CityCouncil
Report
City Council Meeting: April 26, 2016
Agenda Item: 7.C
To: Mayor andCityCouncil
From: GigiDecavalles-Hughes, Director, Finance Department AndyAgle, Director
Subject: Modifications totheMinimum WageOrdinance
RecommendedAction
Staffrecommends thattheCityCouncil:
1) Introduce forfirstreading theattached ordinance amending Chapters 4.62and
4.63oftheSantaMonica Municipal Coderequiring aminimum wagefor employees withaphased approach toreach $15perhourby2020formost businesses, andalivingwageforhotelworkers toreachparitywiththeCityof LosAngeles hotelwageonJuly1, 2017forhotels;
2) Receive initialstaffanalysis ofCalifornia SenateBillNo. 3 \[Minimum wage; inhomesupportive services; paidsickdays\] setting aminimum wageincrease for theStateofCalifornia; and
3) Authorize budget changes asoutlined intheFinancial Impacts & BudgetActions section ofthisreport.
ExecutiveSummary
Aspartofitsactions approving aminimum wageordinance onJanuary 12, 2016 Attachment A), Council authorized theCityManager toformanad-hocworking group ofbusiness, labor, andcommunity members toaddress certain issues withinthe ordinance identified byCouncil asrequiring further discussion andclarification. The Minimum WageWorking Group hascompleted itsmeetings andrecommended changes totheordinance responding tothisdirection, which staffpresented inan Information ItemonMarch 31, 2016 (Attachment B). Staffrecommends thatCouncil service charges, sickleave, enforcement, wageschedules, andhotelhardship waiver procedure.
OnApril4, 2016, Governor JerryBrown signed intolawaminimum wageincrease schedule fortheStateofCalifornia, reaching $15perhourapproximately twoyears behind theSanta Monica ordinance, onaslightly different schedule, withtheoption to pausewageincreases basedoneconomic orStatebudget conditions. Thefirst increase isscheduled forJanuary 1, 2017. Staffdoesnotanticipate material changes t
assess itsimpact forSantaMonica andothercitiesintheregionwithminimum wage laws.
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Background
mumwageinSanta
Monica onJanuary 12, 2016. Theordinance reflects inputandfeedback fromSanta Monica businesses, workers, advocacy groups, andthecommunity, inaddition to subject matterresearch andexpertrecommendations. Itincludes ahotel livingwage andprovisions relating toservice charges, seasonal orfirst-timeworkers, paidsick leave, andenforcement, manyofwhichareunique toSantaMonica andreflect the process ofengaging withandincorporating feedback fromstakeholders.
Testimony attheJanuary 12thmeeting affirmed community support foraSantaMonica minimum wage. Representatives ofbusinesses, workers, advocacy groups, andthe broader community alsodrewattention toelements oftheordinance thatcouldbenefit fromclarification ormodification. Tomeettheprimary goalofadopting theminimum wageandinrecognition ofstakeholder contributions totheprocess ofdeveloping the proposed ordinance, Council adopted theordinance. Toaddress outstanding concerns, andinlightofhowrecently thelawwasadopted anditspotentially significant impacton affected parties, Council authorized theCityManager toappoint anad-hocworking groupthatwouldmeetinpublicanddevelop recommendations onissues thatCouncil identified aswarranting further discussion andclarification. TheWorking Group wagelaw, which staffpresented toCouncil inanInformation ItemonMarch 31, 2016.
Discussion
Thisreport briefly reviews theWorking Group process, presents itsrecommendations, andsummarizes therelated changes intheamended ordinance (Attachment C). Italso presents Stateminimum wagelawprovisions andapreliminary discussion ofpotential implications forSantaMonica.
Working Group
Following Council direction attheJanuary 12th, 2016meeting, theCityManager established anad-hocWorking Group. Thecharge oftheWorking Groupwastoreview 2of18
issues identified byCouncil andtorecommend changes tostrengthen theordinance or makeitclearer through revised provisions. TheWorking Group included business, labor, andcommunity representatives: fivevoting andthreeex-officio members. The Working Group metthreetimesinFebruary. Inaccordance withtheBrownAct, staff minutes, shared documents, meeting recordings, andpublic correspondence ona Minimum WageWorking Group website (Attachment E), accessible through http://www.smgov.net/minimumwage. Through discussion andagive-and-takeprocess during whichbusiness andlaborrepresentatives negotiated forcommon ground, the Working Group unanimously approved recommendations toamend theminimum wage ordinance. Thediscussion belowdescribes eachissueandrecommendation ingreater minutes andaudiorecordings, which canbefound ontheMinimum WageWorking Group website.
