, effective May 31, 2019.
2. Purpose. According to supporters, this bill allows appropriate state agencies to more efficiently identify patterns of wage disparities. Moreover, supporters note this bill will help employers analyze their own pay practices and help promote internal change in pay practices.
3. The OES database. SB 171’s data reporting requirement relies heavily on the Bureau of Labor Statistics’ OES database. The OES program produces employment and wage estimates annually for over 800 occupations at the state and national level. The survey is the only comprehensive source of regularly collected wage rate information across occupations, and each year’s dataset uses data collected at different points in time. For example, the May 2018 OES release reflects data collected in November 2015, May 2016, November 2016, May 2017, November 2017, and May 2018.
4. This data could be valuable. Opponents correctly note this bill requires employers to submit pay data that does not align with current state standards around pay equality and pay discrimination. Existing law prohibits employers from paying an employee less than an employee of the opposite sex for “substantially similar” work, except when the wage differential is based on factors such as seniority, a merit system or other bona fide factors. This bill’s data will not reflect these nuances and will not consider factors such as seniority or merit. Moreover, this bill’s job categories do not show “substantially similar” work: OES’ job categories are broad and encompass a variety of employees with differing tasks and responsibilities.

Despite the above considerations, this bill’s pay data could still be valuable for both state agencies and employers. This data will not show evidence of explicit wage discrimination and should not be used for this purpose. However, the collected data can provide insight into hiring or promotion practices that perpetuate ongoing pay disparities in the workplace. For example, this data could show a clustering of women employees just below the median wage of a mid-level management position and men just above the median, or it could show a clustering of male employees in certain high-paying occupations.

1. Recent legislation. SB 1284 (Jackson), of the 2017-18 Legislative Session, was substantially similar to this bill and was held on this committee’s Suspense File.

Analysis Prepared by: Luke Reidenbach / APPR. / (916) 319-2081

Date of Hearing: July 2, 2019

ASSEMBLY COMMITTEE ON JUDICIARY

Mark Stone, Chair

SBPCA Bill Id:SB 171

Author:(Jackson) – As Amended Ver:April 9, 2019

As Proposed to be Amended

SENATE VOTE: 28-9

SUBJECT: EMPLOYERS: ANNUAL REPORT: PAY DATA

KEY ISSUES:

1. IN ORDER TO ADDRESS LONGSTANDING PROBLEMS OF PAY DISPARITY AND INEQUITY, SHOULD LARGE EMPLOYERS (WHO EMPLOY 100 OR MORE PERSONS) BE REQUIRED TO REPORT TO THE DEPARTMENT OF FAIR EMPLOYMENT AND HOUSING (DFEH) INFORMATION ABOUT THEIR EMPLOYEES’ PAY, AS WELL AS INFORMATION ABOUT THEIR GENDER, ETHNICITY, AND RACE?
2. SHOULD INFORMATION REPORTED TO DFEH PURSUANT TO THE BILL’S REQUIREMENTS BE CONSIDERED CONFIDENTIAL AND EXEMPT FROM DISCLOSURE PURSUANT TO THE CALIFORNIA PUBLIC RECORDS ACT?

SYNOPSIS

This bill seeks to further the goal of achieving pay equity in California by requiring large employers (those with 100 employers or more) to submit data about their employees’ pay, broken down in specified job categories and including the number of employees by race, ethnicity and sex with annual earnings, to the California Department of Fair Employment and Housing (DFEH). The information that the bill requires employers to submit to the DFEH is the same information already required to be submitted by those employers to the federal Equal Employment Opportunity Commission (EEOC). The bill makes all individually identifiable information submitted to the department confidential and not subject to disclosure pursuant to the California Public Records Act (CPRA). The analysis reviews the history of state laws that have sought to ensure pay equity. It also summarizes the history of employers who are subject to this bill being subject to those same reporting requirements, but with the data being required to be submitted to the federal Equal Employment Opportunity Commission (EEOC). Although the current presidential administration has attempted to end the EEOC reporting requirement, a federal court has blocked its efforts, so the reporting requirement applies now. This bill would maintain the reporting requirement—but with the data being transmitted to DFEH—regardless of the outcome of any challenge to the EEOC rule. The author has agreed to minor clarifying amendments that are discussed in detail and incorporated into the analysis. The bill, recently approved by the Assembly Labor and Employment Committee, is co-sponsored by California Employment Lawyers Association, Equal Rights Advocates, and American Association of University Women, and supported by a wide coalition of women’s organizations, legal and civil rights advocates, and labor organizations. It is opposed by a large number of business groups. Finally, a group of construction employers oppose the bill unless they are exempt from it.

SUMMARY: Requires large employers to report annually to the Department of Fair Employment and Housing (DFEH) with pay data for specified job categories broken down by race, ethnicity, and sex. Specifically, this bill:

1. Requires, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1 Report) under federal law, to submit a pay data report to the DFEH that, upon request, shall make the report available to the Division of Labor Standards Enforcement (DLSE).
2. Requires that the pay data report be broken down by specified job categories and include the number of employees by race, ethnicity and sex with annual earnings separated in pay bands used by the United States Bureau of Labor Statistics.
3. Requires that, for purposes of establishing the number of employees in each pay band, the employer create a “snapshot” that counts all the individuals in each job category employed during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year.
4. Requires employers with multiple establishments to submit a report for each establishment and a consolidated report.
5. Permits an employer to make clarifying remarks regarding any of the information provided.
6. Provides that if an employer submits to the DFEH a copy of its’ EEO-1 report containing the same or substantially similar pay data required under this section, then the employer shall be in compliance.
7. Provides that in the event an employer fails to submit the required report to the DFEH, the department may seek an order requiring the employer to comply and shall be entitled to recover the costs associated with seeking the order.
8. Requires the DFEH to maintain the pay data reports for a minimum of ten years.
9. Prohibits any officer or employee of the DFEH or the DLSE from making public any individually identifiable information obtained prior to the institution of a proceeding under California’s Equal Pay Act or the employment anti-discrimination provisions of the Fair Employment and Housing Act; and clarifies that “individually identifiable information” means data reported pursuant to this section that is associated with a specific person or business.
10. Exempts from coverage under the California Public Records Act and considers confidential, any individually identifiable information disclosed to the DFEH under these provisions.
11. Allows the DFEH to develop, publish on an annual basis, and publicize aggregate reports based on the data obtained provided the aggregate reports are calculated to prevent the association of any data with an individual person or business.
12. Defines “employee” as an individual on an employer’s payroll, including a part-time individual, whom the employer is required to include in an EEO-1 Report and for whom the employer is required to withhold federal social security taxes.
13. Finds and declares that the bill “imposes a limitation on the public’s right of access to the meetings of public bodies or the writings of public officials and agencies within the meaning of Section 3 of Article I of the California Constitution” and makes specific findings to demonstrate the interest protected by this limitation and the need for protecting that interest.

EXISTING STATE LAW:

1. Provides, in the California Constitution, that “The people have the right of access to information concerning the conduct of the people’s business, and therefore . . . the writings of public officials and agencies shall be open to public scrutiny.” (Cal. Const., art. 1, sec. 3, subd. (b), par. (1).)
2. Provides, under the California Public Records Act (CPRA), that all public agency records are open to public inspection upon request, unless the records are otherwise exempt from public disclosure. (Government Code Section 6250 et seq.)
3. Prohibits an employer from paying an employee at wage rates less than the rates paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar working conditions. (Labor Code Section 1197.5 (a).)
4. Prohibits an employer from paying employees a wage rate less than the rate paid to employees of a different race or ethnicity for substantially similar work. (Labor Code Section 1197.5 (b).)
5. Provides that an employer is not liable for wage discrimination based on sex if the employer demonstrates that the payment is made pursuant to:
   1. A seniority system;
   2. A merit system;
   3. A system which measures earnings by quantity or quality of production;
   4. A bona fide factor other than sex, such as education, training, or experience. (Labor Code Section 1197.5.)
6. Specifies that an employer who violates the above provisions is liable to the affected employee in the amount of the wages, and interest thereon, and an additional equal amount as liquidated damages, administered and enforced by the Division of Labor Standards Enforcement (DLSE), which may supervise the payment of wages owed. (Labor Code Section 1197.5 (c) and (d).)
7. Authorizes an employee to file a complaint with the DLSE for wages owed, and authorizes the DIR or the DLSE to commence and prosecute a civil action on behalf of the employee and on behalf of a similarly affected group of employees to recover unpaid wages, liquidated damages, and costs of the suit. (Labor Code Section1197.5 (g).)

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

Double referral: This bill was recently heard and approved by the Assembly Labor and Employment Committee, which approved the bill by a vote of 5-2.

COMMENTS: This bill seeks to further the goal of achieving pay equity in California by requiring large employers (those with 100 employers or more) to submit data about their employees’ pay, broken down in specified job categories and including the number of employees by race, ethnicity and sex with annual earnings, to the California Department of Fair Employment and Housing (DFEH). The information that the bill requires employers to submit to the DFEH is the exact same information, using the same form in fact, that these same employers are currently required to submit to the federal Equal Employment Opportunity Commission (EEOC). According to the author:

SB 171 will ensure this important pay data being collected at the federal level will also be compiled and aggregated in California. Modelled after the Obama Administration order, payroll data will be broken down by gender, race, ethnicity, and job category.

SB 171 will encourage employers to analyze their own pay and hiring practices to ensure they are fair and allow for self-evaluation and correction. In addition, SB 171 will allow DFEH to more efficiently identify patterns of wage disparities, particularly as they relate to job segregation by gender and race, which, with additional information, could lead to the targeted enforcement of equal pay and anti-discrimination laws.

An employer may comply with SB 171 by simply submitting a copy of their EEO-1 report.

The problem: pervasive and discriminatory disparities in pay. Citing statistics compiled by the National Women’s Law Center and based upon census data, the sponsors and supporters of the bill cite startling evidence of wage disparity in California as justification for the bill:

In California in 2017, women working full-time, year-round made a median 89 cents to every dollar earned by men, and for women of color, the gap is far worse. Asian-American women earned 73.5 cents, African-American women 61 cents, Native American women 50 cents, and Latinas just 42 cents for every dollar earned by white, non-Hispanic men. Nationwide, women overall make 80 cents to every dollar a man earns. (“The Wage Gap, State by State,” National Women’s Law Center, December 31, 2018, https://nwlc.org/resources/wage-gap-state-state/.)

Federal and State Equal Pay Laws and Data Collection: When first enacted in 1949, California's Equal Pay Act required employers to pay men and women equal wages if they performed “equal work” in the same establishment. Although the law is gender-neutral on its face, it was intended to correct a long and well-documented history of wage discrimination against women. In 2015, the author of the present bill successfully carried SB 358 (Chap. 546, Stat. 2015), which significantly strengthened the Equal Pay Act by enhancing an employee's ability to discover wage disparities and seek appropriate remedies. One important change made by SB 358 addressed the then-existing law's admirable but simplistic demand of “equal pay for equal work.” The problem with this formulation was that in the modern workplace the work performed by two employees rarely is completely “equal.” Thus, an employer confronting a gender discrimination challenge under the Equal Pay Act could have argued that the jobs performed by persons of the opposite sex were not “equal” because of some minor variation, even if that variation could not reasonably justify different pay. SB 358 addressed that problem by prohibiting employers from paying men and women different wages for “substantially similar work, when viewed as a composite of skill, effort, and responsibility, and performed under similar work conditions.” In short, a female employee must receive equal pay for performing a job that is “substantially similar” to one performed by a male counterpart, even though the jobs may not be identical.

Federal pay data reporting requirement regulations – implemented, abandoned, and reinstated. While California's Equal Pay Act, as strengthened by SB 358, provides a mechanism for an individual employee to obtain an equitable wage, the author and co-sponsors believe there is still a need to identify broader, collective patterns of wage discrimination. Largely in recognition of a need to detect and address these larger patterns, in 2015 the Obama Administration revised the federal Employer Information Report (EEO-1) to include pay data on gender, race, and ethnicity. Federal law had long required that EEO-1 reports be submitted to the federal Equal Employment Opportunity Committee (EEOC). The EEOC, after taking public comments, holding public hearings, and conducting a pilot project decided to adopt the Obama Administration’s proposals and revised the EEO-1 form so that it would provide more meaningful data on wage disparities according to race, gender, and ethnicity.

