BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                    SB 1063


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          SENATE THIRD READING


          SB  
          1063 (Hall)


          As Amended  August 19, 2016


          Majority vote


          SENATE VOTE:  26-13


           -------------------------------------------------------------------- 
          |Committee       |Votes|Ayes                   |Noes                 |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Labor           |5-1  |Roger Hernández, Chu,  |Patterson            |
          |                |     |McCarty, O'Donnell,    |                     |
          |                |     |Thurmond               |                     |
          |                |     |                       |                     |
          |----------------+-----+-----------------------+---------------------|
          |Appropriations  |14-5 |Gonzalez, Bloom,       |Bigelow, Gallagher,  |
          |                |     |Bonilla, Bonta,        |Jones, Obernolte,    |
          |                |     |Calderon, Daly,        |Wagner               |
          |                |     |Eggman, Eduardo        |                     |
          |                |     |Garcia, Holden, Quirk, |                     |
          |                |     |Santiago, Weber, Wood, |                     |
          |                |     |McCarty                |                     |
          |                |     |                       |                     |
          |                |     |                       |                     |
           -------------------------------------------------------------------- 










                                                                    SB 1063


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          SUMMARY:  Expands the prohibitions laid down in the California  
          Equal Pay Act regarding gender, to include discrimination based  
          on race or ethnicity.  Specifically, this bill:  
          1)Prohibits an employer from paying any of its employees at wage  
            rates less than the rates paid to employees of another race or  
            ethnicity for substantially similar work, when viewed as a  
            composite of skill, effort, and responsibility, and performed  
            under similar working conditions.


          2)Provides exceptions for when the employer demonstrates the  
            wage differential is based upon one or more of the following  
            factors, each factor relied upon is applied reasonably and the  
            one or more factors relied upon account for the entire wage  
            differential:


             a)   A seniority system


             b)   A merit system


             c)   A system that measures earnings by quantity or quality  
               of production


             d)   A bona fide factor other than race or ethnicity, such as  
               education, training, or experience.  This factor shall  
               apply only if the employer demonstrates that the factor is  
               not based on or derived from a race- or ethnicity-based  
               differential in compensation, is job related with respect  
               to the position in question, and is consistent with a  
               business necessity. 


             e)   For purposes of these provisions, "business necessity"  
               means an overriding legitimate business purpose such that  
               the factor relied upon effectively fulfills the business  








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               purpose it is supposed to serve.  This shall not apply if  
               the employee demonstrates that an alternative business  
               practice exists that would serve the same business purpose  
               without producing the wage differential.


          3)Provides technical changes to address chaptering concerns with  
            AB 1676 (Campos) of the current legislative session. 





          EXISTING LAW:   


          1)Prohibits an employer from paying any of its employees 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, unless the employer demonstrates  
            that specific, reasonably applied factors account for the  
            entire wage differential.


          2)Authorizes an employee paid lesser wages in violation of this  
            prohibition to file a complaint with the Division of Labor  
            Standards Enforcement, and authorizes the employee, the  
            division, or the Department of Industrial Relations to  
            commence a civil action for the wages the employee was  
            deprived of because of the violation, interest on those wages,  
            and liquidated damages. 


          3)Provides that an employer or other person who violates or  
            causes a violation of that prohibition, or who reduces the  
            wages of any employee in order to comply with that  
            prohibition, is guilty of a misdemeanor.









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          FISCAL EFFECT:  According to the Assembly Appropriations  
          Committee, unknown, likely significant costs to the Department  
          of Industrial Relations (DIR) to process claims associated with  
          wage discrimination based on race or ethnicity. 


          The Division of Labor Standards and Enforcement (DLSE) does not  
          currently receive any pay discrimination claims on the basis of  
          race or ethnicity, making it difficult to predict costs  
          associated with this bill.  DIR notes, however, that the  
          Department of Fair Employment and Housing (DFEH) received  
          roughly 6,500 claims in 2014 alleging employment discrimination  
          based on race.  As a point of comparison, if DLSE received 1% of  
          the claims DFEH received, this would generate workload for DLSE  
          of approximately $600,000 (special fund) in the first year and  
          $570,000 (special fund) in subsequent years.   


          COMMENTS:  The author believes that the Equal Pay Act, in its  
          current form, fails to address that wage discrimination is not  
          confined to gender.  Women of color, who are paid less than  
          white women, should be able to make a claim under California's  
          Equal Pay Act.  Men of color, who are paid less than white men,  
          should be able to make a claim under California's Equal Pay Act  
          as well.

          Supporters argue, "A 2013 study revealed that Asian American  
          women make 90 cents; African American women make 64 cents, and  
          Hispanic or Latina women make just 54 cents for every dollar  
          that a Caucasian man earns.  The wage gap isn't only between men  
          and women, as African American men earn just 75% of the average  
          salary of a Caucasian male worker.  This bill builds upon the  
          important steps California has taken to address wage inequality  
          and will set a national standard to ensure that every worker is  
          paid a fair and equitable wage." 

          Opponents state, "SB 358 (Jackson), [Chapter 546, Statutes of  
          2015], which expanded and strengthened the law regarding equal  








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          pay for women, just went into effect at the beginning of this  
          year.  The Legislature should allow time for employees,  
          employers, and the courts to interpret and implement the new  
          boundaries of the equal pay law before seeking to amend and  
          expand it."



          Analysis Prepared by:                                             
                          Taylor Jackson / L. & E. / (916) 319-2091  FN:  
          0004730