Issues andRecommendations
AtitsJanuary 12, 2016meeting, Council identified fiveprovisions oftheordinance for theWorking Group toevaluate andconsider, including service charges, sickleave, firsttimeworker exception, education andenforcement, andthemechanics ofwagelevel alignment andthehotelhardship waiver.
Servicecharges
Provisions inadopted ordinance
Theservice charge andsurcharge provisions intheadopted ordinance include requirements foremployers tofollow, iftheyelecttouseservice charges orother surcharges attheirbusinesses. Theordinance provisions arefocused onemployee protection andtransparency toconsumers drawing largely fromlanguage proposed by UniteHereLocal11, theRestaurant Opportunities Center (ROC), andtheCLEAN Car Washcampaign. Somekeyaspects oftheseprovisions are:
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Service charge proceeds mustgotoemployees whogenerally provide the service
Employees areeligible toreceive service charge proceeds unless theyhavea primarily managerial orsupervisory role
Employers mustdisclose service charge distribution toallemployees Other surcharges areallowed aslongasclearly described andusedasstated; healthcare surcharges mustbeusedentirely onemployee healthcare or otherwise spentontheemployee
Businesses mustclearly describe anycharges andtheirusetocustomers Protections areputinplaceforemployees whocurrently receive service charge proceeds forbanquets andcatering services, roomservice, andporterage service
Council direction
abuses related totheuseofsurcharges, withparticular concerns forthedefinition and implementation ofhealthcare surcharges. Council alsoasked theWorking Group to reviewandconfirm transparency requirements andconsider clarifying operational differences between hotelandrestaurant service charges. Council direction included:
Consider differentiating between hotelandnon-hotel inservice charges, especially in4.62.040(2)(A)-(C) (banquets andcatering, porterage, androom service)
Consider Alternative 2 (UniteHere, ROC, CLEAN CarWashrecommendation) aspresented toCouncil intheJanuary 12, 2016staffreport
Ensure strong transparency foremployers andconsumers (makesurecustomers areaware ofanyservice charges / surcharges before purchasing meal / hotel accommodation)
Addsupervisor definition, ifnecessary
Discussion
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definition, andreviewed typical employee dutiesorrolesthatdonotfallcleanly inthese categories, thecomplexity ofmanaging funds collected toprovide foremployee healthcare, andlessons fromhealthcare surcharge litigation inSanFrancisco.
Recommendations
Working Group members approved recommendations thatclarifywhichservice charge provisions apply tohotelsonly, andthatincorporate healthcare andbenefits surcharges intotheservice charge definition andprovide narrow guidelines fortheircollection and use. Changes areincluded intherecommended ordinance, andaredetailed below:
Specify thattheprovisions inSections 4.62.040(2)(A)-(C) forbanquets and catering, porterage, androomservice, apply tohotelsonly definition anduse
Remove regulations forothersurcharges
Adddirections foruseofhealthcare surcharges toSection 4.62.040(a)(1) to control
inthedescription ofhowtodistribute service charges
Comments
Working Group members agreed ontheimportance oftransparency requirements. The groupdetermined thattheordinance language requiring businesses toprovide clear andobvious notice ofanyservice charges andtheirusemeets transparency needs.
Staffactions / commitments
AstheWorking Group recommended, theCityAttorney, incoordination withWorking Group member JeremyBlasi, developed amended language forSection 4.62.040to uponrecommendations. Thislanguage isincluded
intherevised ordinance.
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Within thefirstyearofimplementation, staffwillsolicitfeedback onhowemployers and employees areusingsurcharges toassess needforadditional changes orclarification.
Seasonal/First-TimeWorkers
Provision inadopted ordinance
Theadopted ordinance language buildsonaStatelawprovision forfirst-timeworkers.
