California Governor Jerry Brown has signed landmark legislation that protects transgender employees of companies doing business with state agencies.

The bill (SB 703) prohibits state agencies from entering into a contract worth $100,000 or more with any company that does not offer equal benefits to employees regardless of their gender identity.

The bill was authored by openly gay Senator Mark Leno and co-sponsored by the National Center for Lesbian Rights (NCLR), Equality California and the Transgender Law Center.

“California law already stipulates that employers cannot deny transgender people health care and other benefits, but a loophole in state law has allowed companies that contract with the state to refuse equal health coverage,” Senator Leno, a Democrat from San Francisco, said in a statement. “This bill closes that loophole. Denying equal benefits to employees at the same company based on gender identity is harmful and wrong. It also can jeopardize employee health and strain publicly-funded programs that fill in the gaps when employers don't provide the same benefits to everyone.”

California is the first state to enact such a law, which takes effect on January 1, 2016.