In 2017, not surprisingly, the Trump administration reversed the Obama Administration’s order and the corresponding EEOC action. As a result, the EEOC could only collect demographic information and lacked access to any pay data based on protected characteristics. In March of this year however, a federal court lifted the stay on implementation of the revised reporting rule, noting that the Trump administration lacked a reasonable explanation for blocking the rule. While the March ruling is under appeal by the U.S. Department of Justice, the EEOC’s current position is that employers are expected to submit the revised EEO-1 Report, effective May 31, 2019.

According to the author and sponsors, the present bill is modeled after the Obama order and will ensure that such data is collected in California, notwithstanding the federal court reversal of the Trump Administration’s reversal and the outcome of any appeal about those decisions.

What this bill does and does not do. While this bill provides for the collection of pay data and makes it available to the DFEH, it does not in any way alter the standard of what constitutes wage discrimination, nor would it make an employer liable for wage discrimination based on the data reports submitted to the DFEH. (Although an employer could be cited for a violation of state law for failing to provide the reports.) Under existing law, an employer cannot be held liable merely because wage data shows racial or gender disparity within the same job category, and this bill would do nothing to change that. The Equal Pay Act expressly recognizes that there are many factors that justify a wage difference, such as a seniority system, a merit system, or some other "bona fide factor" such as level of education, training, or experience. This bill does not change the standard for finding unlawful wage discrimination and does not assume that wage disparities alone are evidence of unlawful discrimination. This bill seeks to obtain necessary data in order to ascertain larger patterns and make more meaningful assessments about the scope of the problem. Opposition arguments notwithstanding, nothing in the bill even implies that wage disparity alone is evidence of unlawful discrimination on the part of any particular employer.

Moreover, as the supporters of the legislation point out, the data may reveal the extent to which wage disparities are not the result of intentional discrimination on the part of the employer so much as they are the result of structural problems such as “occupational segregation,” or the way in which implicit bias and cultural and historical factors have channeled women and persons of color into lower paid job categories. This is why breaking down compensation data for each job category on the basis of race, ethnicity, or gender, as the reports required by this bill would do, is so important. For example, persons within the same job category may be paid an equal amount of money regardless of race or gender. However, this seeming equality may obscure the discriminatory effects of occupational segregation if women and persons of color are disproportionately represented in the lower-wage job categories. As the author and co-sponsors have repeatedly written and testified, the purpose of gathering data is not to engage in the “public shaming” of businesses, as the opposition insists, but, to the contrary, to get a better sense of the complex factors that contribute to inequality.

Exemption to the California Public Records Act. Finally, and most relevant to this Committee’s jurisdiction, the bill makes all individually identifiable information submitted to the department confidential and not subject to disclosure pursuant to the California Public Records Act (CPRA). This provision appears to conflict with the state constitutional guarantee that “the people have the right of access to information concerning the conduct of the people’s business, and therefore . . . the writings of public officials and agencies shall be open to public scrutiny.” (Cal. Const., art. 1, sec. 3, subd. (b), par. (1).) It also conflicts with the CPRA’s presumption that all public agency records are open to public inspection upon request, unless the records are otherwise exempt from public disclosure. (Government Code Section 6250 et seq.) According to the author’s office:

In response to business community concerns, Senator Jackson has taken amendments to this bill that address concerns about this data being made publically available. SB 171 specifically prohibits the Department of Fair Employment and Housing and the Department of Labor Standard Enforcement from making this information publically available. In addition, the bill takes the added, unusual step of prohibiting this data from being subject to a California Public Records Act request.

. . .

Even though this data will not be publically available, some in the business community have also raised concerns that this data will appear to expose California Fair Pay Act violations when none exist. The information in these reports is not intended and cannot be used to enforce the CA Fair Pay Act on its own. In isolation, these reports will not provide the kind of granular data that allow for equal pay violations to be exposed.

The bill includes legislative findings, as required by Section 3 of Article I of the California Constitution, that this limitation on the public’s right of access to public records is necessary for the following reason:

To maintain the privacy of individuals who are the subject of sensitive information, that employers are required to report, regarding compensation and hours worked, sorted by gender, race, ethnicity, and job category in order to measure progress and further the state’s goal of achieving equal pay for women and people of color.

While it seems somewhat difficult to believe that the privacy of employees who work for large employers, such as those with 100 or more employees who are subject to the requirements of this bill, could be jeopardized by a report that does not require names or other individually identifying information to be submitted to the DFEH, it is also clear that the reason for the reporting requirement - to measure progress and further the state’s goal of achieving equal pay for women and people of color- is compelling.

Author’s amendments. The bill in print provides that “individually identifiable information includes” certain information, but does not specify what the term “means.” Also, the bill in print makes that term apply to only one subdivision of the bill, whereas the term is used elsewhere in the section. In order to clarify these issues, correct minor drafting errors, and specify that a report published by the DFEH may be published on an annual basis, the author has agreed to accept the following minor clarifying amendments to subdivisions (h), (i), and (j) of Section 2 of the bill (beginning on Page 5, at line 17):

(h) It shall be unlawful for any officer or employee of the department or the Division of Labor Standards Enforcement to make public in any manner whatever any individually identifiable information obtained pursuant to their authority under this section prior to the institution of an investigation or enforcement proceeding by the Division of Labor Standards Enforcement or the department under Section 1197.5 of the Labor Code or Section 12940 involving that information, and only to the extent necessary for purposes of the enforcement proceeding. For the purposes of this subdivision section, “individually identifiable information” includes means data submitted pursuant to this section that is associated with a specific person or business.

(i) Any individually identifiable information disclosed submitted to the department pursuant to this section shall be considered confidential information and not subject to disclosure pursuant to the California Public Records Act (Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1).

(j) Notwithstanding subdivision (h), the department may develop, publish on an annual basis, and publicize aggregate reports based on the data obtained pursuant to their authority under this section, provided that the aggregate reports are reasonably calculated to prevent the association of any data with any individual business or person.

ARGUMENTS IN SUPPORT: The bill’s co-sponsors, California Employment Lawyers Association, Equal Rights Advocates, and American Association of University Women – California Chapter and a large coalition of legal and civil rights advocates who write that they support the bill for a number of reasons:

1. Wage discrimination is a pervasive problem that is often hidden from view and difficult to detect.

Pay discrimination is not just a women’s issue, but also harms families and the state’s economy. . . . One obstacle to effective enforcement is that pay discrimination often is “hidden from sight” and can be a result of unconscious biases or historical inequities. For example, recent studies reveal significant systemic biases against women due to unconscious cultural biases, particularly in the science and technology industries.

1. SB 171 is needed because of uncertainty about federal wage reporting requirements.

[I]t is still unclear whether these pay data reporting requirements will be hung up in litigation if the Trump Administration appeals the DC court’s order. Therefore, SB 171 will help ensure that, despite any setbacks at the federal level, this important pay data will continue to be compiled and aggregated in California.

1. The bill’s reporting requirements are modeled on the EEOC requirements to minimize reporting burdens for employers; and the bill’s confidentiality provisions in the bill protect the privacy of employers and employees.

Modelled after the revised EEO-1 reporting requirements, SB 171 would require payroll data to be broken down by gender, race, ethnicity, and job category. These reports would be submitted to the Department of Fair Employment and made available to the Division of Labor Standards and Enforcement upon request. The information provided in the reports would not be publicly available or identifiable at the individual level, which should assuage fears of employers that this information would create additional liability for them.

1. The process of preparing reports will help employers recognize problems in their pay practices:

SB 171 would allow for the designated state agencies to more efficiently identify patterns of wage disparities and allow for targeted enforcement of California’s equal pay laws, when appropriate. Very importantly, it will encourage employers to analyze their own pay practices to ensure they are fair and lawful and allow for self-correction. Simply compiling the data will prompt some businesses to make necessary changes.

ARGUMENTS IN OPPOSITION: A large coalition of business groups and employers oppose the bill for the following reasons:

1. SB 171 Will Likely Be Redundant to Federal Requirements.

[T]he federal requirement is likely to remain in effect and employers will be required to submit data for 2017 and 2018 in September of this year. As a result, SB 171 will be redundant and will require that the same information reported to the EEOC be reported to DFEH. . . . And should a future court further delay the September 2019 implementation of the federal reporting requirement, SB 171 would create a new and different reporting requirement for employers that do business in California. . . . All of this illustrates that the Legislature should wait for final resolution of the federal EEO-1 reporting requirements, before moving forward with this bill.

1. SB 171 Relies Upon Job Titles and Classifications to Compare Jobs, Which Undermines the Intent of SB 358 to Compare “Substantially Similar” Positions and, as Such, Will Provide a False Impression of Wage Discrimination When None May Exist.

Job titles are not determinative of whether two jobs are substantially similar for purposes of equal pay under Labor Code Section 1197.5 or the federal Equal Pay Law. See Brennan v. Prince William Hospital Corp., 503 F.2d 282, 288 (4th Cir. 1974) (stating “[j]ob descriptions and titles, however, are not decisive. Actual job requirements and performance are controlling”) . . .Due to the fact that SB 171 is completely reliant on job classifications and titles, it will create a false impression of wage discrimination or unequal pay where none may exist. SB 171 Fails to Take into Consideration an Employer’s Objective, Non-Discriminatory, “Bona Fide Factors” for the Wage Disparity and, Therefore, Undermines the Balance Provided by Labor Code Section 1197.5.

1. SB 171 Utilizes Data That May Be Impacted by Employee Choices.

For example, an employee who requests to work part-time, reduced hours, or only on specific shifts that pay a lesser rate than others will impact the wages he or she earns. Per Diem employees may only work one shift per month, at the employee’s own request. Moreover, if the employee is a “sales worker” or performing another job where the employee receives commissions or bonuses based upon his or her performance, this will create a wage disparity. Even though all employees in the substantially similar position are working under the same commission or bonus plan, the employee’s own actions and performance will dictate what the employee actually earns. . . .Finally, a wage disparity can also be created by an employee’s personal choices as to pre-tax payroll deductions.

1. SB 171 Is Premature.

SB 171 is premature because there is a Pay Equity Task Force assigned to analyzing the Equal Pay Act, as well as workplace and compensation policies that can lead to successful compliance with the Act. . . . [T]he Legislature should wait for the Pay Equity Task Force’s report before imposing a new mandate on employers.

In addition, the California Chapter of the National Electrical Contractors Association and other construction organizations are opposed to the bill unless it is amended to remove construction employers like them. They state the following:

The union contractor has no say regarding what gender or race the person who is sent from the hall will be or what they will be paid once they are on the job. Exiting law already precludes contractors who are subject to a CBA from engaging in any discrimination based upon gender or race, including inequitable compensation for performing the same job. For these reasons, we oppose SB 171 and ask that construction employers subject to a CBA be removed from this bill.

Prior Similar Legislation: SB 1284 (Jackson) of 2018 was substantially similar to this bill. SB 1284 died in the Assembly Appropriations Committee.

AB 2282 (Eggman) Chapter 127, Statutes of 2018 clarified that, while prior salary information cannot justify disparities in compensation, an employer may make a compensation decision based on an applicant’s current salary as long as any wage differential resulting from that compensation decision is justified by: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) a bona fide factor other than sex, such as education, training, or experience.

AB 46 (Cooper) Chapter 776, Statutes of 2017 clarified that the California Equal Pay Act applies to public as well as private sector employers.

AB 168 (Eggman) Chapter 688, Statutes of 2017 prohibited an employer from seeking or relying on the salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer an applicant. The bill also required an employer, upon reasonable request, to provide the pay scale for a position to an applicant.

AB 1209 (Gonzalez-Fletcher) of 2017 would have required employers with 500 or more employees in California to provide the Secretary of State with specific information regarding gender wage differentials for exempt employees and board members every two years as part of their corporate filings. The measure was vetoed by Governor Brown.

SB 1063 (Hall) Chapter 866, Statutes of 2016 expanded the prohibitions on pay discrimination to include discrimination based on race or ethnicity.