Itdiffersinproviding foralongertimeframe inwhichfirst-timeworkers couldbepaid lessthantheminimum wage, toaccommodate employers withfull-timesummer orparttimelongertermseasonal workers. Theexisting provision provides for:
Exception at85% ofminimum wageforthefirst480hoursorsixmonths, whichever issooner, foremployees working inanoccupation oractivity forthe firsttime (480hours=6months@20hours, 3months@40hours).
Council direction
earnthesamewageasotheremployees, andthepossibility forincreased jobturnover inyouthorfirst-timeworker positions. Council asked theWorking Group to:
Review potential impacts onyouthemployment
Review potential forincreased jobturnover
Ifnoseasonal exemption isproposed, consider impacts tothebusinesses and theCity'sgoals forPieraffordability
Discussion
Working Group members reviewed seasonal orfirst-timeworker provisions inother cities, anddiscussed youthfinancial obligations, theimportance ofyouth employment andproviding equalpayforequalwork, andpotential forgreater employee turnover due totheordinance provision. Theyalsoconsidered costsassociated withtraining firsttimeworkers, creating pathways toemployment forfirst-timeworkers, theambiguity of aMonica aligning withestablished State
lawandwiththeCityofLosAngeles ordinance ontheissue.
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Recommendations
Working Group members recommended modifying theadopted ordinance tomatch the Statelearner provision: 85% oftheminimum wageforthefirst160hoursofworkinan activity inwhichtheemployee hasnosimilarorrelated experience. Theexemption is narrow, matches theState andtheCityofEmeryville, andisnotagespecific.
Comments
Regarding thepotential impact onyouthemployment, jobturnover, orpieraffordability, thegroupfeltthattherewasnotsufficient datatodrawanyreliable conclusions, butthat thesewouldbeareas tomonitor goingforward.
Staffactions / commitments
Staffcommitted toworkwiththeStatetocl
research yields insufficient information, staffcouldpromulgate administrative regulations clarifying useoftheprovision. Stafffurther agreed toinclude information related tothis area, including information gathered fromtheState, asapartoffrequently asked questions orasimilar guide toaccompany theminimum wageordinance.
SickLeave
Provision inadopted ordinance
Theadopted ordinance provides forsickleaveinexcess ofStatelaw, andmatches Stateconditions foruse. Itprovides that:
Employees accrue 1hourforevery30hoursworked (same asState). Accrual capis72hours (9days) forbusinesses with26ormoreemployees; and40 hours (5days) forsmaller businesses.
Accrued timecanbeusedforsickleaveonly; employees cancarryoverhoursup totheaccrual cap; theabilitytocashoutsickleaveisnotrequired.
Council direction
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Council responded tobusiness ownerandworker advocacy concerns regarding the increase insickdaysandpotential issues withuse. Council asked theWorking Group to:
Review proposals forphasing indays (9days / 5daysdepending onsizeof business), orestablishing 6daysforallbusinesses
Consider logistics issues forbusinesses (i.e. useofaccrued sickleavebefore ending employment)
Ensure strong worker protections foruseofsickleave
Discussion
Thegroup discussed logistics related tosickleaveadministration andtheimpact on businesses oftheincreases required intheordinance, including potential foremployee abuse ofsickdays. Thegroupalsodiscussed howlarger andsmaller businesses differ intheirability toprovide sickleave.
Recommendations
TheWorking Group recommended phasing intherequired sickleaveovertwoyears, withaJanuary instead ofJulystartdate, toprovide businesses additional timetoadjust operations andconduct workforce planning inconsideration ofincreased sickleave amounts. Theirrecommendation wouldphase insickdaysasfollows:
January 1, 2017: 4days (smallbusinesses); 5days (largebusinesses) January 1, 2018: 5days (smallbusinesses); 9days (largebusinesses) Thegroupalsorecommended removing aprovision stating thatemployers canrequire employees toprovide reasonable notification ofanabsence (4.62.025(g)), given that Stateguidelines foruseofsickleaveaddress theissue.
