BILL ANALYSIS
AB 17
Page 1
Date of Hearing: April 1, 2003
ASSEMBLY COMMITTEE ON JUDICIARY
Ellen M. Corbett, Chair
AB 17 (Kehoe) - As Introduced: December 2, 2002
As Proposed to Be Amended
SUBJECT : DOMESTIC PARTNER BENEFITS: PUBLIC CONTRACT REQUIREMENT
KEY ISSUE : IN ORDER TO REDUCE DISCRIMINATION, SHOULD CALIFORNIA
PROHIBIT STATE CONTRACTS WITH CONTRACTORS WHO DISCRIMINATE IN
THE PROVISION OF BENEFITS BETWEEN EMPLOYEES WITH SPOUSES AND
EMPLOYEES WITH DOMESTIC PARTNERS?
SYNOPSIS
This bill seeks to reduce discrimination against employees and
their domestic partners by prohibiting a state agency from
entering into a contract for goods or services with a contractor
who discriminates in the provision of benefits between employees
with spouses and employees with domestic partners or between the
spouses and domestic partners of those employees. The bill
provides that this requirement may be waived under certain
circumstances and provides for a delayed implementation date.
In order to address concerns of religious entities, the bill
provides that a contractor is not deemed to discriminate in the
provision of benefits when it, among other things, elects to
provide benefits on a basis unrelated to an employee's marital
or domestic partnership status. As explained in the analysis,
similar language was successfully included in the San Francisco
Equal Benefits Ordinance.
Proponents argue that employment benefits account for 30 to 40%
of employee compensation and therefore providing unequal levels
of compensation is unfair and discriminatory. The author also
notes that California provides domestic partner benefits to its
own employees and the State should not do business with
contractors that continue to discriminate. Opponents, on the
other hand, argue that most businesses do not offer domestic
partner coverage and state that the bill will force the State to
limit its vendor competition to a small percentage of available
bidders. Opponents also argue that the bill is anti-family
because, they assert, many companies will reduce or eliminate
family benefits as a result of the requirements.
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SUMMARY : Seeks to reduce discrimination against employees and
their domestic partners by eliminating one source of such
discrimination: when state contractors discriminate in the
provision of benefits. Specifically, this bill , among other
things:
1)Prohibits a state agency from entering into any contract for
goods or services with a vendor or contractor who
discriminates in the provision of benefits between employees
with spouses and employees with domestic partners or between
the spouses and domestic partners of those employees.
2)Provides that these benefits may include, but are not limited
to: (a) bereavement leave; (b) family medical leave; (c)
health benefits; (d) membership or membership discounts; (e)
moving expenses; (f) pension; (g) retirement benefits; or (h)
travel benefits.
3)Provides that, after taking all reasonable measures to find a
contractor or vendor who complies, the bill's requirements may
be waived under specified circumstances, including among
others, if there is only one prospective contractor willing to
enter into the contract or if the contract is necessary to
respond to an emergency that endangers the public health or
safety and no complying contractor is immediately available.
4)Provides that a contractor is not deemed to discriminate in
the provision of benefits when it, among other things, elects
to provide benefits on a basis unrelated to an employee's
marital or domestic partnership status, such as allowing an
employee to designate a legally domiciled member of the
employee's household as being eligible for benefits.
5)Does not apply to contracts executed or amended prior to July
1, 2004 or to bid packages advertised and made available to
the public or any competitive or sealed bids received by the
state prior to July 1, 2004, but applies to a contract amended
after June 30, 2004.
EXISTING LAW :
1)Sets forth procedures for the establishment, registration and
termination of a domestic partnership and provides that the
only persons who may register as domestic partners are
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same-sex couples over the age of 18 or opposite sex couples
where one of the partners is over the age of 62. (Family Code
section 297 et seq. )
2)Provides that a group health care service plan and group
disability insurance policy that provides specified benefits
must offer coverage to employers for the domestic partner of
an employee or insured to the same extent, and subject to the
same terms and conditions, as provided to a dependent of the
employee or insured. (Health and Safety Code section 1374.58
and Insurance Code section 10121.7.)