AB 1676 (Campos) Chapter 856, Statutes of 2016 provided that prior salary shall not, by itself, justify any disparity in compensation.

SB 358 (Jackson) Chapter 546, Statutes of 2015 amended the Equal Pay Act to require employers to justify any gender pay differential with a legitimate non-sex-based factor and prohibited retaliation against employees for disclosing or discussing their wages with their co-workers.

REGISTERED SUPPORT / OPPOSITION:

Support

AAUW - California
American Civil Liberties Union Of California
Business And Professional Women Of Nevada County
California Employment Lawyers Association
California Labor Federation, AFL-CIO
California Women's Law Center
California Work And Family Coalition
Child Care Law Center
Consumer Attorneys Of California
Equal Rights Advocates
Friends Committee On Legislation Of California
Latina Coalition Of Silicon Valley

Lawyers' Committee for Civil Rights
Legal Aid at Work
Stronger California Advocates Network
The Women's Foundation Of California
United Food and Commercial Workers, Western States Council
YWCA San Francisco & Marin

Oppose

Associated General Contractors Of California
Brea Chamber Of Commerce
California Ambulance Association
California Apartment Association
California Association For Health Services At Home
California Association Of Licensed Security Agencies, Guards & Associates
California Association Of Winegrape Growers
California Chamber Of Commerce
California Farm Bureau Federation
California Landscape Contractor's Association
California League Of Food Producers
California Manufacturers & Technology Association
California Restaurant Association
California Retailers Association
California State Council Of SHRM
California Taxpayers Association
California Travel Association
Cerritos Regional Chamber Of Commerce
Civil Justice Association Of California
Construction Employers' Association
El Dorado County Chamber Of Commerce
Elk Grove Chamber Of Commerce
Folsom Chamber Of Commerce
Garden Grove Chamber Of Commerce
Greater Coachella Valley Chamber Of Commerce
Greater Conejo Valley Chamber Of Commerce
Long Beach Area Chamber Of Commerce
Orange County Business Council
Rancho Cordova Chamber Of Commerce
Redondo Beach Chamber Of Commerce
Roseville Chamber Of Commerce
San Gabriel Valley Economic Partnership
Santa Maria Valley Chamber Of Commerce
Society For Human Resource Management
South Bay Association Of Chambers Of Commerce
Western Growers Association
Wine Institute

Oppose Unless Amended

California Legislative Conference Of Plumbing, Heating & Piping Industry
Electrical Contractors Of California Trust
Engineering & Utility Contractors Association Dba United Contractors
Northern California Allied Trades
Wall And Ceiling Alliance
Western Line Constructors Chapter, Inc., Neca, Inc.
Western Wall And Ceiling Contractors Association

Analysis Prepared by: Alison Merrilees / JUD. / (916) 319-2334

Date of Hearing: June 26, 2019

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Ash Kalra, Chair

SBPCA Bill Id:SB 171

Author:(Jackson) – As Amended Ver:April 9, 2019

SENATE VOTE: 28-9

SUBJECT: Employers: annual report: pay data

SUMMARY: Requires private employers with 100 or more employees to submit a report annually to the Department of Fair Employment and Housing (DFEH) with pay data for specified job categories broken down by race, ethnicity, and sex. Specifically, this bill:

1. Requires, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1 Report) under federal law, to submit a pay data report to the DFEH that, upon request, shall make the report available to the Division of Labor Standards Enforcement (DLSE).
2. Requires that the pay data report be broken down by specified job categories and include the number of employees by race, ethnicity and sex with annual earnings separated in pay bands used by the United States Bureau of Labor Statistics.
3. Requires that, for purposes of establishing the number of employees in each pay band, the employer create a “snapshot” that counts all the individuals in each job category employed during a single pay period of the employer’s choice between October 1 and December 31 of the reporting year.
4. Requires employers with multiple establishments to submit a report for each establishment and a consolidated report.
5. Permits an employer to make clarifying remarks regarding any of the information provided.
6. Provides that if an employer submits to the DFEH a copy of its’ EEO-1 report containing the same or substantially similar pay data required under this section, then the employer shall be in compliance.
7. Provides that in the event an employer fails to submit the required report to the DFEH, the department may seek an order requiring the employer to comply and shall be entitled to recover the costs associated with seeking the order.
8. Requires the DFEH to maintain the pay data reports for a minimum of ten years.
9. Prohibits any officer or employee of the DFEH or the DLSE from making public any individually identifiable information obtained prior to the institution of a proceeding under California’s Equal Pay Act or the employment anti-discrimination provisions of the Fair Employment and Housing Act.
10. Exempts from coverage under the California Public Records Act and considers confidential, any information disclosed to the DFEH under these provisions.
11. Permits the DFEH to develop and publicize aggregate reports based on the data obtained provided the aggregate reports are calculated to prevent the association of any data with an individual person or business.
12. Defines “employee” as an individual on an employer’s payroll, including a part-time individual, whom the employer is required to include in an EEO-1 Report and for whom the employer is required to withhold federal social security taxes.

EXISTING STATE LAW:

1. Establishes the DLSE within the Department of Industrial Relations to administer and enforce provisions of the Labor Code governing wages, hours, and working conditions.
2. Establishes the DFEH to, among other things, receive and investigate complaints of illegal employment discrimination.
3. Provides that it is an unlawful employment practice, for an employer, because of race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person, to refuse to hire, discharge, or discriminate against the person in compensation or in terms, conditions, or privileges of employment.

EXISTING FEDERAL LAW:

1. Establishes the Equal Employment Opportunity Commission (EEOC) to enforce the anti-discrimination in employment provision, known as Title VII, of the Civil Rights Act of 1964.
2. Requires every employer with 100 or more employees that is covered by Title VII, to file annually with the EEOC, demographic information about its employees in the Standard Form 100, as revised (known as the EEO-1 Report).

FISCAL EFFECT: According to the Senate Appropriations Committee, DFEH indicates that its costs to implement the bill would range from $1 million to $5 million annually, depending upon how the proposed pay reporting system is developed and implemented (General Fund).

The bill would not have a fiscal impact on the DLSE within the Department of Industrial Relations (DIR). The DLSE’s only role in this bill is to request the data collected as necessary, which is not anticipated to significantly increase its workload.

COMMENTS: Note: This bill is double-referred to Assembly Judiciary Committee upon passage out of this Committee.

The EEOC, for decades, has required employer submission of workforce demographic information to it in order to assist the Commission achieve its purpose of administering and enforcing anti-discrimination laws in employment. In 2016, the Obama Administration announced its intent to revise the reporting rule to also require the submission of employee pay data by race and gender beginning in 2018. In August 2017, the federal Office of Management and Budget (OMB) halted implementation of the proposed rule and initiated an extensive review process of all proposed revisions. As a result, the EEOC could only collect demographic information and lacked access to any pay data based on protected characteristics. In March of this year however, a federal court lifted the stay on implementation of the revised reporting rule, noting that the OMB lacked a reasonable explanation for blocking the rule. While the March ruling is under appeal by the Department of Justice, the EEOC’s current position is that employers are expected to submit the revised EEO-1 Report, effective May 31, 2019.

A Note About the Scope of “Employees” for Reporting Purposes

Committee staff notes that the EEOC defines “employee” in its EEO-1 instructions for filing (OMB No. 3046-0007) as “all full-time and part-time employees” that are “on the payroll of an employer who is an employee for purposes of the employer’s withholding of Social Security taxes…” In section 12999 (l)(1) of the bill, it incorporates this definition as well as adding employees that an “employer is required to include in an EEO-1 Report.” Committee staff believes this is duplicative, and moving forward, the author may wish to reference only employees required for inclusion in the EEO-1 Report.

Arguments in Support

According to the California Employment Lawyers Association, Equal Rights Advocates, and the American Association of University Women – California Chapter, sponsors of the bill, “SB 171 would require payroll data to be broken down by gender, race, ethnicity, and job category. These reports would be submitted to the Department of Fair Employment and made available to the Division of Labor Standards Enforcement upon request. The information provided in the reports would not be publicly available or identifiable at the individual level, which should assuage fears of employers that this information would create additional liability for them.

SB 171 would allow for the designated state agencies to more efficiently identify patterns of wage disparities and allow for targeted enforcement of California’s equal pay laws, when appropriate. Very importantly, it will encourage employers to analyze their own pay practices to ensure they are fair and lawful and allow for self-correction. Simply compiling the data will prompt some businesses to make necessary changes.”

Arguments in Opposition

A coalition of employers, including the California Chamber of Commerce, are opposed and state, “SB 171 requires employers to collect pay data in the aggregate. Doing so will likely demonstrate wage disparity amongst employees in the different job classifications or titles according to gender. However, a disparity in wages does not automatically translate into wage discrimination or a violation of Labor Code Section 1197.5 (as amended by SB 358). Specifically, SB 171 seeks to collect pay data according to job title, not according to whether the jobs are “substantially similar” for purposes of comparison. Job titles are not determinative of whether two jobs are substantially similar for purposes of equal pay under Labor Code Section 1197.5 or the federal Equal Pay Law.”

The California Chapter of the National Electrical Contractors Association and other construction organizations are opposed unless amended, and state, “The union contractor has no say regarding what gender or race the person who is sent from the hall will be or what they will be paid once they are on the job. Exiting law already precludes contractors who are subject to a CBA from engaging in any discrimination based upon gender or race, including inequitable compensation for performing the same job. For these reasons, we oppose SB 171 and ask that construction employers subject to a CBA be removed from this bill.”

Prior Legislation

SB 1284 (Jackson) of 2018 was substantially similar to this bill. SB 1284 died in the Assembly Appropriations Committee.

AB 2282 (Eggman) Chapter 127, Statutes of 2018 clarified that, while prior salary information cannot justify disparities in compensation, an employer may make a compensation decision based on an applicant’s current salary as long as any wage differential resulting from that compensation decision is justified by: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) a bona fide factor other than sex, such as education, training, or experience.

AB 46 (Cooper) Chapter 776, Statutes of 2017 clarified that the California Equal Pay Act applies to public as well as private sector employers.

AB 168 (Eggman) Chapter 688, Statutes of 2017 prohibited an employer from seeking or relying on the salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer an applicant. The bill also required an employer, upon reasonable request, to provide the pay scale for a position to an applicant.

AB 1209 (Gonzalez-Fletcher) of 2017 would have required employers with 500 or more employees in California to provide the Secretary of State with specific information regarding gender wage differentials for exempt employees and board members every two years as part of their corporate filings. The measure was vetoed by Governor Brown.

SB 1063 (Hall) Chapter 866, Statutes of 2016 expanded the prohibitions on pay discrimination to include discrimination based on race or ethnicity.

AB 1676 (Campos) Chapter 856, Statutes of 2016 provided that prior salary shall not, by itself, justify any disparity in compensation.

SB 358 (Jackson) Chapter 546, Statutes of 2015 amended the Equal Pay Act to require employers to justify any gender pay differential with a legitimate non-sex-based factor and prohibited retaliation against employees for disclosing or discussing their wages with their co-workers.