Comments
Working Group members considered thelogistics issues discussed attheCouncil meeting, including thepotential thatanemployee could choose totakeuptoninesick daysupongivingnotice, whichwouldcreatesignificant difficulties foremployers. While 8of18
employers agreed thatthisandsimilarissues mayoccur, andlaboradvocates expressed willingness toworkwithemployers ontheseissues, groupconsensus was thatState laborregulations govern useofsickleave, andanyeffortsSantaMonica mightmakewouldnotsupersede theseorchange employer requirements.
Staffactions / commitments
Inaddition totheWorking Group recommendations, staffrecommends thefollowing minoradjustments toclarify theordinance provisions andalignsickleaverequirements withState law. These arethefollowing:
Modify language toshowthataccrual ofpaidsickdaysbegins uponthehiredate theprovision thatemployees cannot usesickleaveuntilthe90thdayof employment wouldbeunchanged).
Insertlanguage clarifying thatsickleavecanbecarried overtothenextcalendar orfiscalyear, asisthecaseinSanFrancisco andOakland.
Educationandenforcement
Provision inadopted ordinance
Theadopted ordinance requires businesses topostminimum wagelawrequirements andretainpayroll andotherrecords; provides forfines, administrative citations, and criminal penalties; givesemployees private rightofact
feesandcosts, andincludes retaliation protection. These provisions arecommon among other minimum wageordinances, andareamong those thattheUCLALabor Center andotherworker advocacy groups recommend.
Council direction
enforcement provisions becomprehensive; andresponded tobusiness testimony about excessive penalties. Council alsoasked thegrouptoconsider outreach andeducation Group to:
Ensure enforcement provisions forgrievances adequately protectworkers 9of18
Ensure recordkeeping requirements apply toallareasoftheordinance Review thepenalty accrual provisions (e.g. daily vs. bypayperiod); andreview Suggest bestpractices foroutreach toemployees andemployers Discussion
TheWorking Group discussed reasons forandpotential unintended consequences of theordinance enforcement provisions, focusing onretaliation andpenalty guidelines.
Members balanced theneedforstrongdeterrents against retaliation, wagetheft, and otherviolations withthepotential forunfounded andcostly lawsuits incentivized byhigh penalty limits. Members alsoconsidered theinterpretation ofcompensation andnonwagebenefits inthecontext ofadjustments employers areprohibited frommaking to fundthewageincrease. Thegroupdiscussed thetypeofemployer activity thatwould reasonably constitute avalidwageclaim, andwaystodecrease thechance thatsmaller misdemeanor penalties escalate intoextreme situations thatmightforcebusinesses to close. Thegroupalsodiscussed somebestpractices foroutreach andeducation, including reference toSanFrancisco asamodel.
Recommendations
Working Groupmembers agreed onadjustments toprovide flexibility inpenalty assessments, theneedtobetterdifferentiate regular operational adjustments from unlawful compensation orotherbenefitreductions, andthealignment oftheSanta Monica ordinance withLosAngeles andSanFrancisco forlength ofrebuttable presumption period (thetimeduring whichanegative employment action ispresumed toberetaliatory). Specifically, therecommendations would:
Reduce therebuttable presumption period from180to90days (matching San Francisco andLosAngeles)
Moreclosely define unlawful practices tothosechanges madetodirectly fund required wages andbenefits
Incivilpenalt
penalties inthecaseofwillfulviolations ratherthanarequirement todoso. 10of18
Staffactions / commitments
Staffwillreview theordinance inoneyear, ashasbeendoneforsomeothernewCity ordinances, toassess needforfurther adjustments. Staffcommitted tofurther researching SanFrancisco education andenforcement practices, including working with community-based organizations, andwillfollowtheserecommendations totheextent Stateandotherregional partners oneducation andenforcement where feasible and beneficial.
OtherTopics
Provisions inadopted ordinance
WageRates
Theadopted ordinance proposes twonewwagerateswhichdifferfromeachother (the minimum wageandhotel livingwage), and, because oftiming, fromtheCityofLos toce
hotelrates. Theadopted ordinance provides for:
General minimum wage at $15perhourby2020, increasing bytheconsumer priceindex starting in2022
Hotelwage at $15.37perhourby2017, increasing bytheconsumer priceindex starting in2018 (oneyearbehind LosAngeles)
ThelivingwageforCitycontractors withannual agreements greaterthan $52,400 (in Chapter 4.26ofthemunicipal code) willbe $15.87perhourinFY2016-17, and increases annually bytheconsumer priceindex (CPI).