3)Imposes various requirements on public entities with respect
to the letting of state contracts. For example, all state
contracts for public works or goods and services must contain
a nondiscrimination clause and contractors on certain projects
must certify that none of the foreign-made materials used have
been produced by, among other things, forced labor or child
labor. (Government Code section 12990 and Public Contract Code
section 6108.)
FISCAL EFFECT : The bill as currently in print is keyed fiscal.
COMMENTS : This bill seeks to reduce discrimination against
employees and their domestic partners by eliminating one source
of such discrimination: when state contractors discriminate in
the provision of benefits. In support of the measure, the
author states:
AB 17 promotes equal pay for equal work. Employment
benefits account for 30 to 40% of employee
compensation. Providing unequal levels of compensation
is unfair and discriminatory. California recognized
this workplace inequity and extended domestic partners
benefits to its workers, affirming our State's
commitment to equality. To promote that principle, our
State should not do business with contractors that
continue to discriminate. AB 17 levels the playing
field and promotes equal opportunity for all
contractors. Domestic partner benefits are essential in
a workplace where equal work deserves equal
compensation. A company that chooses to provide
benefits to its domestic partner employees makes a
business decision to provide the same benefits to its
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domestic partner employees as it provides to its
married employees. These companies recognize the need
for equity in the workplace.
Similar Requirements for Public Contracts Implemented in Other
Localities. In 1996, the City and County of San Francisco
enacted the "Equal Benefits Ordinance" prohibiting the City and
County from entering into contracts with any entity that
discriminates in the provision of benefits between employees
with domestic partners and employees with spouses or between the
domestic partners and spouses of employees. Since the enactment
of the San Francisco ordinance, several other California
jurisdictions have enacted similar ordinances, including the
cities of Oakland, Los Angeles, Berkeley and San Mateo County.
The author's office notes that several cities outside of
California have also followed suit, including Seattle and
Tumwater, Washington and Minneapolis, Minnesota. And, according
to the San Francisco Human Rights Commission, both Broward
County, Florida and Portland, Maine have enacted ordinances on
the issue.
Opposition Argument that the Bill will Reduce or Eliminate
Benefits Offered to All Employees Appears Misplaced. Opponents
argue that this measure will result in businesses either
reducing or simply refusing to offer any benefits to all
employees. In explanation, they state, "since the cost of
insurance and other benefits is constantly increasing, many
(most?) companies will reduce or eliminate family benefits. ?
This bill ? will directly cause harm to thousands of working
families by eliminating health insurance, prescription benefits,
dental coverage, etc."
While this argument ignores a business' self-interest in
offering a competitive benefits package in order to attract
quality employees, the recent experience in San Francisco
regarding that city's Equal Benefits Ordinance appears to
further demonstrate that employers do not reduce or eliminate
benefits to all employees when an Equal Benefits Ordinance is in
place.
Specifically, on November 14, 2002, the San Francisco Human
Rights Commission released its "Five-Year Report on the San
Francisco Equal Benefits Ordinance" detailing the implementation
and impact of the ordinance over the five-year period. Notably,
the Commission found that "The most significant change has been
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a 6% decrease in the number of companies not offering benefits
[to either domestic partners or spouses]. This decline has
continued over the five years of implementation and refutes the
assertion that Equal Benefits legislation encourages employers
to take away benefits they might otherwise offer."
Efforts to Address Religious Organizations' Concerns. This bill
contains language, modeled on Equal Benefits Ordinances in San
Francisco and Seattle, that attempts to address concerns raised
by religious entities regarding the bill's requirements.
Specifically, religiously-based employers oppose the measure
unless it is amended to "allow faith based employers to continue
providing services for the state without compromising their
religious beliefs."
In order to address this concern, the bill provides that a
contractor is not deemed to discriminate in the provision of
benefits when it, among other things, elects to provide benefits
on a basis unrelated to an employee's marital or domestic
partnership status, such as allowing an employee to designate a
legally domiciled member of the employee's household as being
eligible for benefits. In other localities this language has
been used to address similar concerns raised by religious
organizations, as explained by St. Mary's Medical Center,
operated as part of Catholic Healthcare West (CHW), which wrote
in support of Equal Benefits legislation:
In 1997, shortly after the City of San Francisco enacted
its Equal Benefits Ordinance, St. Mary's Medical Center,
along with other San Francisco-based CHW institutions,
amended its employee benefits policies in order to comply
with the San Francisco law. This policy shift made sense
for many reasons.