REGISTERED SUPPORT / OPPOSITION:

Support

AAUW - California (Co-Sponsor)
California Employment Lawyers Association (Co-Sponsor)
Equal Rights Advocates (Co-Sponsor)
American Association Of University Women - California
American Civil Liberties Union Of California
Business And Professional Women Of Nevada County
California Commission on the Status of Women
California Labor Federation
California Women's Law Center
California Work and Family Coalition
Child Care Law Center
Consumer Attorneys Of California
Friends Committee On Legislation Of California
Lawyers' Committee For Civil Rights
Legal Aid At Work
National Council of Jewish Women California
National Council Of Jewish Women Los Angeles
Stronger California Advocates Network
The Women's Foundation Of California
United Food And Commercial Workers, Western States Council
Western Center On Law & Poverty, Inc.
YWCA San Francisco & Marin

Opposition

Associated General Contractors Of California
Brea Chamber Of Commerce
California Ambulance Association
California Apartment Association
California Association For Health Services At Home
California Association Of Licensed Security Agencies, Guards & Associates
California Association Of Winegrape Growers
California Chamber Of Commerce
California Farm Bureau Federation
California Landscape Contractor's Association
California League Of Food Producers
California Manufacturers & Technology Association
California Restaurant Association
California Retailers Association
California State Council Of SHRM
California Taxpayers Association
California Travel Association
Cerritos Regional Chamber Of Commerce
Civil Justice Association Of California
Construction Employers' Association
El Dorado County Chamber Of Commerce
Elk Grove Chamber Of Commerce
Folsom Chamber Of Commerce
Garden Grove Chamber Of Commerce
Greater Coachella Valley Chamber Of Commerce
Greater Conejo Valley Chamber Of Commerce
Long Beach Area Chamber Of Commerce
Orange County Business Council
Rancho Cordova Chamber Of Commerce
Redondo Beach Chamber Of Commerce
Roseville Chamber Of Commerce
San Gabriel Valley Economic Partnership
Santa Maria Valley Chamber Of Commerce
Society For Human Resource Management
South Bay Association Of Chambers Of Commerce
Western Growers Association
Wine Institute

Oppose Unless Amended

California Legislative Conference Of Plumbing, Heating & Piping Industry
Electrical Contractors Of California Trust
Engineering & Utility Contractors Association Dba United Contractors
Northern California Allied Trades
Wall And Ceiling Alliance
Western Line Constructors Chapter, Inc., Neca, Inc.
Western Wall And Ceiling Contractors Association

Analysis Prepared by: Megan Lane / L. & E. /

 THIRD READING  

Bill No: SB 171

Author: Jackson (D)

Amended: 4/9/19

Vote: 21

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 3/27/19

AYES: Hill, Jackson, Mitchell, Pan

NOES: Morrell

SENATE JUDICIARY COMMITTEE: 7-1, 4/2/19

AYES: Jackson, Allen, Caballero, Monning, Stern, Umberg, Wieckowski

NOES: Borgeas

SENATE APPROPRIATIONS COMMITTEE: 4-2, 5/16/19

AYES: Portantino, Bradford, Hill, Wieckowski

NOES: Bates, Jones

SUBJECT: Employers: annual report: pay data

SOURCE: American Association of University Women

California Employment Lawyers Association

Equal Rights Advocates

DIGEST:

This bill requires that employers with 100 or employees provide the Department of Fair Employment and Housing with EEO-1 (Employer Information Report) pay data, as specified.

ANALYSIS:

Existing law:

1. Prohibits an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person, to refuse to hire, discriminate against, or harass the person. (Government Code §12940)
2. Prohibits, explicitly, an employer, labor organization, employment agency, apprenticeship training program, or any training program leading to employment, to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring. (Government Code §12940(k))
3. Requires every employer, employment agency, and labor organization subject to this subchapter to: (a) make and keep such records relevant to the determinations of whether unlawful employment practices have been or are being committed, (b) preserve such records for such periods, and (c) make such reports therefrom as the Equal Employment Opportunity Commission (EEOC) shall prescribe by regulation or order, after public hearing, as reasonable, necessary, or appropriate for the enforcement of this title. (Federal Civil Rights Act of 1964, §709(c), Title VII)
4. Requires that, on or before March 31 of each year, every employer that is subject to Title VII of the Civil Rights Act of 1964, as amended, and that has 100 or more employees, shall file with the EEOC or its delegate executed copies of Standard Form 100, as revised (otherwise known as "Employer Information Report EEO-1"), in conformity with the directions set forth in the form and accompanying instructions. (29 CFR §1602.7)

This bill:

1. Requires that, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1) under federal law must submit a pay data report to the Department of Fair Employment and Housing (DFEH) that covers the prior calendar year, or “reporting year”.
2. Requires that DFEH makes the reports available to the Division of Labor Standards and Enforcement (DLSE) upon request.
3. Requires that the pay data report includes the number of employees, categorized by race, ethnicity, and sex that are within the pay bands used by the United States Bureau of Labor Statistics in the Occupation Employment Statistics survey.
4. Requires the pay data report includes the number of employees, categorized by race, ethnicity, and sex in each of the following job categories:
5. Executive or senior level officials and managers
6. First or mid-level officials and managers
7. Professionals
8. Technicians
9. Sales workers
10. Administrative support workers
11. Craft workers
12. Operatives
13. Laborers and helpers
14. Service workers
15. Requires that, for the purposes of an employer calculating the numbers above, the employer create a “snapshot” that counts all of the individuals in each job category employed during a single pay period of the employer’s choice between October 1 and December 31 of the “reporting year”.
16. Requires, for the purposes of calculating annual earnings within federal pay bands, the employer must calculate W-2 total earnings for each employee in the “snapshot” for the entire “reporting year”, irrespective of if the employees worked the entire year.
17. Requires that the employer must include the total number of hours worked by each employee counted in each pay band.
18. Requires that, for employers with multiple establishments, the employer must submit a report for each establishment and a consolidated report that includes all employees.
19. Requires that the pay data report include a section for employers to provide clarifying remarks regarding any of the information provided, but clarifies that the employer is not required to provide clarifying remarks.
20. Provides that, if an employer is required to file an Employer Information Report, otherwise known as the EEO-1 Report, the employer may satisfy compliance with the requirements above by submitting the Employer Information Report. This bill requires that the Employer Information Report must include the same or substantially similar pay data required under this section.
21. Requires that, if an employer fails to comply, DFEH may seek an order requiring the employer to comply with these requirements and seek an order requiring the employer to comply with these requirements, as well as recovery of costs associated with seeking the order for compliance.
22. Prohibits any officer or employee of the DFEH or DLSE from making public in any manner whatsoever any individually identifiable information obtained through the employer-submitted pay data prior to an investigation or enforcement action. “Individually identifiable information” includes data that is associated with a specific person or business.
23. Clarifies that the prohibition above does not prevent DFEH from publicizing aggregate reports on pay data if the aggregate reports are reasonably calculated to prevent the association of any data with an individual business or person.
24. Excludes any pay information disclosed to DFEH from disclosure pursuant to the California Public Records Act.
25. Requires that the DFEH maintain pay data reports for not less than 10 years.
26. Makes findings and declarations on the gender pay gap, as well as the need for a limitation on the public’s access to the pay data under the California Public Records Act.

Comments

1. EEOC and Form EEO-1

The EEOC is a federal commission, created by the Civil Rights Act of 1964. Since its creation, the EEOC has fought discrimination in all forms throughout America’s workplaces, including discrimination based on race, color, religion, national origin, age, disability, and of either sex. The EEOC was an early pioneer in the fight for gender equality – as early as 1968, the EEOC was arguing in court that state laws that prevented women from certain occupations were illegal and preempted under federal law.

Starting in 1966, the EEOC required employers with 100 or more employees to submit EEO- 1 forms, which showed the representation of men and women of different ethnic groups in nine different occupational classifications. According to the EEOC, the EEO-1 data was invaluable in enforcing anti-discrimination laws and conducting public hearings throughout the country to bring attention to the issue of discrimination in the workplace. The EEO-1 continues to be required by the EEOC, and continues to be used to enforce anti- discrimination laws throughout the country.

In 2016, in an attempt to end gender-based pay discrimination, the Obama Administration required employers to report pay data in specified bands on the EEO-1 form. This requirement went through the necessary rule making, and the first reporting deadline was March 31, 2018. However, in August of 2017, the current federal Administration, through the Office of Management and Budget (OMB), suspended the rule requiring the reporting of pay data due to compliance burdens.

However, on March 4, 2019, the U.S. District Court for D.C. found that the OMB had failed to meet the legal requirements necessary to stay the reporting of EEO-1 pay data. While this court order will almost certainly be appealed, it is increasingly likely that employers will be required to include the pay data required under this bill with their federal EEO-1 form. As such, it is likely that compliance with SB 171 will be as simple as submitting the EEO-1 form to DFEH and EEOC at the same time.

Related/Prior Legislation

SB 1284 (Jackson, 2018), which dealt with EEO-1 reporting to DFEH, was very similar to this bill. SB 1284 was held under submission by the Assembly Appropriations Committee.

SB 358 (Jackson, Chapter 546, Statutes of 2015) prohibited an employer from paying any of his or her employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility.

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

According to the Senate Appropriations Committee, the DFEH indicates that its costs to implement the bill range from $1 million to $5 million annually, depending upon how the proposed pay reporting system is developed and implemented.

SUPPORT: (Verified 5/16/19)

American Association of University Women (co-source)
California Employment Lawyers Association (co-source)

Equal Rights Advocates (co-source)
American Civil Liberties Union of California

Business and Professional Women of Nevada County

California Labor Federation

California Women’s Law Center

Child Care Law Center

Consumer Attorneys of California

Legal Aid at Work

National Council of Jewish Women, California

United Food and Commercial Workers, Western States Council

Western Center on Law and Poverty

Women’s Foundation of California

YWCA San Francisco & Marin

OPPOSITION: (Verified 5/16/19)

Brea Chamber of Commerce

California Ambulance Association

California Association of Licensed Security Agencies, Guards & Associates

California Association of Winegrape Growers

California Chamber of Commerce

California Farm Bureau Federation

California League of Food Producers

California Manufacturers & Technology Association

California Retailers Association

California Taxpayers Association

California Travel Association

Cerritos Regional Chamber of Commerce

Civil Justice Association of California

Construction Employers’ Association

Garden Grove Chamber of Commerce

Greater Coachella Valley Chamber of Commerce

Greater Conejo Valley Chamber of Commerce

Long Beach Area Chamber of Commerce

Orange County Business Council

Rancho Cordova Chamber of Commerce

Redondo Beach Chamber of Commerce

San Gabriel Valley Economic Partnership

Santa Maria Valley Chamber of Commerce

Society for Human Resource Management

South Bay Association of Chambers of Commerce

Western Growers Association

ARGUMENTS IN SUPPORT: Consumer Attorneys of California support SB 171, arguing:

Pay discrimination affects all segments of society, and especially harms families and the state’s economy. In California in 2017, women working full-time, year-round made a median 89 cents to every dollar earned by men, and for women of color, the gap is far worse.

Recognizing that pay discrimination is difficult to detect and address, the Obama Administration announced a proposed revision to the Employer Information Report (EEO-1) to include the reporting of pay data by gender, race and ethnicity beginning in 2018. For more than 50 years, large companies have been submitting these reports with demographic information to the federal agency responsible for enforcing workplace anti-discrimination laws, the Equal Employment Opportunity Commission. This data has helped identify patterns of occupational segregation and discrimination.

The proposed revision to the EEO-1 reports, to include pay data, was adopted by the Commission and approved by Office of Management and Budget after a rigorous and transparent process that spanned years and included a pilot study, a public hearing and two public comment periods. However, in August 2017, the Trump Administration put a halt to the implementation of this new rule, dealing a significant blow to the fight for equal pay.

National Women’s Law Center and Democracy Forward (plaintiffs) filed a lawsuit challenging the stay of the pay data collection and this March, the District Court in that case (1) denied the US's motion to dismiss; (2) granted plaintiffs’ motion for summary judgment; and (3) vacated the stay on the pay data collection component of the EEO-1. Under the terms of the order, the pay data collection is once again in effect. The deadline for EEO-1 filings was extended to May 31 this year because the government shutdown. Under the court's order, those filings should include pay data.

…

SB 171 would allow for the designated state agencies to more efficiently identify patterns of wage disparities and allow for targeted enforcement of California’s equal pay laws, when appropriate. Very importantly, it will encourage employers to analyze their own pay practices to ensure they are fair and lawful and allow for self-correction. Simply compiling the data will prompt some businesses to make necessary changes.

ARGUMENTS IN OPPOSITION: The California Chamber of Commerce opposes SB 171, arguing:

SB 171 seeks to collect pay data according to job title, not according to whether the jobs are “substantially similar” for purposes of comparison… The term “substantially similar” was adopted in Labor Code Section 1197.5 to capture the intent of equal pay – meaning that employees who, with minor deviations, perform the same work according to a composite of skill, responsibility and effort, should be paid the same wage rate, unless a bona fide factor for the disparity exists.… Comparatively, two in-house attorneys may have the same job title, but may not actually have substantially similar job duties for purposes of comparison…

Aggregate data as proposed in SB 171 fails to take these valid, non-discriminatory reasons into consideration and will create a false impression of wage discrimination where none exists. For example, there could be a disparity in the mean of salaries between two exempt employees because one employee has only worked for the employer for 6 months, whereas the other employee has been with the employer for 10 years....