Hotelhardship waiver provision
Theordinance provides foraone-yearwaiver uponapproval forhotels that1) would needtocutstaffbymorethan20% toavoid bankruptcy and/orshutdownOR2) would needtocuthoursbymorethan30% toavoidbankruptcy and/orshutdown. Inthis provision, theFinance Director would grantawaiver based onexpert externalreview of 11of18
ppealthe
decision toahearing examiner.
Council direction
Toavoid confusion andinresponse toconcern about hotelworker paritywithLos Angeles, Councilrequested areview ofoptions forstreamlining wage rates. Council alsorequested thattheWorking Group consider waystomake thehotelhardship waiver process moretransparent. Direction wasto:
Alignvarious wagerates (general minimum wage, hotelwage, Citylivingwage, LAhotels) overtime
Discuss potential toincorporate publichearing orworkertestimony intohotel hardship process, withoutrequiring hoteltoshareprivate financial information.
Discussion
Thegroup discussed timing oftheSanta Monica hotelwageincrease andopportunities formatching LosAngeles. Theydiscussed thehardship waiverprocess, including the typeofanalysis andreview necessary tomakethedetermination required bythe ordinance.
Recommendations.
TheWorking Grouprecommended amending theordinance tomatch theLosAngeles hotelwage, whichwillbe $15.37perhourplusaninflation measure, onJuly1, 2017, 1, 2018.
Thegrouprecommended thattheordinance require ahotelapplying forawaiverto notify itsemployees
accessible toallemployees. Thiswouldafford workers theopportunity tobeheard in Staffactions / commitments
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Staffwillassess whenandbywhatmethod itmakes themostsense toadjust theliving wageapplied toCitycontractors based oninflation measures inthenexttwoyears.
TheWorking Group unanimously approved therecommendations above.
StateofCalifornia Minimum WageBill
Governor JerryBrown signedSenate BillNo. 3 (Minimum wage; in-homesupportive services; paidsickdays) intolawonApril4, 2016.
Majorprovisions
Thelawrequires incremental minimum wageincreases to $15perhour, andextends theStatesickleaveprovision toin-homesupportive services (IHSS) workers, following theschedule below:
Year* WageRate** SickLeave
LargeBusinesses SmallBusinesses IHSSWorkers
26ormoreemployees) ( 25orfeweremployees)
2017 $ 10.50 $ 10.00
2018 $ 11.00 $ 10.50 8hours
2019 $ 12.00 $ 11.00
2020 $ 13.00 $ 12.00 *** 16hours
2021 $ 14.00 $ 13.00
2022 $ 15.00 $ 14.00 *** 24hours
2023 $ 15.00 $ 15.00
WageratesareeffectiveJanuary1stofeachyear. SickleavehoursareeffectiveJuly1st.
Thewagerateprogressiondepends onannualassessment ofeconomic andbudgetconditions describedbelow. 13of18
Sickleavethresholds beyondtheinitial8hourrequirement arelinkedtothelargebusiness wagerate thresholds ($13perhourand $15perhour) ratherthantheyear.
Following theminimum wagereaching itsfinaltargetof $15perhourintheschedule for largeandsmallbusinesses, thewagewillincrease annually bythelesserof3.5% orthe July-JuneCPIinflation measure.
Thelawprovides theGovernor anoption topause increases inthisschedule ifheor shedetermines thateithereconomic orbudget conditions demonstrate thattheState cannot support thenextscheduled increase. TheGovernor willindicate hisorher swageincrease bySeptember 1priortotheplanned
increase, andwouldmakethisdecision byproclamation. TheGovernor canpause increases amaximum oftwotimes. Thus, thelatestthattheState minimum wage wouldreach $15perhouris2025forlargeand2026forsmaller businesses.
Economic conditions
TheGovernor maychoose tosuspend thenextscheduled increase ifeitherA) orB) is metANDC) ismet.
