Takeaways

• California state-level enforcement is on the rise as federal policies shift.
• The state is reinforcing its commitment to nondiscrimination in public contracting through increased oversight and compliance certification.
• California contractors should assess compliance with state law and other applicable obligations.

Article

As federal policies shift from affirmative action and diversity, equity, and inclusion initiatives — particularly through Executive Order 14173, “Ending Illegal Discrimination and Restoring Merit-Based Opportunity,” which rescinded affirmative action mandates for federal contractors — state-level enforcement efforts are on the rise.

Several states, including California, are not only maintaining state contractor mandates but are also reinforcing their commitment to nondiscrimination through increased oversight and compliance certification. Employers aiming to do business with California should be aware of and prepared to meet these obligations.

California’s Nondiscrimination Requirements for State Contractors

Under California law, companies must have a written nondiscrimination program approved and certified by the Civil Rights Department (CRD) before they may enter into a public works or service contract with the state. The law applies broadly, with limited exceptions. It mandates the inclusion of a nondiscrimination clause in each covered contract. This clause prohibits discrimination based on protected characteristics under California law, including race and sex, among others.

In addition to submitting an approved program, contractors are required to notify relevant labor organizations of their nondiscrimination obligations and ensure all subcontractors are bound by the same requirements. These requirements support compliance throughout the contracting chain.

Compliance Statements, Reporting Obligations

When bidding on a California state contract, eligible prospective contractors must submit a statement affirming compliance with the nondiscrimination obligations. The declarations are made under penalty of perjury, emphasizing the seriousness of the commitment.

Contractors also may be required to submit periodic reports demonstrating ongoing compliance. If a contractor already maintains a nondiscrimination program that is subject to federal review, California law provides a rebuttable presumption that the contractor is also in compliance with state requirements; given the federal government’s retrenchment from affirmative action requirements, however, it remains uncertain how this presumption will be applied.

Enforcement, Complaints

California’s regulatory framework allows any interested person to file a written complaint with either the CRD or the awarding agency for investigation if they believe a contractor is not following applicable nondiscrimination standards. Violations of the requirements are considered material breaches of contract and can result in sanctions, including contract suspension or termination, as well as disqualification from future contracting opportunities with the state.

Practical Implications for Contractors

Given the increased scrutiny at both the state and federal levels — and the potential for perceived conflicts between evolving standards — contractors should consider deliberate steps to ensure their nondiscrimination programs and policies are up to date and compliant with California law and other applicable obligations.