SB 171 requires employers to provide pay data regarding an employee’s total earnings as shown on the Internal Revenue Service Form W-2. However, a W-2 form does not take into account an employee’s own decisions and actions that can also create wage disparity that has nothing to do with discriminatory intent by the employer.

Finally, a wage disparity can also be created by an employee’s personal choices as to pre-tax payroll deductions. One employee may max out all pre-tax deductions for a 401(k), dependent child reimbursement, medical expense reimbursement, college savings, etc., while another employee may not request any such deductions be made to his or her paycheck. None of these employee choices and actions will be captured or reflected in SB 171 to justify a potential wage disparity. Again, this omission on the report will create the false impression of wage discrimination, where none exists.”

Prepared by: Gideon L. Baum / L., P.E. & R. / (916) 651-1556

5/18/19 13:14:19

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

SB 171 (Jackson) - Employers: annual report: pay data

Bill Summary:

SB 171 would require large employers to annually report pay and job title information broken down by gender, race, and ethnicity to the Department of Fair Employment and Housing (DFEH).

Fiscal Impact:

• DFEH indicates that its costs to implement the bill would range from $1 million to $5 million annually, depending upon how the proposed pay reporting system is developed and implemented (General Fund, see Staff Comments).
• The bill would not have a fiscal impact on the Division of Labor Standards Enforcement (DLSE) within the Department of Industrial Relations (DIR). The DLSE’s only role in this bill is to request the data collected as necessary, which is not anticipated to significantly increase its workload.

Background:

Studies consistently show that women continue to earn less than their male counterparts. In 1963, women who worked full-time year-round made 59 cents on average for every dollar earned by a man according to the American Association of University Women (AAUW). Today, women working full time in the United States typically are paid just 80 percent of what men are paid, a gap of 20 cents.

The persistent gender pay gap has resulted in significant state efforts to curb wage discrimination. In 1949, California enacted the California Equal Pay Act, which targeted wage discrimination against women by prohibiting an employer from paying an employee a wage rate that is less than the rate of an employee of the opposite sex who does comparable work. SB 358 (Jackson, 2015) proposed a number of procedural and substantive changes to the California Equal Pay Act in order to make it easier for a victim of wage discrimination to identify an unlawful wage disparity and seek an appropriate remedy. Most notably, it changed the terminology so that an employee can more reasonably prove that he or she received lower wages for "substantially similar" work; clarifies the employer's burden to demonstrate that a wage disparity is based on some legitimate factor other than sex; and prohibits employers from interfering with employees' ability to discuss and share information about their wages. Additionally, in 2016 AB 1676 (Campos) was enacted which specifies that prior salary cannot, by itself, justify any disparity in compensation under the bona fide factor exception in the existing Equal Pay Act law. Also in 2016, SB 1063 (Hall) was enacted to expand the prohibitions laid down in the California Equal Pay Act regarding gender, to include discrimination based on race or ethnicity.

Proposed Law:

This bill would, among other things, do the following:

• Require that, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1) under federal law must submit a pay data report to DFEH that covers the prior calendar year, or “reporting year”.
• Require that DFEH make the reports available to the Division of Labor Standards and Enforcement (DLSE) within DIR upon request.
• Require that the pay data report include the number of employees, categorized by race, ethnicity, and sex that are within the pay bands used by the United States Bureau of Labor Statistics in the Occupation Employment Statistics survey.
• Require the pay data report include the number of employees, categorized by race, ethnicity, and sex in each of ten specified job categories.
• Require that, for the purposes of an employer calculating the numbers above, the employer create a “snapshot” that counts all of the individuals in each job category employed during a single pay period of the employer’s choice between October 1 and December 31 of the “reporting year”.
• Require, for the purposes of calculating annual earnings within federal pay bands, the employer must calculate W-2 total earnings for each employee in the “snapshot” for the entire “reporting year”, irrespective of if the employees worked the entire year.
• Require that the employer must include the total number of hours worked by each employee counted in each pay band.
• Require that, for employers with multiple establishments, the employer must submit a report for each establishment and a consolidated report that includes all employees.
• Require that the pay data report includes a section for employers to provide clarifying remarks regarding any of the information provided, but clarifies that the employer is not required to provide clarifying remarks.
• Provide that, if an employer is required to file an Employer Information Report, otherwise known as the EEO-1 Report, with the United States Equal Employment Opportunity Commission or other federal agency, the employer may satisfy compliance with the requirements above by submitting the Employer Information Report. This bill requires that the Employer Information Report must include the same or substantially similar pay data required under this section.
• Require that, if an employer fails to comply, DFEH may seek an order requiring the employer to comply with these requirements and seek an order requiring the employer to comply with these requirements, as well as recovery of costs associated with seeking the order for compliance.
• Prohibit any officer or employee of the DFEH or DLSE from making public in any manner whatsoever any individually identifiable information obtained through the employer-submitted pay data prior to an investigation or enforcement action. “Individually identifiable information” includes data that is associated with a specific person or business.
• Clarify that the prohibition above does not prevent DFEH from publicizing aggregate reports on pay data if the aggregate reports are reasonably calculated to prevent the association of any data with an individual business or person.
• Exclude any pay information disclosed to DFEH from disclosure pursuant to the California Public Records Act.
• Require that the DFEH maintain pay data reports for not less than 10 years.

Related Legislation:

• SB 1284 (Jackson, 2018) dealt with EEO-1 reporting to DFEH, and was very similar to this bill. The bill was held under submission on the Suspense File of the Assembly Appropriations Committee.
• SB 358 (Jackson, Chapter 546, Statutes of 2015), prohibits an employer from paying any of his or her employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility.

Staff Comments:

As noted above, DFEH anticipates implementation costs ranging from $1 million to $5 million annually, depending upon the scope and complexity of the proposed pay reporting system. On the lower end of the range, the department’s costs would include the development and maintenance of the data collection system and technology systems hardware, as well as the use of enhanced enforcement tools to assess discrimination complaints, analyze systemic pay disparities, and implement appropriate enforcement responses.

Additional costs to DFEH would cover broader uses of the data such as (1) the effective identification of wage patterns and trends in the state to guide policy on pay equity issues, (2) analyses of systemic pay disparities by job category, establishment, industry, and labor market, (3) benchmarking pay data for each establishment against comparable data for peer establishments, (4) targeted enforcement of equal pay and anti-discrimination laws, if appropriate, and (5) the development and publication of aggregate reports of average earnings data for industries and geographical areas on a publicly-accessible website, parallel to the EEOC’s current public posting of average employee representation data. Under either scenario, DFEH indicates that it would require additional staff, including data analysts, economists, information technology staff and legal staff.

-- END --

SENATE JUDICIARY COMMITTEE

Senator Hannah-Beth Jackson, Chair

2019-2020 Regular Session

Bill No: SB 171 (Author:Jackson)

Version: January 28, 2019

Hearing Date: April 2, 2019

Fiscal: Yes

Urgency: No

Consultant: TSG

SUBJECT

Employers: annual report: pay data

DIGEST

This bill requires large employers to report pay and job title information broken down by gender, race, and ethnicity to the Department of Fair Employment and Housing on an annual basis.

EXECUTIVE SUMMARY

In spite of both federal and state legislation designed to address the problem, pay disparities based on race and gender persist. In 2016, in an effort to monitor these pay gaps and further spur their closure, the Obama Administration announced a plan to begin requiring large companies to report pay data by race and gender as an additional element of their annual filings with the Equal Employment Opportunity Commission (EEOC). The program is in some legal limbo: the Trump Administration initially halted its implementation, but the program was recently reinstated by federal court order.

This bill, modeled closely on the Obama Administration’s program, would require large employers in California to report pay and job title information broken down by gender, race, and ethnicity, to the Department of Fair Employment and Housing (DFEH) on an annual basis. In the process, the bill would cause these employers to undertake self-audits of their pay structures. The resulting aggregate data would enable the state to monitor overall progress, or the lack thereof, toward achieving pay equity.

The bill is sponsored by the American Association of University Women, the California Employment Lawyers Association, and Equal Rights Advocates. Support is from civil rights advocates who view the bill as an essential tool for addressing the pay gap. Opposition comes from employers who worry about how the data would be used and argue that the data captured would not account for bona fide factors that may justify, legally speaking, some part of the pay gap. This bill passed out of the Senate Labor, Public Employment, and Retirement Committee on a 4-1 vote.

PROPOSED CHANGES TO THE LAW

Existing federal law:

1. Requires every employer, employment agency, and labor organization subject to this subchapter to:

a) make and keep such records relevant to the determinations of whether unlawful employment practices have been or are being committed;

b) preserve such records for such periods; and

c) make such reports therefrom as the EEOC shall prescribe by regulation or order, after public hearing, as reasonable, necessary, or appropriate for the enforcement of this title. (Federal Civil Rights Act of 1964, § 709(c), Title VII)

1. Requires that, on or before March 31 of each year, every employer that is subject to Title VII of the Civil Rights Act of 1964, as amended, and that has 100 or more employees, shall file with the EEOC or its designee executed copies of Standard Form 100, as revised (otherwise known as "Employer Information Report EEO-1"), in conformity with the directions set forth in the form and accompanying instructions. (29 CFR § 1602.7)

Existing state law:

1. Prohibits, under the California Equal Pay Act, an employer from paying an employee wage rates less than the rates paid to employees of the opposite sex for substantially similar work requiring the same skills, effort, and responsibility when performed under similar working conditions. (Lab. Code § 1197.5(a).)
2. Prohibits employers from paying employees a wage rate less than the rate paid to employees of a different race or ethnicity for substantially similar work requiring the same skills, effort, and responsibility when performed under similar working conditions. (Lab. Code § 1197.5(b).)
3. Sets forth exceptions to these prohibitions when a wage differential is based on one or more of the following: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) a bona fide factor other than sex, such as education, training, or experience. (Lab. Code §§ 1197.5(a)(1)(A-D) and 1197.5(b)(1)(A-D).)
4. Specifies that prior salary by itself may not justify any disparity in compensation. (Lab. Code §§ 1197.5(a)(3) and 1197.5(b)(3).)
5. Makes it a misdemeanor punishable by fine or imprisonment for any employer or person acting individually as an officer, agent, or employee of another person who willfully: (a) pays or causes to be paid to any employee a wage less than the rate paid to an employee of another sex, race, or ethnicity; or (b) reduces the wages of any employee to comply with the California Equal Pay Act. (Lab. Code § 1199.5.)
6. States that any employer who violates the California Equal Pay Act is liable for the amount of the compensation and interest that the employee is deprived of, in addition to liquidated damages. (Lab. Code § 1197.5(c).)
7. Provides that the Division of Labor Standards Enforcement (DLSE) shall administer and enforce the California Equal Pay Act, and may supervise the payment of wages and interest found to be due by an employer in violation of the Act. (Lab. Code § 1197.5(d).)
8. Requires every private sector employer to maintain records of the wages and wage rates, job classifications, and other terms and conditions of employment of the persons employed, to be kept on file for three years. (Lab. Code § 1197.5(e).)
9. Authorizes any employee to file a complaint with the DLSE that their wages are less than those owed to the employee under the California Equal Pay Act, and the DLSE is required to investigate these complaints, as specified. (Lab. Code § 1197.5(f).)
10. Authorizes the Department of Industrial Relations (DIR) or the DLSE to commence and prosecute, unless otherwise requested by the employee or affected group of employees, a civil action on behalf of the employee and on behalf of a similarly affected group of employees to recover unpaid wages and liquidated damages for violations of the California Equal Pay Act, and to recover costs of suit. (Lab. Code § 1197.5(g).)
11. Sets the statute of limitation to file a civil action for a violation of the Equal Pay Act at two years after the cause of action accrues generally, and three years after the cause of action accrues if the violation was willful. (Lab. Code § 1197.5(i).)
12. Makes it an unlawful employment practice, unless based upon a bona fide occupational qualification, or, except where based upon applicable security regulations established by the United States or the State of California, for an employer, because of the employee’s race or gender, to discriminate against an employee in compensation or in terms, conditions, or privileges of employment. (Gov. Code § 12940(a).)