A. Employment decrease forthreemonths fromApriltoJunepriortotheadjustment totalnonfarm employment, seasonally adjusted)
B. Employment decrease forsixmonths fromJanuary toJunepriortothe adjustment (totalnonfarm employment, seasonally adjusted) C. SalesandUsetaxreceipts showanannual decrease (July1toJune30before theincrease)
Budget condition
TheGovernor maychoose tosuspend thenextscheduled increase iftheStateGeneral Fundwouldbeinadeficitineitherthecurrent oreitherofthetwofollowing fiscalyears defined asanegative balance intheSpecial FundforEconomic Uncertainties that exceeds 1percent oftotalstateGeneral Fundrevenue andtransfers).
Implications forSantaMonica
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Whenoverlapping laborlawsexist, employers mustabidebythemostgenerous and erateforlargeandsmall
businesses andforhotelswillbemoregenerous thanthose required bytheState law; thusthislawdoesnotchange circumstances materially forSantaMonica businesses or workers. There isoneexemption thatwillbelessimportant foraffected organizations because ofthehigherState law:
Transitionalworkerexemption Theordinance provides forbelow minimum wagepayments foremployers thatprovide transitional jobsforthehardest to employ duringthefirst18months ofth
Thisexemption wouldstillbevalid, butwillprovide lessreliefforthetransitional employer.
SantaMonica employers should alsobeaware ofoneareawhereStateminimum wage lawrequirements aremoregenerous thanthoseprescribed inthelocal law:
IHSSsickleaverequirements Affected providers inSantaMonica mustabide bytheStatelawrequiring sickdays, although theseemployers areexempt from thelocalsickleaveandminimum wagerequirements.
Regional implications andactions
LosAngeles CityandCounty staffarereviewing theStatelawtodetermine howifatall itwillimpacttheirrespective minimum wagelaws. Staffwillcontinue tocoordinate with LosAngeles CityandCounty, andotherareacitieswithlocalminimum wage ordinances, andcommunicate anyresponse toCityCouncil.
Alternatives
resultinmoving forward withtheordinance asadopted onJanuary 12th, 2016.
Therecommended changes represent significant thought andresearch fromWorking Group members, andreflect compromises toprovide workable solutions forsome difficult andcontentious issues. Staffbelieves thattheproposed changes make the 15of18
ordinance stronger andclearer, andrecommends thatCouncil adopttheordinance with therecommended amendments.
NextSteps
IfCouncil adopts theamended ordinance, thelawwouldproceed tosecond reading and gointoeffectafter30days. Staffwouldthencontinue withactivities related toits implementation.
Communication, Outreach andEducation, Enforcement
webpage athttp://www.smgov.net/minimumwage (Attachment D), andresponds to minimum wagequestions. Internally, staffhasprepared acommunications plan building onexisting business andcommunity networks andresources; communications tiononproposed amendments. Staffisalso
coordinating withLosAngeles County oncommunication andoutreach efforts, to maximize existing resources andprovide aconsistent regional message.
Staffiscontinuing discussion withtheLosAngeles County Department ofConsumer andBusiness Affairs (DCBA) WageEnforcement Program (WEP) toprovide enforcement services forSantaMonica, andwillreturntoCouncil withapartnership proposal before theendofthefiscalyear.
IntheJanuary 12, 2016report, staffproposed aninitialbudget of $80,000tofundthe BasedOrganizations (CBOs), butdidnotformally request thebudgetatthattime. Staff requests anappropriation of $80,000tofundtheseactivities, basedontheamount that SanFrancisco appropriates forCBOcontracts annually.
Reporting
AstheWorking Group requested, andasCouncil andtheCityManager suggested at theJanuary 12th, 2016adoption, staffwill
willreporttoCouncil onlessons learned.
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FinancialImpactsandBudgetActions
Thereisnoimmediate financial impactorbudget action necessary asaresultofthe recommended action. Approving abudget forcommunication, outreach andeducation efforts requires thefollowing FY2015-16appropriation:
01221.555060 $ 80,000
Theamount includes one-timecostsforcommunication, outreach, andeducation efforts associated withthenewminimum wagelaw. Itislikelythatstaffwillrequire anongoing annual amount fortheservices. Staffwillrequest thebudget atalatertimewithbetter information about ongoing program needs.
