CITY COUNCIL
Darrell Steinberg, Mayor
Lisa Kaplan, District 1
Shoun Thao, District 2
Karina Talamantes, Mayor Pro Tem, District 3
Katie Valenzuela, District 4
Caity Maple, Vice Mayor, District 5
Eric Guerra, District 6
Rick Jennings, II, District 7
Mai Vang, District 8
CHARTER OFFICERS
Mindy Cuppy, City Clerk
Susana Alcala Wood, City Attorney
Farishta Ahrary, Interim City Auditor
Howard Chan, City Manager
John Colville, City Treasurer
City Council
Financing Authority
Housing Authority
Public Financing Authority
Redevelopment Agency Successor Agency
City Hall Complex
915 I Street, Sacramento, CA 95814
Published by the Office of the City Clerk
(916) 808-7200
SUPPLEMENTAL MATERIAL
Description: Attached is supplemental material received after publishing the agenda, including a revised staff report to clarify future prevailing wage under the proposed revisions to the draft ordinance, and the addition of At tachment 3- Ordinance (redlined) and Attachment 4- Ordinance (clean). The attached staff report replaces the original staff report in its entirety.
For the Meeting of: Tuesday, June 25, 2024, at 2:00 p.m.
Agenda Item: Discussion Item 20
20. O rdinance Amending Section 3.56.070 Relating to Janitorial and Security Guard Services Contracts [In Lieu of Pass for Publication Ordinance to be Published in its Entirety]
File ID: 2024-01128
Loca
tion: Citywide
Re
commendation: 1) Pass a Motion pursuant to Rule 13.B.1.b.ii of the Council Rules of Procedure to bypass the Law and Legislation Committee; 2) adopt an Ordinance amending se tion 3.56.070 of the Sacramento City Code (SCC), relating to janitorial and security guard services contracts; and 3) publish the ordinance in full in the official newspaper of the City within ten days should the council adopt the ordinance, consistent with City Charter section 32(d).
Contact: Pete Coletto, Finance Director, (916) 808-5416, [email protected]; Dayana Reyes Zanaska, Procurement Manager, (916) 808-5524, [email protected]; Ashley Petralli, Program Manager, (916) 808-5749, [email protected]; Finance Department City of Sacramento Page 1
City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01128 6/25/2024 Discussion Item 20.
Ordinance Amending Section 3.56.070 Relating to Janitorial and Security Guard Services Contracts [In Lieu of Pass for Publication Ordinance to be Published in its Entirety] File ID: 2024-01128
Location: Citywide
Recommendation: 1) Pass a Motion pursuant to Rule 13.B.1.b.ii of the Council Rules of Procedure to bypass the Law and Legislation Committee; 2) adopt an Ordinance amending section 3.56.070 of the Sacramento City Code (SCC), relating to janitorial and security guard services contracts; and 3) publish the ordinance in full in the official newspaper of the City within ten days should the council adopt the ordinance, consistent with City Charter section 32(d).
Contact: Pete Coletto, Finance Director, (916) 808-5416, [email protected]; Dayana Reyes Zanaska, Procurement Manager, (916) 808-5524, [email protected]; Ashley Petralli, Program Manager, (916) 808-5749, [email protected]; Finance Department
Presenter: None
Attachments:
1-Description/Analysis
2-Policy Direction provided by Council (June 18, 2024)
3-Ordinance (redline) -TBD
4-Ordinance (clean) - TBD
Description/Analysis
Issue Detail: On May 14, 2024, Council directed staff to conduct an analysis of an amendment to the SCC incorporating the requirements of California Labor Code Section 238.5, subsections (c) and (d), concerning wage theft disclosure and liability, requiring contractors to provide a sworn affidavit assuring that the City will not be subject to joint and several liability for unpaid wages, and utilizing the Public Utilities Code prevailing wage for private sector janitors in lieu of the City’s Living Wage Ordinance. Council specified that this language apply to janitorial and security services instead of all property services contracts as written in the labor code.
File ID: 2024-01128 6/25/2024 Discussion Item 20.
