Bill Text: CA AB2571 | 2017-2018 | Regular Session | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Public employee retirement systems: investments: race and gender pay equity.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-04-18 - In committee: Set, first hearing. Hearing canceled at the request of author. [AB2571 Detail]
Download: California-2017-AB2571-Introduced.html
Bill Title: Public employee retirement systems: investments: race and gender pay equity.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced - Dead) 2018-04-18 - In committee: Set, first hearing. Hearing canceled at the request of author. [AB2571 Detail]
Download: California-2017-AB2571-Introduced.html
CALIFORNIA LEGISLATURE—
2017–2018 REGULAR SESSION
| Assembly Bill | No. 2571 |
| Introduced by Assembly Member Gonzalez Fletcher |
February 15, 2018 |
An act to add Section 7513.76 to the Government Code, relating to retirement.
LEGISLATIVE COUNSEL'S DIGEST
AB 2571, as introduced, Gonzalez Fletcher.
Public employee retirement systems: investments: race and gender pay equity.
The California Constitution grants the retirement board of a public employee retirement system plenary authority and fiduciary responsibility for investment of moneys and administration of the retirement fund and system. The California Constitution qualifies this grant of powers by reserving to the Legislature the authority to prohibit investments if it is in the public interest and the prohibition satisfies standards of fiduciary care and loyalty required of a retirement board.
Existing law requires every public investment fund, including any fund of any public pension or retirement system, to require each alternative investment vehicle in which it invests to make prescribed annual financial disclosures.
This bill, if consistent with fiduciary responsibilities of a public investment fund as determined
by its board, would restrict new, additional, or renewed investments by a public investment fund to an alternative investment vehicle where, if the investment vehicle is managed by an investment manager, the investment manager has adopted and committed to comply with a race and gender pay equity policy consistent with requirements established in the bill. The bill would require an investment manager, beginning September 1, 2019, to submit at least once annually to the public investment fund a certified report regarding compliance. Because a certified report would be required to be verified under penalty of perjury, this bill would expand the crime of perjury, thereby imposing a state-mandated local program. The bill would require each contractually enforceable instrument for additional or new investments or renewal of existing investments with an investment manager to require that the investment manager take prescribed actions consistent with the bill as a material term of the instrument. The bill would
require a public investment fund to disclose pay equity reporting information provided to it pursuant to the bill at least once annually to the State Auditor and in a report presented at a meeting open to the public. The bill would define terms for its purposes.
Because this bill would impose new requirements on local entities, relating to the implementation of the bill, including the collection of information and its presentation at a meeting open to the public, it would impose a state-mandated local program.
The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this
purpose.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for specified reasons.
Digest Key
Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: YESBill Text
The people of the State of California do enact as follows:
SECTION 1.
The Legislature finds and declares all of the following:(a) More than 50 years after passage of the Equal Pay Act of 1963 and the Civil Rights Act of 1964, pay inequities along race and gender lines remain pervasive.
(b) The purpose of this act is to ensure that, when it is consistent with and not in violation of their fiduciary responsibilities, California public retirement systems require that investment managers of alternative investment vehicles in which they invest adopt race and gender pay equity policies applicable to themselves and to the investment vehicles’ subsidiary entities in the hospitality sector, a key area of public investment and of the California
economy in which pay disparities are well documented.
(c) The data required to meet the reporting obligations in this act are readily available, consistent with existing federal reporting requirements, and do not impose an unreasonable burden on those required to prepare reports.
SEC. 2.
Section 7513.76 is added to the Government Code, to read:7513.76.
(a) Nothing in this section shall require a public investment fund board to take any action that the board determines to be inconsistent with its fiduciary responsibilities, as described in Section 17 of Article XVI of the California Constitution.(b) On and after January 1, 2019, a public investment fund shall make new, additional, or renewed investments in an alternative investment vehicle only where, if the investment vehicle is managed by an investment manager, the investment manager has adopted and committed to comply with a race and gender pay equity policy consistent with this section.
(c) The race and gender pay equity policy shall contain at minimum the following
elements:
(1) The investment manager, with respect to its own employees, shall do both of the following:
(A) Identify and eliminate racial or gender pay differentials that are not explained by bona fide nondiscriminatory factors.
(B) Prepare a certified report containing the pay equity reporting information outlined in subdivision (g).
(2) The investment manager shall cause any subsidiary entity of the alternative investment vehicle that is a hospitality employer, and any hospitality employer with which any subsidiary entity contracts to operate a facility owned by the subsidiary entity, to do both of the following:
(A) Identify and eliminate racial or gender pay differentials that are
not explained by bona fide nondiscriminatory factors.
(B) Submit a certified report to the investment manager containing the pay equity reporting information outlined in subdivision (g).
(d) The same obligations outlined in paragraph (2) of subdivision (c) shall apply to any labor contractor of such a hospitality employer.