St. Mary's complies with the San Francisco Equal Benefits
Ordinance by extending to each employee the option of
selecting one adult household member for insurance
benefits eligibility. The employee may select a spouse, a
domestic partner, or one other adult household member to
receive insurance coverage. By treating spouses and
domestic partners equally, this form of compliance
satisfies the Ordinance's requirements. By extending
benefits to a broader pool of adult household members,
this form of compliance satisfies the philosophy upon
which our facility is founded and at the same time
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expands on the Ordinance's underlying concept of
nondiscrimination.
St. Mary's compliance with San Francisco's Equal Benefits
Ordinance fits perfectly with our mission to enhance the
health and well-being of the Individuals, families and
communities we serve. Equal Benefits laws promote better
health care and broadens access to health care for people
currently uninsured or underinsured. Our extension of
benefits promotes this goal for St. Mary's community of
employees and their families.
Companies and Localities Increasingly Offer Domestic Partner
Benefits to Employees. The number of organizations and public
entities offering benefits to domestic partners has grown
dramatically over the past decade. The sponsor notes that
California already offers domestic partner benefits to its
employees, as do 137 other state and local governments
nationwide. According to the San Francisco Human Rights
Commission, 4,500 private sector employers nationwide offer
domestic partner benefits, including one-third of Fortune 500
companies.
Cost to Employers Who Offer Domestic Partner Benefits. The
additional costs of adding domestic partner benefits are
apparently minimal. According to the San Francisco Human Rights
Commission, actuarial data collected since 1982 indicate that
"neither claims experience nor enrollment rates create a
significant increase in expenses." Various factors explain the
low cost: the enrollment rate is low because eligible employees
face tax implications when they sign up and some do not want to
declare their sexual orientation in the workplace. The claims
history also indicates that the cost for the group covered by
domestic partner benefits has been equal, if not lower, than for
spouses. For example, domestic partners tend not to incur the
maternity and childbirth-related costs that spouses do.
ARGUMENTS IN SUPPORT : The California Alliance for Pride and
Equality (CAPE), sponsor of the measure, states that the measure
will "level the playing field for contractors by assuring that
companies that discriminate are no longer given a competitive
advantage." CAPE also points out that "the cost and
administrative burdens of domestic partner benefits are
negligible. Most employers offering domestic partner benefits
see an increase in health care costs of less than 1%."
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The Greater San Diego Business Association also supports the
measure, writing that "offering the most competitive benefits
package attracts and retains the best and talented employees,
which then lowers turnover and recruitment costs, and helps
improve employee job satisfaction and performance."
ARGUMENTS IN OPPOSITION : The Committee on Moral Concerns
opposes the measure, stating that the bill "would force
California to limit its vendor competition to roughly 1% of
available bidders. Price and quality of goods and services
would no longer be the priority. Uncompetitive services from
gay-friendly businesses will not help California. ? a few
companies may choose to increase their labor costs by adding
domestic partner coverage, passing the cost on to the state and
all their other customers. This is inflationary, hurts the
economy, and the budget can't afford it."
The Seventh-day Adventist Church State Council also opposes
the measure, stating that the bill "represents a potentially
alarming undermining of the health, education, and welfare
for thousands of citizens."
Prior Related Legislation. AB 1080 (Kehoe) of 2002, which was
gutted and amended in the Senate to be substantially similar to
this bill, was referred to the Committee when it returned to the
Assembly for concurrence. The measure died in the Committee.
SB 841 (Hayden) of 1997, which would have prohibited a public
entity from contracting with a contractor that discriminates in
its provisions of benefits to employees with spouses and
employees with domestic partners, failed passage in the Senate
Judiciary Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
California Alliance for Pride and Equality (sponsor)
Abercrombie & Co. Broker (Santa Barbara, CA)
AIDS Legal Referral Panel
AIDS Project Los Angeles
American Conservatory Theater
American Civil Liberties Union
American Industrial Supply, Inc.