On JJune 18, 2024, Council directed staff to incorporate revisions to the SCC amendment, as reflected in Attachment 2, and directed staff to bring an Ordinance to Council for approval on June 25, 2024. As part of that direction, Council asked the City Attorney’s Office (CAO) to work with legal counsel for USWW to obtain additional information to clarify the proposed revisions to the SCC.
USWW’s representative notified the CAO that USWW rarely engages legal counsel in discussions with local government staff, and requested that the CAO meet with Andrew Gross Gaitan, Director of Contracts & Enforcement for SEIU-USWW, instead.
Based on the policy direction reflected in Attachment 2, the discussion at the Council meeting on June 18, 2024, and the CAO’s discussion with USWW’s representative, staff has revised the draft ordinance originally presented on June 18, 2024 (Attachments 3 and 4).
The Ordinance, as revised, will ensure that contracts for janitorial and security services are performed by contractors with a collective bargaining agreement or a letter of intent”in place, and will utilize the Public Utility Code prevailing wage for janitorial workers, with two exceptions: (1) on-call, emergency janitorial and security services (which was included in the revisions requested by Council on J
une 18th);and (2) on-call security services for events if the costs of the services are passed through to a third party. This second exception will ensure that when the City engages security services, the City is able to meet unpredictable staffing needs when security services are needed for events on behalf of a third party.
The City will only be protected statutorily from joint and several liability if the contractor has a collective bargaining agreement in place at the time of bidding, or if, as a result of the letter of intent, the contractor’s employees elect to be represented by a labor union. If the contractor’s employees do not ultimately elect to be represented, the City will have to rely on the contractual remedies that it currently has at its disposal.
The proposed Ordinance, as revised, will also require janitorial services contractors to compensate its employees for hours worked at the highest rates listed in the annual prevailing wage determination, regardless of the employees’ dates of hire. Because janitors qualify for automatic dependent coverage under the USWW contract, the top rate under the prevailing wage includes the hourly cost of employer-paid dependent health coverage, which is the higher of the two health and welfare hourly payments listed in the Department of Industrial Relations’ (DIR) prevailing wage determination.
As discussed at the June 18th meeting, the DIR has not yet issued a new DIR prevailing wage determination for the remainder of 2024. But as indicated by the USWW’s representative at that same meeting, a new 4-year regional bargaining agreement has been negotiated and ratified and will serve as the basis for future prevailing wage determinations for the period of M ay 1, 2024,
through April 30, 2028. USWW’s representative has provided the following table, which shows the hourly pay rates and benefit costs for employer-paid coverage for dependents that will be paid by the signatory employers for their employees who have worked for 30 months or more. The table includes the 2024 rates reflected in the DIR’s current prevailing wage determination for reference purposes.
File ID: 2024-01128 6/25/2024 Discussion Item 20.
Based on the language in the revised Ordinance requiring janitorial services contractors to compensate their employees for hours worked at the highest rates listed in the annual prevailing wage determination from the first day of employment, these are the hourly wage rates and benefit package costs that will be paid by all City janitorial services contractors.
USWW did not provide calculations based on the lower healthcare rate for newer employees, as the proposed revisions to the Ordinance require payment at the top rate of the prevailing wage determination (reflected in the table above) from the first day of employment, and they did not have the calculations for the lower healthcare benefit rate readily available.
The City’s 2024 composite janitorial living wage is $25.97 (including the mandatory hourly wage [$18.50] and non-mandatory benefits [$7.47]) and increases annually based on the CPI. The City’s current janitorial living wage is higher than DIR’s current janitorial prevailing wage if the employee elects to participate in the benefits program offered. All the City’s janitorial contractors offer health benefits to their employees.
When USWW’s newly ratified regional agreement is finalized, DIR’s Prevailing Wage will increase to $26.51 (for wages and benefits), which will be higher overall than the City’s current janitorial living wage in all circumstances. According to USWW’s representative, the prevailing wage determination requires janitorial contractors to pay both the mandated hourly wage rate and the required benefits or the defined cash value of the benefits as wages.
File ID: 2024-01128 6/25/2024 Discussion Item 20.
