City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-00809 4/22/2025 Item 8.
Annual Report on Living Wage Ordinance (LWO)
File ID: 2025-00809
Location: Citywide
Recommendation: Receive and file.
Contact: Ashley Petralli, Program Manager, (916) 808-5749, <mailto:> [email protected]; Dayana Reyes Zanaska, Procurement Manager, (916) 808-5524, [email protected]; Department of Finance Presenter: None
Attachments:
1-Description/Analysis
2-Living Wage Rate History
Description/Analysis
Issue Detail: This report reviews the administration of the 21st year of the Living Wage Program for the period from March 2024 to February 2025. The following is a list of actions taken and the results obtained during this period:
· Rates for 2025 have been updated utilizing the San Francisco-Oakland-Hayward, CA metropolitan area Consumer Price Index for all Urban Consumers (CPI-U) which resulted in an increase of 2.4%.
· The rate for 2025 is at least $18.94 per hour if health benefits are not provided. If health benefits are provided and at least $2.48 per hour, the minimum rate is $16.47 per hour (for a combined rate and health benefit payment of at least $18.94 per hour). · The rate for 2025 applicable to janitorial contractors is at least $18.94 per hour if health benefits are not provided. If health benefits are provided, they must be at least $7.65 per hour (for a combined rate and health benefit payment of at least $26.59 per hour). · Procurement has provided notice of rate changes to City staff and contractors. · 2025 Living Wage rates as well as a history of Living Wage rate changes are posted on the City’s public website and are updated annually.
File ID: 2025-00809 4/22/2025 Item 8.
Policy Considerations: The intent of the Living Wage Program is consistent with City Council goals to promote and support economic vitality.
Economic Impacts: Applicable contractors performing non-professional services for the City under agreements valued at $250,000 or more must ensure employees performing work on these contracts are paid a wage equal to or greater than the rate noted in the current Living Wage Memo included as Attachment 2.
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: Not applicable.
Financial Considerations: Not applicable.
Local Business Enterprise (LBE): Not applicable.
Background: In December 2003, the City Council enacted a LWO, which became effective March 1, 2004. The intent of LWO is to ensure that employees of businesses contracting with the City to provide nonprofessional services are paid a wage that includes heal-care benefits and enables the employees and their families to meet basic needs and avoid economic hardship.
The LWO applies to:
· A contract for non-professional services with a value of $250,000 or more when the service provider has at least 25 full and/or part-time employees. · The aggregate value of City contracts awarded to a non-professional services provider within a 12-month period exceeds $250,000 and the service provider has 25 or more full or part-time employees.
· City of Sacramento employees.
The LWO does not apply to:
· Not-for-profit corporations with less than 100 employees. · Contracts for, or providers of, professional services, goods, or commodities. · Student internships and specialized training programs. · Services deemed by the City Manager to constitute an emergency.
File ID: 2025-00809 4/22/2025 Item 8.
· Non-career and seasonal City employees.
The LWO rate is computed as follows:
· For each year after 2007, the rate shall be based on the rate from the immediately preceding year adjusted by the increase in the Consumer Price Index for All Urban Consumers, San Francisco/Oakland/Hayward, CA area (1982-1984=100) from January 1 through December 21 of the immediately preceding year.
· The Consumer Price Index baseline (1982-1984=100) is established as a reference for measuring increases and decreases to the index over time.
Regarding janitorial contracts, the LWO rate is only applicable to legacy contracts which pre-date the amendment of Sacramento City Code section 3.56.070. Section 3.56.070 applies to new and amended janitorial contracts, and requires “prevailing wage” rates be paid as described in California Public Utilities Code section 465, without regard to employees’ dates of hire.
Living Wage Ordinance - Rate History
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On December 9, 2003, the Sacramento City Council enacted a Living Wage Ordinance (the “LWO”), adopted as Amended Ordinance No. 2003-082 and codified as Chapter 3.58 of the Sacramento City Code. The LWO requires certain firms that contract to provide certain services to or for the City to pay a specified minimum level of compensation to their employees for time spent performing any work on the City contract. The LWO also applies to certain subcontractors.
Listed below is the starting rate of the City of Sacramento’s Living Wage and the subsequent annual increases. The percentage increase for each year is variable and is tied to the Consumer Price Index for the San Francisco / Oakland / Hayward area for the end of the previous calendar year. The revised Living Wage rate typically will take effect on the final Sunday of February with the approval of the City Manager.
During 2004 (start of LWO)
1. $9.00 per hour if employer's contribution for health benefits is at least $1.50 for each hour of work.
2. $10.50 per hour if employer's contribution for health benefits is not at least $1.50 for each hour of work.
During 2005
1. $9.33 per hour if employer's contribution for health benefits is at least $1.50 for each hour of work.