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Anti-Defamation League, Ventura, Santa Barbara & San Luis Obispo
Counties
Apex Refrigeration Corp. (Emeryville, CA)
Bay Area Floor Machine Co. (San Jose, CA)
Billy DeFrank Lesbian, Gay, Bisexual, and Transgender Community
Center
Breast Cancer Fund
Bridges Architecture, Inc. (San Francisco, CA)
California Capital Political Action Committee
California Church IMPACT
California Commission on the Status of Women
California Democratic Party LGBT Caucus
California Nurses Association
California Prevention & Education Project (CAL-PEP)
California Professional Firefighters
California School Employees Association
California State Employees Association
Channel Star Excursions, Inc. (Sacramento, CA)
Chico City Councilmember Scott Gruendl
Clear Channel Outdoor/Northern California (Clear Channel
Worldwide)
Coach USA (San Francisco, CA)
Core Power Services, Inc. (Newark, CA)
Deaf Counseling Advocacy & Referral Agency (San Leandro, CA)
Diamond Diesel Service, Inc. (Oakland, CA)
Dolphin Graphics (San Francisco, CA)
Ecology Action of Santa Cruz
Envirolution, Inc. (Glendale, CA)
Genentech, Inc. (San Francisco & Vacaville, CA)
General Graphic Services, Inc. (San Francisco, CA)
Gilmore Technology Services, Inc. (Walnut Creek, CA)
Gray Panthers
Greater San Diego Business Association
Human Rights/Fair Housing Commission of the City and County of
Sacramento
International Institute of San Francisco
Invitro International (Irvine, CA)
King Parrish Canvas & Graphics (Sonora, CA)
LaFrance Associates, LLC (San Francisco, CA)
Lambda Legal Defense & Education Fund
Lambda Letters Project
Lambda Community Center
Lamplighters Musical Theatre (San Francisco, CA)
Legal Aid Society Employment Law Center
Legal Services for Children
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Light Weavers, Inc. (San Rafael, CA)
Long Beach Genetics, Inc. (Rancho Dominguez, CA)
Los Angeles Gay & Lesbian Center
Macro-Pro, Inc. (Signal Hill, CA)
Mar Craw Business Machines
Metropolitan Community Church of San Francisco
Mossinger Consulting (Newark, CA)
Neopost, Inc. (San Francisco, CA)
National Association of Social Workers California Chapter
National Center for Lesbian Rights
North of Market Neighborhood Improvement Corp. (San Francisco,
CA)
Objective Medical Evaluations, Inc. (Sacramento, CA)
Outword Newsmagazine (Sacramento, CA)
Parker Diving Service (Forest Knolls, CA)
Pacific Pride Foundation
QuickStart Intelligence Corp. (Irvine, CA)
Rainbow Grocery Cooperative, Inc. (San Francisco, CA)
REALM Communications Group, Inc. (Milpitas, CA)
San Diego LGBT Community Center
San Francisco Housing Development Corporation
San Francisco IHSS Public Authority
San Francisco SPCA
Santa Barbara County Democratic Central Committee
St. Mary's Hospital CHW (San Francisco, CA)
Staton Hughes (San Francisco, CA)
Stonewall Democratic Club of Greater Sacramento
Tenderloin Housing Clinic (San Francisco, CA)
The China Press (Burlingame, CA)
The Depot (Sacramento, CA)
Under One Roof (San Francisco, CA)
Walter Dankas & Co. (San Francisco, CA)
Weco Industries, LLC (Vallejo, CA)
West Hollywood City Councilmember Jeffrey Prang
Western Steel & Wire, Inc. (San Francisco, CA)
Witeck Combs Communications (Washington, DC)
Woodenship, A Strategic Communications Company (Sacramento, CA)
Youth Law Center (San Francisco, CA)
Over 1,100 individual letters of support
Opposition
Association of Independent California Colleges and Universities
California Catholic Conference
Campaign for California Families
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Committee on Moral Concerns
Concerned Women for America
Ironwood Christian Academy
Montebello Church of the Nazarene
Open Doors Ministries International, Inc.
Paradise Valley Hospital - Adventist Health
Rancho Christian Center
Seventh-day Adventist Church State Council
Traditional Values Coalition
Numerous Individuals
Analysis Prepared by : Saskia Kim / JUD. / (916) 319-2334