Policy Considerations: Council determined it was in the best interest of the City to proceed with Ordinance updates to incorporate these requirements for new, amended, and extended janitorial and security contracts.
Economic Impacts: By incorporating these changes, the City is providing an economic incentive for firms to have collective bargaining agreements with their workers.
Environmental Considerations:
California Environmental Quality Act (CEQA): This report concerns administrative activities and governmental fiscal activities that do not constitute a "project" as defined by the CEQA Guidelines Sections 15378(b)(2) and 15378(b)(4) and are not subject to the provisions of CEQA (CEQA Guidelines Section 15060(c)(3)).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: This item fulfills Council direction to bring this Ordinance for approval.
Financial Considerations: Staff estimates that a requirement for these services to be provided by contractors with collective bargaining agreements in place would increase costs by between $500,000 and $650,000 annually.
Local Business Enterprise (LBE): Not applicable.
Background: None.
Item 33 – Ordinance Amending Section 3.56.070
Relating to Janitorial and Security Guard Services Contracts Proposed Motion:
1. Allow a signed letter of intent OR a collective bargaining agreement:
3.56.070 A. No new, amended or extended contract for janitorial or security-guard services may be awarded by the city to a prospective contractor unless the employees who will provide services under the contract are covered by a collective bargaining agreement that meets the criteria set forth in California Labor Code section 238.5. or if the contractor provides a signed letter of intent with a union whose collective bargaining agreement includes the required California Labor Code Section 238.5 waiver.
1. If the contractor opts for a letter of intent, that letter shall commit the contractor to honor that regional agreement if awarded the service contract for which they are bidding.
2. Adopt staff recommendation to implement California Labor Code Section 238.5, subdivision (b), as amended:
3.56.070 B. Before being awarded a city contract for janitorial or security-guard services, the prospective contractor for those services shall—
1. Attest in writing, under penalty of perjury, that the employees who will be working under the contract are covered by a bona fide collective bargaining agreement that meets the criteria set forth in California Labor Code section 238.5, subdivision (b);
2. Attest in writing, under penalty of perjury, that the city, pursuant to the collective bargaining agreement, will not be subject to joint and several liability for unpaid wages owed to employees who will be working under the contract; and
3. Provide a copy of the collective bargaining agreement or letter of intent required in subsection (A) to the city if requested.
3. Add language to exempt emergency on-call contracts from the proposed ordinance changes:
3.56.070 A. 2. Contracts for on-call emergency services are exempt from this section.
4. Add language to require contractors to follow the public utilities code prevailing wage for private sector janitors:
3.56.070 D. Any contractor awarded a contract for janitorial services pursuant to this section shall follow the California Public Utilities Code prevailing wage for private sector janitors.
5. Add language to require janitorial contractors pay the top step of the most current prevailing wage determination from the first day of employment:
3.56.070 D. 1. The contractor shall pay employees at the top of the most current prevailing wage determination from the first day of employment under the contract. 1 ORDINANCE NO.
A
dopted by the Sacramento City Council
[Date Adopted]
A
N ORDINANCE AMENDING SECTION 3.56.070 OF THE SACRAMENTO CITY
CODE, RELATING TO JANITORIAL AND SECURITY-GUARD SERVICES CONTRACTS B
E IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:
S
ECTION 1.
Se
ction 3.56.070 of the Sacramento City Code is hereby amended to read as follows:
3.56 .070 Transition employment period for displaced janitors.Janitorial and security- guard services contracts.
A. N
o contract for janitorial or security-guard services may be awarded by the city to a prospective contractor, and no existing contract for such services may be amended, unless—
1. Th
e employees who will provide services under the contract are covered by a collective bargaining agreement that meets the criteria set forth in California Labor Code section 238.5; or
2. The
contractor or prospective contractor has entered into a letter of intent, as defined in subsection E, below.