This bill:

1. Requires that, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer that has 100 or more employees and who is required to file an annual Employer Information Report (EEO-1) pursuant to federal law shall submit a pay data report to DFEH.
2. Requires DFEH to make the reports available to DLSE upon request.
3. Requires the pay data report to include the number of employees, categorized by race, ethnicity, and sex in each of the following job categories:
   1. Executive or senior level officials and managers
   2. First or mid-level officials and managers
   3. Professionals
   4. Technicians
   5. Sales workers
   6. Administrative support workers
   7. Craft workers
   8. Operatives
   9. Laborers and helpers
   10. Service workers
4. Requires that an employer, by followed specified procedures, identify employees by race, ethnicity, and sex, whose annual earnings fall within each of the pay bands used by the United States Bureau of Labor Statistics in the Occupation Employment Statistics survey.
5. Requires that, for employers with multiple establishments, the employer must submit a report for each establishment and a consolidated report that includes all employees.
6. Requires that the pay data report include a section for employers to provide clarifying remarks regarding any of the information provided. Clarifying remarks are not required.
7. Provides that, if an employer is required to file an Employer Information Report, otherwise known as the EEO-1 Report, with the EEOC or other federal agency, the employer may satisfy its reporting requirements under this bill by submitting the Employer Information Report to DFEH.
8. Requires that, if an employer fails to comply with the reporting requirements set forth in this bill, DFEH may seek an order requiring the employer to comply and shall be entitled to recover the costs associated with seeking the order for compliance.
9. Makes it unlawful for any officer or employee of the DIR or the DFEH to make public in any manner whatever any individually identifiable information obtained pursuant to their authority under this bill prior to the institution of any enforcement proceeding and only to the extent necessary for that purpose.
10. Exempts the data collected under this bill from the California Public Records Request Act.
11. Permits DFEH to develop and publicize aggregate reports based on the data obtained pursuant to its authority under this section, provided that the aggregate reports are reasonably calculated to prevent the association of any data with any individual business or person.
12. Requires DFEH to hold onto all pay data reports for at least 10 years.
13. Makes findings and declarations on limiting public access to the pay data reports.

COMMENTS

1. The federal fair pay data reporting program

In announcing its fair pay data reporting program, the Obama Administration summarized it as follows:

Today, the EEOC is proposing revisions to its longstanding EEO-1 form to require all employers with 100 or more employees […] who currently submit the EEO-1 to submit additional summary data on wages paid to their employees, including by gender, race, and ethnicity. As currently proposed, this information would be reported across 10 job categories and by 12 pay bands, and will not require the reporting of specific salaries of each individual employee. […]

This new policy lays important groundwork for progress toward achieving equal pay, as it will encourage and facilitate greater voluntary compliance by employers with existing federal pay laws – such as by evaluating how they are currently paying their employees. It will also assist the EEOC […] in better focusing investigations on employers that are unlawfully shortchanging workers based on their gender, race, or ethnicity.^[1]

The specific details of the Obama Administration’s proposed program are laid out in depth at 81 Federal Register 5113 et seq. The Obama Administration’s program is sometimes referred to as EEO-1 Component Two to distinguish it from the pre-existing demographic data collection, EEO-1 Component One.

2. Current status of the federal fair pay data reporting program

The Obama Administration’s proposed program to collect pay equity data has been the subject of significant political and legal wrangling. Although first announced in early 2016, the EEOC did not plan to begin collecting data immediately. Instead, implementation was delayed to allow employers and the agency itself to put the necessary systems in place.

When the Trump Administration took office in early 2017, therefore, the pay equity data collection still had not officially gotten under way. In August 2017, before data collection had begun, the federal Office of Management and Budget (OMB) ordered the EEOC to halt implementation of the program. It stated that:

OMB has […] decided to stay immediately the effectiveness of the revised aspects of the EEO-1 form for good cause, as we believe that continued collection of this information is contrary to the standards of the [Paperwork Reduction Act]. Among other things, OMB is concerned that some aspects of the revised collection of information lack practical utility, are unnecessarily burdensome, and do not adequately address privacy and confidentiality issues.^[2]

Shortly thereafter, however, the National Women’s Law Center and the Labor Council for Latin American Advancement sued to have the program reinstated, arguing that, in fact, OMB lacked good cause to stay implementation of the program.

On March 4, 2019, a federal district court ruled that the Trump Administration’s decision to halt the program had, indeed, lacked good cause. The court recited at length the extensive preparation, study, and input that went into the creation of the Obama Administration program and concluded that, in the face of that groundwork, and absent a clear statement of its own reasoning, OMB’s decision to halt the program was arbitrary and capricious. Accordingly, the court ordered the Obama Administration’s program reinstated. (Nat’l Women's Law Ctr. v. OMB (D.C. Mar. 4, 2019) Civil Action No. 17-cv-2458 (TSC).)

In response, the EEOC stated that it is “working diligently on next steps” to initiate EEO-1 Component Two data collection and that it “will provide further information as soon as possible.”^[3] According to further orders from the federal court, the EEOC has until April 3, 2019, to inform employers of its plan.

In a nutshell, what this all means is that, for now, the data this bill would require large California employers to report to DFEH is data they will already have to collect and report to comply with the federal program. Whether that federal mandate will prove enduring, however, remains an open question.

3. Comparison of this bill to prior related legislation

AB 1209 (Gonzalez-Fletcher, 2017)

In some respects, this bill is similar to AB 1209, a bill authored by Assemblymember Lorena Gonzalez-Fletcher in 2017. Although the California Senate passed AB 1209 on a 23-13 vote and the Assembly concurred with the final form of the bill by a vote of 47-23, Governor Brown ultimately vetoed it. He cited two principal reasons for the veto. First, he wrote that “ambiguous” language in the bill “could be exploited to encourage more litigation than pay equity.” Second, he said: “[w]hile transparency is often the first step to addressing an identified problem, it is unclear that the bill… will provide data that will meaningfully contribute to efforts to close the gender wage gap.”

Like this bill, AB 1209 proposed to require large California employers to report pay data broken down by gender in order to identify possible discrimination. Opponents of this bill assert that it shares many qualities with AB 1209, qualities they argue are faults.

While there is an overall similarity of purpose, this bill departs from AB 1209 both in its overall design and in several key details. First, AB 1209 proposed an entirely new set of reporting requirements. This bill is closely modeled on the Obama Administration’s program and builds upon annual EEOC reporting requirements with which large employers are already obliged to comply. Second, AB 1209 would have collected a different data set. Under AB 1209, employers would have had to determine and report the difference between mean and median wages for male and female employees in every job classification or title. This bill only requires employers to submit information about earnings by pay band and by general job category. Third, AB 1209 would have directed the Secretary of State to publish the resulting data, unfiltered, online, for all the world to see. Under this bill, only aggregate data would be made available to the public. Finally, whereas AB 1209 would only have collected information about pay disparity by gender, this bill also includes data collection on pay differentials by race and ethnicity.

SB 1284 (Jackson, 2018)

Like this bill, SB 1284 (Jackson, 2018) was an effort to codify the Obama Administration’s proposed pay equity data collection program at the state level. Between its introduction and its final form, SB 1284 went through a number of refinements to address opposition concerns. The author increased restrictions on the use and handling of the collected data to protect employee’s privacy and allay fears that the data would be utilized for a wave of private litigation against employers. The author also dropped significant fines that would have been levied against non-compliant employers, opting instead for a lighter touch based on agency enforcement through the courts. Despite these refinements, SB 1284 ultimately died in the Assembly Committee on Appropriations.

This bill largely starts off where SB 1284 left off. It incorporates the refinements to SB 1284 detailed above and adds one more: a clearer and simpler description of the procedure that companies must follow when compiling the pay equity data to report. Under the bill, employers would submit data for the preceding twelve month reporting period by choosing a single pay period from the final quarter of the calendar year to serve as a “snapshot” and then reporting the annual earnings, by pay band, for each employee in the snapshot.

4. Utility of the resulting data

The Equal Pay Act permits employers to pay employees different amounts for substantially similar work provided that the difference can be justified “pursuant to a seniority system, a merit system, a system which measures earnings by quantity or quality of production, or a differential based on any bona fide factor other than sex.” (Lab. Code § 1179.5(a).)

The data collected under this bill will only show the existence of pay gaps. It will not identify the degree to which any such gaps can be explained by some of the legally permissible bona fide factors for disparate pay. So while the data resulting from this bill would provide important information about differences between how much people are paid, it would not indicate how much of that pay gap is the result of Equal Pay Act violations. This appears to be what the opponents of the bill are referring to when they remark that SB 171 “will create a false impression of an equal pay violation where none actually exists.”

Even so, at least three arguments can be made for why the pay data this bill proposes to collect would still be informative and helpful. First, the data would have an important role to play as an ongoing measure of broader barriers to workplace equity. After all, the factors that make wage differentials legally acceptable under the Equal Pay Act, such as seniority, education, training, or experience, for instance, are themselves influenced by underlying discrimination. That white men often have more seniority and education than their co-workers is not, obviously, because of any inherent ability to endure longer in the workplace or to collect more degrees; those gaps, too, are a function of discrimination. Thus, while a measure of the pay gap that does not account for the “bona fide factors” would not precisely measure compliance with the Equal Pay Act, it would serve as a standing barometer of whether or not we are progressing toward greater equality of opportunity in the larger sense.

Second, the pay equity data collected under this bill would enable DFEH and the DLSE to utilize their enforcement resources more effectively. By identifying patterns and outliers, the agencies could determine which industries and employers might merit further attention. Of course, the data alone would not necessarily indicate that any Fair Pay Act violations had taken place, but by following up on data, the agencies could investigate whether data showing large wage disparities was the result of pay discrimination, or whether it could be explained by bona fide factors.

Third, even if the cumulative data produced by this bill would have certain explanatory limitations, the process that each individual company would have to go through to produce the data might have a tremendous impact on pay equity. As the example in the next Comment illustrates, the process of conducting a pay equity self-audit, even if it is merely for the purpose of complying with this bill, can produce transformative results. Many companies may be unaware that their pay structures contain disparities that cannot be explained by any of the permissible factors enumerated in the Pay Equity Act. Upon discovery of such inequities, these companies may be inspired, whether by fear of litigation under the Pay Equity Act or simply out of a sense of fairness, to correct those problems. On balance, in fact, it is plausible that the self-auditing required by this bill might ultimately play a bigger role in closing the wage gap than the publication and monitoring of the overall data.

5. The correctional power of self-audits

In order to compile and report the required data under the terms of this bill, the covered employers will have to conduct a self-audit. They will need to gather and organize information about how much they are paying various workers and break it down by gender, race, and ethnicity. While the bill does not require employers to do anything if they discover, upon completion of the self-audit, that they are paying people differently based on their gender, race, or ethnicity, many employers may elect to look further into the situation, either from a sense of fairness or out of a concern to make sure that they are, in fact, compliant with the Pay Equity Act.

As evidence that conducting this sort of self-audit can lead to change and greater compliance, the author points to what took place at the company Salesforce in 2015. There, female managers convinced the male CEO, Marc Benioff, to order a Pay Equity Act compliance self-audit. Benioff was initially dismissive, expressing confidence that the company paid its employees equitably, so that the self-audit was unnecessary. To his surprise, however, the self-audit revealed that, at the time, Salesforce was in fact underpaying its female employees,^[4] even taking into account factors like seniority and location. Based on the self-audit, Benioff committed Salesforce to make up the difference. Forbes reported that the process affected 6 percent of the company’s 17,000 salaries and cost Salesforce around $3 million. ^[5] A few years later, after Salesforce had acquired some other companies’ workers and their corresponding pay structures, the company conducted another self-audit and found that it had to make further adjustments. (Ibid.)

Under this bill, all large California employers would regularly undergo a similar self-auditing process every year.