2. $10.87 per hour if employer's contribution for health benefits is not at least $1.50 for each hour of work.
During 2006
1. $9.67 per hour if employer's contribution for health benefits is at least $1.50 for each hour of work.
2. $11.17 per hour if employer's contribution for health benefits is not at least $1.50 for each hour of work.
During 2007
1. $10.00 per hour if employer's contribution for health benefits is at least $1.50 for each hour of work.
2. $11.50 per hour if employer's contribution for health benefits is not at least $1.50 for each hour of work.
During 2008
1. $10.31 per hour if employer's contribution for health benefits is at least $1.50 for each hour of work.
2. $11.86 per hour if employer's contribution for health benefits is not at least $1.50 for each hour of work.
During 2009
1. $10.65 per hour if employer's contribution for health benefits is at least $1.60 for each hour of work.
2. $12.25 per hour if employer's contribution for health benefits is not at least $1.60 for each hour of work.
During 2010 (an increase of 0.7%)
1. $10.72 per hour if employer's contribution for health benefits is at least $1.61 for each hour of work.
2. $12.33 per hour if employer's contribution for health benefits is not at least $1.61 for each hour of work.
During 2011 (an increase of 1.4%)
1. $10.87 per hour if employer's contribution for health benefits is at least $1.63 for each hour of work.
2. $12.50 per hour if employer's contribution for health benefits is not at least $1.63 for each hour of work.
During 2012 (an increase of 2.6%)
1. $11.15 per hour if employer's contribution for health benefits is at least $1.67 for each hour of work.
2. $12.82 per hour if employer's contribution for health benefits is not at least $1.67 for each hour of work.
During 2013 (an increase of 2.7%)
1. $11.45 per hour if employer's contribution for health benefits is at least $1.72 for each hour of work.
2. $13.17 per hour if employer's contribution for health benefits is not at least $1.72 for each hour of work.
During 2014 (an increase of 2.1%)
1. $11.69 per hour if employer's contribution for health benefits is at least $1.76 for each hour of work.
2. $13.45 per hour if employer's contribution for health benefits is not at least $1.76 for each hour of work.
Living Wage Ordinance - Rate History
2 | Page
During 2015 (an increase of 2.8%)
1. $12.02 per hour if employer's contribution for health benefits is at least $1.81 for each hour of work.
2. $13.83 per hour if employer's contribution for health benefits is not at least $1.81 for each hour of work.
During 2016 (an increase of 2.6%)
1. $12.33 per hour if employer's contribution for health benefits is at least $1.85 for each hour of work.
2. $14.18 per hour if employer's contribution for health benefits is not at least $1.85 for each hour of work.
During 2017 (an increase of 3.5%)
1. $12.76 per hour if employer's contribution for health benefits is at least $1.92 for each hour of work.
2. $14.68 per hour if employer's contribution for health benefits is not at least $1.92 for each hour of work.
During 2018 (an increase of 2.9%)
1. $13.13 per hour if employer's contribution for health benefits is at least $1.98 for each hour of work.
2. $15.11 per hour if employer's contribution for health benefits is not at least $1.98 for each hour of work.
During 2019 (an increase of 4.5%)
1. $13.72 per hour if employer's contribution for health benefits is at least $2.07 for each hour of work.
2. $15.79 per hour if employer's contribution for health benefits is not at least $2.07 for each hour of work.
During 2020 (an increase of 2.5%)
1. $14.06 per hour if employer's contribution for health benefits is at least $2.12 for each hour of work.
2. $16.18 per hour if employer's contribution for health benefits is not at least $2.12 for each hour of work.
During 2021 (an increase of 2.0%)
1. $14.34 per hour if employer's contribution for health benefits is at least $2.16 for each hour of work.
2. $16.50 per hour if employer's contribution for health benefits is not at least $2.16 for each hour of work.
During 2022 (an increase of 4.2%)
1. $14.94 per hour if employer's contribution for health benefits is at least $2.25 for each hour of work.
2. $17.19 per hour if employer's contribution for health benefits is not at least $2.25 for each hour of work.
During 2023 (an increase of 4.9%)
1. $15.67 per hour if employer's contribution for health benefits is at least $2.36 for each hour of work.
2. $18.03 per hour if employer's contribution for health benefits is not at least $2.36 for each hour of work.
During 2024 (an increase of 2.6%)
1. $16.08 per hour if employer's contribution for health benefits is at least $2.42 for each hour of work.
2. $18.50 per hour if employer's contribution for health benefits is not at least $2.42 for each hour of work.
During 2025 (an increase of 2.4%)
1. $16.47 per hour if employer's contribution for health benefits is at least $2.48 for each hour of work.
2. $18.94 per hour if employer's contribution for health benefits is not at least $2.48 for each hour of work.