B. B
efore being awarded a city contract for janitorial or security-guard services, or amending such a contract, the contractor or prospective contractor for those services shall—
1. A
ttest in writing, under penalty of perjury, that the employees who will be working under the contract are covered by a bona fide collective bargaining agreement that meets the criteria set forth in California Labor Code section 238.5, subdivision (b), or provide a letter of intent with a labor union whose collective bargaining agreement meets the criteria set forth in California Labor Code section 238.5;
2. P
rovide a copy of the collective bargaining agreement or letter of intent to the city if requested.
C. A c
ontractor under a city contract for janitorial services shall pay “prevailing wages,” as described in California Public Utilities Code section 465, to its employees who work under the contract. A janitorial services contractor shall compensate its employees for hours worked under the contract at the highest rates 2 listed in the annual prevailing wage determination, regardless of the employees’ dates of hire.
D. The 60-day transition employment period for displaced janitors set forth in California Labor Code section 1061 is extended to 90 days.
E. For the purpose of this section, a “letter of intent” means an agreement, signed by the contractor or prospective contractor and a labor union, that states the following—
1. The parties intend to enter into a subsequent agreement outlining a procedure for employees to exercise their representation rights granted under federal law if the city awards or amends a contract for janitorial or security-guard services;
2. If the contractor’s or prospective contractor’s employees working under the city contract elect to be represented by a labor union, the contractor or prospective contractor will sign and adhere to the applicable terms and conditions of the labor union’s collective bargaining agreement; and
3. The labor union will not oppose the award of the contract to the prospective contractor or the amendment of an existing contract.
F. This section does not apply to contracts for—1) on-call emergency janitorial or security-guard services; or 2) on-call security-guard services for events if the cost of the services are passed through to a third party. 1 ORDINANCE NO.
Adopted by the Sacramento City Council
[Date Adopted]
AN ORDINANCE AMENDING SECTION 3.56.070 OF THE SACRAMENTO CITY
CODE, RELATING TO JANITORIAL AND SECURITY-GUARD SERVICES CONTRACTS
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:
SECTION 1.
Section 3.56.070 of the Sacramento City Code is hereby amended to read as follows:
3.56.070 Janitorial and security-guard services contracts.
A. No contract for janitorial or security-guard services may be awarded by the city to a prospective contractor, and no existing contract for such services may be amended, unless—
1. The employees who will provide services under the contract are covered by a collective bargaining agreement that meets the criteria set forth in California Labor Code section 238.5; or
2. The contractor or prospective contractor has entered into a letter of intent, as defined in subsection E, below.
B. Before being awarded a city contract for janitorial or security-guard services, or amending such a contract, the contractor or prospective contractor for those services shall—
1. Attest in writing, under penalty of perjury, that the employees who will be working under the contract are covered by a bona fide collective bargaining agreement that meets the criteria set forth in California Labor Code section 238.5, subdivision (b), or provide a letter of intent with a labor union whose collective bargaining agreement meets the criteria set forth in California Labor Code section 238.5;
2. Provide a copy of the collective bargaining agreement or letter of intent to the city if requested.
C. A contractor under a city contract for janitorial services shall pay “prevailing wages,” as described in California Public Utilities Code section 465, to its employees who work under the contract. A janitorial services contractor shall compensate its employees for hours worked under the contract at the highest rates listed in the annual prevailing wage determination, regardless of the employees’ dates of hire.
2 D. The 60-day transition employment period for displaced janitors set forth in California Labor Code section 1061 is extended to 90 days.
E. For the purpose of this section, a “letter of intent” means an agreement, signed by the contractor or prospective contractor and a labor union, that states the following—
1. The parties intend to enter into a subsequent agreement outlining a procedure for employees to exercise their representation rights granted under federal law if the city awards or amends a contract for janitorial or security-guard services;
2. If the contractor’s or prospective contractor’s employees working under the city contract elect to be represented by a labor union, the contractor or prospective contractor will sign and adhere to the applicable terms and conditions of the labor union’s collective bargaining agreement; and
3. The labor union will not oppose the award of the contract to the prospective contractor or the amendment of an existing contract.
F. This section does not apply to contracts for—1) on-call emergency janitorial or security-guard services; or 2) on-call security-guard services for events if the cost of the services are passed through to a third party.