6. Detecting job segregation trends

Job segregation refers to the phenomenon in which one gender or racial group comes to predominate in a certain occupation. In the context of gender segregation, for example, women have consistently held over 80 percent of the librarian, “registered” nurse, and kindergarten teacher jobs for the past several decades.^[6]

Such demographic stratification not only balkanizes the workforce; it also contributes to the pay gap, because occupations that are considered “women’s work” tend to be paid less. A 2010 Institute for Women’s Policy Research study concluded that:

there is a systematic link between the share of women working in an occupation and median weekly earnings: the higher the share of women, the lower the median earnings at each of three broad skill levels. This gender wage gap between occupations comes on top of the gender wage gap within occupations, providing women who work in female-dominated occupations a double disadvantage: lower earnings because they are working in an occupation that is mostly done by women, and lower earnings because within each occupation women are likely to earn less than men.^[7]

The pay data collected under this bill would be tracked by ten different job categories. As a result, it should provide insight into job segregation trends across California. Through the aforementioned self-audits, it should also give large California companies the chance to examine gender and racial segregation within their ranks. Armed with this knowledge, employers and policy makers may be better equipped to find ways to break down the barriers that operate to channel women and people of color toward certain occupations and away from others. By extension, addressing job segregation may contribute greatly toward eliminating the pay gap.

7. Proposed amendments

In order to fulfill commitments made during consideration of the bill in the Senate Committee on Labor, Public Employment and Retirement, and to clarify exactly which employees must be accounted for in the pay data reports, the author proposes to incorporate amendments into the bill that would:

• clarify that submission of an EEO-1 Report to DFEH satisfies the requirements of this bill, so long as the EEO-1 Report contains the same or substantially similar data to that required by this bill;
• narrow the definition of employee to include only individuals who are on the employer’s payroll, whom the employer is required to include in an EEO-1 Report, and for whom the employer is required to withhold federal social security taxes; and
• make other technical, non-substantive changes.

The specific amendments are as follows:

Amendment 1

On page 3, in line 36, strike out “and”

Amendment 2

On page 4, strike out lines 37 through 40, inclusive, and insert:

(f) If an employer submits to the department a copy of the employer's Employer Information Report, otherwise known as an EEO-1 Report, containing the same or substantially similar pay data information required under this section, then the employer is in compliance with this section.

Amendment 3

On page 5, strike out lines 1 through 3, inclusive

Amendment 4

On page 5, in line 11, strike out “whatsoever” and insert:

whatever

Amendment 5

On page 5, in line 14, after “by” insert:

the

Amendment 6

On page 5, in line 35, strike out “for”

Amendment 7

On page 5, in line 36, after “to” insert:

include in an EEO-1 Report and for whom the employer is required to

8. Arguments in support of the bill

According to the author:

For more than 50 years, large companies have submitted demographic information annually to the federal agency responsible for enforcing workplace anti-discrimination laws, the Equal Employment Opportunity Commission (EEOC). This data has helped identify patterns of employment segregation and discrimination. Recognizing that pay discrimination is difficult to detect and address, the Obama Administration announced a proposed revision to the Employer Information Report (EEO-1) to include the reporting of pay data by race, ethnicity and gender beginning in 2018. The EEO-1 pay data collection rule was adopted by the EEOC and approved by the Office of Management and Budget after a rigorous and transparent process that spanned years and included a pilot study, a public hearing and two public comment periods. The agency heard from employer and employee advocates, researchers, academics, and members of the public, and ultimately determined that the final rule’s burden to employers was manageable and the overall benefit substantial. […]

Modelled after the Obama Administration order, […] SB 171 will encourage employers to analyze their own pay and hiring practices to ensure they are fair and allow for self-evaluation and correction. In addition, SB 171 will allow the Department of Fair Employment and Housing to more efficiently identify patterns of wage disparities, particularly as they relate to job segregation by gender and race, which, with additional information, could lead to the targeted enforcement of equal pay and anti-discrimination laws.

The sponsors of the bill, Equal Rights Advocates, the California Employment Lawyers Association, and the American Association of University Women, write:

One obstacle to effective enforcement is that pay discrimination often is “hidden from sight” and can be a result of unconscious biases or historical inequities. For example, recent studies reveal significant systemic biases against women due to unconscious cultural biases, particularly in the science and technology industries. […]

SB 171 will allow for the designated state agencies to more efficiently identify patterns of wage disparities and allow for targeted enforcement of equal pay laws, when appropriate. Very importantly, it will encourage employers to analyze their own pay practices to ensure they are fair and lawful and allow for self-correction. Simply compiling the data will prompt some businesses to make necessary changes.

In further support, the California Women’s Law Center writes:

Despite recent progress, the gender pay gap persists, resulting in an estimated $78.6 billion in lost wages for women each year in California. […] SB 171 will ensure that […] important pay data will continue to be compiled and aggregated in California.

9. Arguments in opposition to the bill

In opposition to the bill, the California Chamber of Commerce and a series of affiliated organizations write:

SB 171 […] will burden employers by requiring them to turn over pay data information that could give the false impression of pay disparity where none may exist. […]

SB 171 requires employers to collect pay data in the aggregate. Doing so will likely demonstrate wage disparity amongst employees in the different job classifications or titles according to gender. However, a disparity in wages does not automatically translate into wage discrimination […]. Job titles are not determinative of whether two jobs are substantially similar for purposes of equal pay under Labor Code Section 1197.5 or the federal Equal Pay Law. […]

[T]here are objective, non-discriminatory reasons for employees to have a wage differential. Aggregate data as proposed in SB 171 fail to take these valid, non-discriminatory, reasons into consideration […].

SB 171 requires employers to provide pay data regarding an employee’s total earnings as shown on the Internal Revenue Service’s Form W-2. However, a W-2 form does not take into account an employee’s own decisions and actions that can also create wage disparity that has nothing to do with discriminatory intent of an employer.

SB 171 is premature because there is a Pay Equity Task Force assigned to analyzing the Equal Pay Act, as well as workplace and compensation policies that can lead to successful compliance with the Act. The Pay Equity Task Force is supposed to release an additional report regarding the Equal Pay Act this year. […] [T]he Legislature should wait for the Pay Equity Task Force’s report before imposing a new mandate on employers.

In further opposition to the bill, Society for Human Resource Management writes:

[H]uman resource information systems (HRIS) that contain demographic data about employees’ race, ethnicity and gender may not communicate with payroll or time-keeping systems. Under this scenario and proposal, employers and human resource professionals may face a costly modification to comply under the law that will not help close any pay discrimination that may be occurring.

SUPPORT

American Association of University Women (sponsor)
California Employment Lawyers Association (sponsor)

Equal Rights Advocates (sponsor)
American Civil Liberties Union of California

California Women’s Law Center

California Work & Family Coalition

Child Care Law Center

Consumer Attorneys of California

Legal Aid at Work

National Council of Jewish Women, California

Western Center Center on Law and Poverty

Women’s Foundation of California

YWCA San Francisco & Marin

OPPOSITION

Brea Chamber of Commerce

California Ambulance Association

California Association of Licensed Security Agencies, Guards & Associates

California Association of Winegrape Growers

California Chamber of Commerce

California Farm Bureau Federation

California League of Food Producers

California Manufacturers & Technology Association

California Retailers Association

California Taxpayers Association

California Travel Association

Cerritos Regional Chamber of Commerce

Civil Justice Association of California

Construction Employers’ Association

Garden Grove Chamber of Commerce

Greater Coachella Valley Chamber of Commerce

Greater Conejo Valley Chamber of Commerce

Long Beach Area Chamber of Commerce

Orange County Business Council

Rancho Cordova Chamber of Commerce

Redondo Beach Chamber of Commerce

San Gabriel Valley Economic Partnership

Santa Maria Valley Chamber of Commerce

Society for Human Resource ManagementSouth Bay Association of Chambers of Commerce

Western Growers Association

RELATED LEGISLATION

Pending Legislation: SCR 9 (Jackson, 2019) proclaims April 2, 2019, as Equal Pay Day in recognition of the need to eliminate the gender gap in earnings by women and to promote policies to ensure equal pay for all.

Prior Legislation:

SB 1284 (Jackson, 2018) was substantially similar to this bill. SB 1284 died in the Assembly Appropriations Committee.

AB 2282 (Eggman, Ch. 127, Stats. 2018) clarified that, while prior salary information cannot justify disparities in compensation, an employer may make a compensation decision based on an applicant’s current salary as long as any wage differential resulting from that compensation decision is justified by: (a) a seniority system; (b) a merit system; (c) a system that measures earnings by quantity or quality of production; or (d) a bona fide factor other than sex, such as education, training, or experience.

AB 46 (Cooper, Ch. 776, Stats. 2017) clarified that the California Equal Pay Act applies to public as well as private sector employers.

AB 168 (Eggman, Ch. 688, Stats. 2017) prohibited an employer from seeking or relying on the salary history information of an applicant as a factor in determining whether to offer an applicant employment or what salary to offer an applicant. The bill also required an employer, upon reasonable request, to provide the pay scale for a position to an applicant.

AB 1209 (Gonzalez-Fletcher, 2017) would have required employers with 500 or more employees in California to provide the Secretary of State with specific information regarding gender wage differentials for exempt employees and board members every two years as part of their corporate filings. In his message vetoing AB 1209, then Governor Brown wrote that “ambiguous” language in the bill “could be exploited to encourage more litigation than pay equity.” In addition, he wrote: “[w]hile transparency is often the first step to addressing an identified problem, it is unclear that the bill… will provide data that will meaningfully contribute to efforts to close the gender wage gap.”

SB 1063 (Hall, Ch. 866, Stats. 2016) expanded the prohibitions in the California

Equal Pay Act regarding gender to include discrimination based on race or ethnicity.

AB 1676 (Campos, Ch. 856, Stats. 2016) required that prior salary shall not, by itself, justify any disparity in compensation.

SB 358 (Jackson, Ch. 546, Stats. 2015) addressed significant loopholes in the Equal Pay Act that had prevented meaningful enforcement by, among other things, requiring employers to justify any gender pay differential with a legitimate non-sex-based factor and prohibiting retaliation against employees for disclosing or discussing their wages with co-workers.

AB 160 (Grunsky, Ch. 804, Stats. 1949) enacted California’s original Equal Pay Act.

PRIOR VOTES:

Senate Labor, Public Employment, and Retirement Committee (Ayes 4, Noes 1)

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

1. Fact Sheet: New Steps to Advance Equal Pay on the Seventh Anniversary of the Lilly Ledbetter Fair Pay Act (Jan. 29, 2016) The White House Office of the Press Secretary https://obamawhitehouse.archives.gov/the-press-office/2016/01/29/fact-sheet-new-steps-advance-equal-pay-seventh-anniversary-lilly (as of Mar. 23, 2019). ↑

2. Memorandum from Neomi Rao, Adm'r, OIRA, to Victoria Lipnic, Acting Chair, EEOC (Aug. 29, 2017) quoted in Nat'l Women's Law Ctr. v. OMB (D.C. Mar. 4, 2019) Civil Action No. 17-cv-2458 (TSC). ↑

3. Statement on the 2018 EEO-1 Portal Opening for Component 1 Data, Equal Employment Opportunity Commission https://www.eeoc.gov/employers/eeo1survey/statement-2018-opening.cfm (as of Mar. 22, 2019.) ↑

4. Lam, One Tech Company Just Erased Its Gender Pay Gap (Nov. 10, 2015) The Atlantic https://www.theatlantic.com/business/archive/2015/11/salesforce-equal-pay-gender-gap/415050/ (as of Mar. 23, 2019). ↑

5. Zillman, Salesforce CEO Marc Benioff: We're Erasing Our Gender Pay Gap—Again (Jan. 20, 2017) Forbes http://fortune.com/2017/01/20/salesforce-marc-benioff-gender-pay-gap-davos/ (as of Mar. 23, 2019). ↑

6. Hegewisch et al, Separate and Not Equal? Gender Segregation in the Labor Market and the Gender Wage Gap (Sep. 2010) Institute for Women’s Policy Research https://iwpr.org/wp-content/uploads/wpallimport/files/iwpr-export/publications/C377.pdf (as of Mar. 28, 2019) at p. 2. ↑

7. Id. at p. 13. ↑

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Jerry Hill, Chair

2019 - 2020 Regular

Bill No: SB 171 Hearing Date: March 27, 2019

Subject: Employers: annual report: pay data

KEY ISSUE

Should the Legislature require that employers with 100 or employees provide the Department of Fair Employment and Housing with EEO-1 pay data, as specified?