(e) Beginning September 1, 2019, the investment manager shall submit at least once annually to the public investment fund a certified report demonstrating the steps the investment manager, and any hospitality employers that are subsidiary entities or with which subsidiary entities contract to operate a facility owned by a subsidiary entity, have taken to comply with subdivision (c), providing in full the pay equity reporting information for its own employees required pursuant to subparagraph (B) of
paragraph (1) of subdivision (c) and for hospitality employers required pursuant to subparagraph (B) of paragraph (2) of subdivision (c). This report should indicate the name and address of each hospitality employer.
(f) Each contractually enforceable instrument for additional or new investments or renewal of existing investments with an investment manager shall require that the investment manager take the actions described in subdivisions (c), (d), (e), and (h) as a material term of the instrument.
(g) Every public investment fund shall disclose the pay equity reporting information provided to it pursuant to subdivisions (c), (d), (e), and (h) at least once annually in a report presented at a meeting open to the public. Additionally, every public investment fund shall submit the same information annually to the State Auditor.
(h) The pay equity reporting information described in subparagraph (B) of paragraph (1), and subparagraph (B) of paragraph (2), of subdivision (c) shall be as follows:
(1) The annual mean compensation of employees, by gender.
(2) The annual mean compensation of employees, by ethnic or racial group.
(3) The number of employees employed in each job category, by gender, for each ethnic or racial group.
(4) The average annual compensation of employees in each job category, by gender, for each ethnic or racial group.
(i) For the purposes of reporting pursuant to subdivision (h):
(1) Employers shall use the job
categories and ethnic or racial groups included in the EEO-1 form used by the United States Equal Employment Opportunity Commission and the Office of Federal Contract Compliance. If the EEO-1 form is no longer in use or no longer includes job categories or ethnic or racial groups, the Department of Fair Employment and Housing shall issue regulations determining the job categories and ethnic or racial groups to be used for reporting, which, to the extent possible, shall match those of any similar federal reporting requirements applicable to firms covered by this section.
(2) The Department of Fair Employment and Housing may issue regulations outlining the job categories in which data for hospitality-specific employee classifications shall be reported.
(j) An employer shall not be obligated to report compensation data otherwise required by subdivision (h) if that reporting would
reflect the compensation of three or fewer employees.
(k) This section applies to all new contracts the public investment fund enters into on or after January 1, 2019, and to all existing contracts pursuant to which the public investment fund makes a new capital commitment on or after January 1, 2019.
(l) For the purposes of this section:
(1) “Alternative investment vehicle” means a limited partnership, limited liability company, or similar legal structure through which a public investment fund invests in a private equity fund, venture fund, hedge fund, absolute return fund, real estate fund, joint venture, coinvestment vehicle, comingled investment, direct investment, or any other investment that is not a publicly traded security or debt fund.
(2) “Certified report” means a report verified under penalty of perjury.
(3) “Compensation” means gross income as reported on a W-2 form, including wages, salaries, fees, commissions, tips, taxable fringe benefits, and elective deferrals, provided, however, that the Department of Fair Employment and Housing shall have authority to issue regulations providing an alternative definition of “compensation” to align to the extent possible with any rule adopted by the United States Equal Employment Opportunity Commission requiring reporting of employee compensation data applicable to employers covered by this section.
(4) “Gender” refers to a person’s self-identified gender identity.
(5) “Hospitality employer” means any individual or entity that acts as an employer in the hospitality sector, including operators
of hotels, motels, and resorts as well as operators of restaurants and bars located on the premises of hotels, motels, and resorts and does not mean an investment firm.
(6) “Labor contractor” means an individual or entity that supplies, either with or without a contract, a hospitality employer with workers to perform labor within the hospitality employer’s usual course of business.
(7) “Investment manager” means an advisor, general partner, real estate manager, private equity manager, or other entity that receives fees to manage a public investment fund investment in an alternative investment vehicle.
(8) “Public investment fund” means any fund of any public pension or retirement system, including that of the University of California to the extent consistent with Section 9 of Article IX of the California
Constitution.
(9) “Public investment fund board” means the governing body of any public investment fund.
(10) “Racial or gender pay differentials that are not explained by bona fide nondiscriminatory factors” means pay differentials that would be prohibited under the standard set forth in subdivisions (a) and (b) of Section 1197.5 of the Labor Code.
(11) “Subsidiary entity” means any business organization, including, but not limited to, a corporation, partnership, or limited liability company, over which an alternative investment vehicle managed by an investment manager exercises, or has the right to exercise, control through ownership or control of shares of the business organization possessing more than 50 percent of voting power, whether directly or indirectly through one or more other subsidiary
entities.
SEC. 3.
The Legislature finds and declares that Section 2 of this act, which adds Section 7513.76 to the Government Code, furthers, within the meaning of paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the Legislature makes the following findings:The information in the disclosures required under subdivisions (b) to (h), inclusive, of Section 7513.76 of the Government Code is necessary to ensure public confidence in the
integrity of investments made by public investment fund boards in alternative investment vehicles.