ANALYSIS

Existing law:

1. Prohibits an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person, to refuse to hire, discriminate against, or harass the person. (Government Code §12940)
2. Explicitly prohibits an employer, labor organization, employment agency, apprenticeship training program, or any training program leading to employment, to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring. (Government Code §12940(k))
3. Requires every employer, employment agency, and labor organization subject to this subchapter shall: (1) make and keep such records relevant to the determinations of whether unlawful employment practices have been or are being committed, (2) preserve such records for such periods, and (3) make such reports therefrom as the Commission shall prescribe by regulation or order, after public hearing, as reasonable, necessary, or appropriate for the enforcement of this title.
   (Federal Civil Rights Act of 1964, §709(c), Title VII)
4. Requires that, on or before March 31 of each year, every employer that is subject to Title VII of the Civil Rights Act of 1964, as amended, and that has 100 or more employees, shall file with the Commission or its delegate executed copies of Standard Form 100, as revised (otherwise known as "Employer Information Report EEO-1"), in conformity with the directions set forth in the form and accompanying instructions. (29 CFR §1602.7)

This bill:

1. Requires that, on or before March 31, 2021, and on or before March 31 each year thereafter, a private employer with 100 or more employees and who is required to file an annual Employer Information Report (EEO-1) under federal law must submit a pay data report to the Department of Fair Employment and Housing (DFEH) that covers the prior calendar year, or “reporting year”.
2. Requires that DFEH makes the reports available to the Division of Labor Standards and Enforcement (DLSE) upon request.
3. Requires that the pay data report includes the number of employees, categorized by race, ethnicity, and sex that are within the pay bands used by the United States Bureau of Labor Statistics in the Occupation Employment Statistics survey.
4. Requires the pay data report includes the number of employees, categorized by race, ethnicity, and sex in each of the following job categories:
5. Executive or senior level officials and managers
6. First or mid-level officials and managers
7. Professionals
8. Technicians
9. Sales workers
10. Administrative support workers
11. Craft workers
12. Operatives
13. Laborers and helpers
14. Service workers
15. Requires that, for the purposes of an employer calculating the numbers above, the employer create a “snapshot” that counts all of the individuals in each job category employed during a single pay period of the employer’s choice between October 1 and December 31 of the “reporting year”.
16. Requires, for the purposes of calculating annual earnings within federal pay bands, the employer must calculate W-2 total earnings for each employee in the “snapshot” for the entire “reporting year”, irrespective of if the employees worked the entire year.
17. Requires that the employer must include the total number of hours worked by each employee counted in each pay band.
18. Requires that, for employers with multiple establishments, the employer must submit a report for each establishment and a consolidated report that includes all employees.
19. Requires that the pay data report includes a section for employers to provide clarifying remarks regarding any of the information provided, but clarifies that the employer is not required to provide clarifying remarks.
20. Provides that, if an employer is required to file an Employer Information Report, otherwise known as the EEO-1 Report, with the United States Equal Employment Opportunity Commission or other federal agency, the employer may satisfy compliance with the requirements above by submitting the Employer Information Report. This bill requires that the Employer Information Report must include the same or substantially similar pay data required under this section.
21. Requires that, if an employer fails to comply, DFEH may seek an order requiring the employer to comply with these requirements and seek an order requiring the employer to comply with these requirements, as well as recovery of costs associated with seeking the order for compliance.
22. Prohibits any officer or employee of the DFEH or DLSE from making public in any manner whatsoever any individually identifiable information obtained through the employer-submitted pay data prior to an investigation or enforcement action. “Individually identifiable information” includes data that is associated with a specific person or business.
23. Clarifies that the prohibition above does not prevent DFEH from publicizing aggregate reports on pay data if the aggregate reports are reasonably calculated to prevent the association of any data with an individual business or person.
24. Excludes any pay information disclosed to DFEH from disclosure pursuant to the California Public Records Act.
25. Requires that the DFEH maintain pay data reports for not less than 10 years.
26. Makes findings and declarations on the gender pay gap, as well as the need for a limitation on the public’s access to the pay data under the California Public Records Act.

COMMENTS

1. The Equal Employment Opportunity Commission (EEOC) and Form EEO-1:

The Equal Employment Opportunity Commission (EEOC) is a federal commission, created by the Civil Rights Act of 1964. Since its creation, the EEOC has fought discrimination in all forms throughout America’s workplaces, including discrimination based on race, color, religion, national origin, age, disability, and of either sex. The EEOC was an early pioneer in the fight for gender equality – as early as 1968, the EEOC was arguing in court that state laws that prevented women from certain occupations were illegal and preempted under federal law.

Starting in 1966, the EEOC required employers with 100 or more employees to submit EEO- 1 forms, which showed the representation of men and women of different ethnic groups in nine different occupational classifications. According to the EEOC, the EEO-1 data was invaluable in enforcing anti-discrimination laws and conducting public hearings throughout the country to bring attention to the issue of discrimination in the workplace. The EEO-1 continues to be required by the EEOC, and continues to be used to enforce anti- discrimination laws throughout the country.

In 2016, in an attempt to end gender-based pay discrimination, the Obama Administration required employers to report pay data in specified bands on the EEO-1 form. This requirement went through the necessary rule making, and the first reporting deadline was March 31, 2018. However, in August of 2017, the current federal Administration, through the Office of Management and Budget (OMB), suspended the rule requiring the reporting of pay data due to compliance burdens.

However, on March 4, 2019, the U.S. District Court for D.C. found that the OMB had failed to meet the legal requirements necessary to stay the reporting of EEO-1 pay data. While this court order will almost certainly be appealed, it is increasingly likely that employers will be required to include the pay data required under this bill with their federal EEO-1 form. As such, it is likely that compliance with SB 171 will be a simple as submitting the EEO-1 form to DFEH and EEOC at the same time.

1. Staff Comments:

EEO-1, Confidentiality, and Compliance

As noted above, the anti-discrimination data from the EEO-1 form is profoundly useful in the enforcement of federal anti-discrimination laws, as well as in tracking employment trends in various industries. It is likely this data will similarly assist DFEH (and potentially DLSE) in their enforcement of anti-discrimination laws, including pay equity provisions created by SB 358 (Jackson), Chapter 546, Statutes of 2015. To assist these efforts, the Committee may wish to consider several amendments.

First, one of the core innovations that SB 171 initiates is that it permits state agencies to piggy back off of the existing EEO-1 form. Last year, when the Committee heard SB 1284 (Jackson), which was a very similar bill, the author took Committee amendments that gave DFEH flexibility to accept or not accept an EEO-1 form based on the inclusion of pay data. On further review, the Committee may wish to provide additional clarity that the submission of an EEO-1 form with pay data is sufficient to comply with the requirements of SB 171.

Therefore, the Committee may wish to consider the following amendment:

On page 4, line 40, strike “the same or substantially similar pay data”, strike lines 1-3 on page 5, and insert:

pay data collection information, the employer satisfies compliance with this section by submitting that same EEO-1 Report to the department.

Second, the EEOC is bound by federal law to treat EEO-1 data confidentially. Currently, while SB 171 prohibits any governmental employee from revealing individually identifiable pay data, it does not mirror federal penalties for the data being revealed to the public or comparable state statutes.

Therefore, the Committee may wish to consider the following amendment:

On page 5, line 17, insert the following after the period:

Anyone who shall make public in any manner whatever any information in violation of this subsection shall be guilty of a misdemeanor and upon conviction thereof, shall be fined not more than $1,000, or imprisoned not more than one year.

This amendment would bring SB 171 in line with existing federal and state law.

1. Proponent Arguments:

The California Consumer Attorneys of California support SB 171, arguing:

“Pay discrimination affects all segments of society, and especially harms families and the state’s economy. In California in 2017, women working full-time, year-round made a median 89 cents to every dollar earned by men, and for women of color, the gap is far worse.

Recognizing that pay discrimination is difficult to detect and address, the Obama Administration announced a proposed revision to the Employer Information Report (EEO-1) to include the reporting of pay data by gender, race and ethnicity beginning in 2018. For more than 50 years, large companies have been submitting these reports with demographic information to the federal agency responsible for enforcing workplace anti-discrimination laws, the Equal Employment Opportunity Commission. This data has helped identify patterns of occupational segregation and discrimination.

The proposed revision to the EEO-1 reports, to include pay data, was adopted by the Commission and approved by Office of Management and Budget after a rigorous and transparent process that spanned years and included a pilot study, a public hearing and two public comment periods. However, in August 2017, the Trump Administration put a halt to the implementation of this new rule, dealing a significant blow to the fight for equal pay.

National Women’s Law Center and Democracy Forward (plaintiffs) filed a lawsuit challenging the stay of the pay data collection and this March, the District Court in that case (1) denied the US's motion to dismiss; (2) granted plaintiffs’ motion for summary judgment; and (3) vacated the stay on the pay data collection component of the EEO-1. Under the terms of the order, the pay data collection is once again in effect. The deadline for EEO-1 filings was extended to May 31 this year because the government shutdown. Under the court's order, those filings should include pay data.

…

SB 171 would allow for the designated state agencies to more efficiently identify patterns of wage disparities and allow for targeted enforcement of California’s equal pay laws, when appropriate. Very importantly, it will encourage employers to analyze their own pay practices to ensure they are fair and lawful and allow for self-correction. Simply compiling the data will prompt some businesses to make necessary changes.”

1. Opponent Arguments:

The California Chamber of Commerce opposes SB 171, arguing:

“SB 171 seeks to collect pay data according to job title, not according to whether the jobs are “substantially similar” for purposes of comparison… The term “substantially similar” was adopted in Labor Code Section 1197.5 to capture the intent of equal pay – meaning that employees who, with minor deviations, perform the same work according to a composite of skill, responsibility and effort, should be paid the same wage rate, unless a bona fide factor for the disparity exists.… Comparatively, two in-house attorneys may have the same job title, but may not actually have substantially similar job duties for purposes of comparison…

Aggregate data as proposed in SB 171 fails to take these valid, non-discriminatory reasons into consideration and will create a false impression of wage discrimination where none exists. For example, there could be a disparity in the mean of salaries between two exempt employees because one employee has only worked for the employer for 6 months, whereas the other employee has been with the employer for 10 years....

SB 171 requires employers to provide pay data regarding an employee’s total earnings as shown on the Internal Revenue Service Form W-2. However, a W-2 form does not take into account an employee’s own decisions and actions that can also create wage disparity that has nothing to do with discriminatory intent by the employer.

Finally, a wage disparity can also be created by an employee’s personal choices as to pre-tax payroll deductions. One employee may max out all pre-tax deductions for a 401(k), dependent child reimbursement, medical expense reimbursement, college savings, etc., while another employee may not request any such deductions be made to his or her paycheck. None of these employee choices and actions will be captured or reflected in SB 171 to justify a potential wage disparity. Again, this omission on the report will create the false impression of wage discrimination, where none exists.”

1. Double Referral:

This bill has been double referred and, if approved by this committee, it will be sent to the Senate Judiciary Committee for hearing.

1. Prior Legislation:

SB 1284 (Jackson) of 2018, which dealt with EEO-1 reporting to DFEH, was very similar to this bill. SB 1284 was held under submission by the Assembly Appropriations Committee.

SB 358 (Jackson), Chapter 546, Statutes of 2015, prohibits an employer from paying any of his or her employees at wage rates less than those paid to employees of the opposite sex for substantially similar work, when viewed as a composite of skill, effort, and responsibility.

SUPPORT

The California Employment Lawyers Association (Co-Sponsor)

Equal Rights Advocates (Co-Sponsor)

American Association of University Women – California Chapter (Co-Sponsor)

California Women’s Law Center

Child Care Law Center

Consumer Attorneys of California

Legal Aid at Work

National Council of Jewish Women, California

The American Civil Liberties Union of California

Western Center Center on law and Poverty

YWCA San Francisco & Marin

OPPOSITION

California Ambulance Association

California Association of Licensed Security Agencies, Guards & Associates

California Chamber of Commerce

California Retailers Association

California Travel Association

Civil Justice Association of California

Society for Human Resource Management

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