PreparedBy: Stephanie Lazicki, Principal Administrative Analyst Approved ForwardedtoCouncil
Attachments:
A. January 12, 2016 (Weblink)
B. Information Item - Minimum WageWorking Group Recommendations C. Amended Minimum Wage Ordinance
D. Minimum WageWebsite
E. Minimum WageWorking Group website
F. Written comments
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G. Powerpoint
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ATTACHMENTB
Information Item
Date:March30, 2016
To: Mayor andCityCouncil
From: GigiDecavalles-Hughes, Finance Director
AndyAgle, Housing andEconomic Development Director
Subject: Minimum WageWorking Group Recommendations
Introduction
This report presents theMinimum Wage Working Group recommendations foramending onJanuary 12, 2016. Staff
willpresent Council witharevised ordinance, incorporating these recommendations, on April26, 2016.
Background
developed through eightmonths ofcommunity,
business, andlabor engagement anddiscussion. Continuing thisopenandparticipatory process, Council directed theCityManager toformanadhocMinimum Wage Working Group (Working Group) toaddress technical issues Council members identified when theyadopted theminimum wage ordinance onJanuary 12, 2016. These issues include elements oftheservice charge andsickleave provision, discussion ofthefirsttimeworker provision, approaches toeducation andenforcement, andalignment ofSanta Monica minimum wage levels. Council directed thattheWorking Group discuss theidentified issues andrecommend modifications thatwould helptostrengthen andclarify the ordinance. Thisreport shares theWorking Group recommendations toprovide the community, stakeholder groups, andCouncil withinformation regarding thepolicy direction oftherevised ordinance.
1 ATTACHMENTB
Discussion
Council authorized theCityManager toestablish theWorking Group: asmall body representing Santa Monica business, labor, andcommunity members. TheCityManager appointed thefollowing individuals:
Voting Members
Hunter Hall, Santa Monica Neighborhood Restaurant Coalition Stephen Sowards, LeMéridien Delfina Santa Monica Hotel
Jeremy Blasi, UniteHere Local11
Sophia Cheng, Restaurant Opportunities Center
Frank Gruber, Santa Monica resident (Chair)
Ex-officio / Non-voting Members
JeffKlocke, Pacific Park
Paloma Nicholas, Santa Monica HighSchoolStudent
CarlHansen, Santa Monica Chamber ofCommerce
Inaccordance withtheBrownAct, staffposted Working Group agendas through theCity public correspondence onaMinimum WageWorking Group website, accessible from http://www.smgov.net/minimumwage.
TheWorking Group metonFebruary 17, February 24, andFebruary 29, 2016. Thepublic waswelcome toattend allmeetings, andeachmeeting included public testimony.
Estimated public attendance, inaddition toWorking Group members andstaff, wasas follows:
February 17: 2
February 24: 40
February 29: 25
2 ATTACHMENTB
Representatives
Department, andtheFinance Department alsoattended eachWorking Group meeting.
The
Working Group members discussed theissues thatCouncil outlined forfurther discussion andresolution. Thegroup considered information thatstakeholders andWorking Group members submitted regarding Council-identified issues for consideration, resources recommended byvarious Working Group members, andinformation and clarifications requested fromstaff. Following discussion oftheissues, members Therecommendations reflect acomplete setofrecommendations bytheWorking Group members, withrepresentatives ofbusiness andlabor seeking toreach common ground through prioritization ofissues andgive-and-takenegotiations. Theissue listwith associated Working Group recommendations isincluded asAttachment A.
Staffwillpresent anamended ordinance incorporating these recommendations forfirst reading onApril26, 2016.
OnMarch 28, 2016, Governor JerryBrown announced aproposal toincrease theState minimum wage gradually to $15by2022 formost businesses, withaone-yeardelay for businesses with25orfewer employees. Thisplanreaches $15perhourtwoyears after Santa Monica, andonaslightly different wage schedule. Theproposal alsoincludes options topause wage increases based oneithereconomic orbudget challenges. This initial proposal mustgothrough State Legislature review andvote. Staffwillcontinue to monitor theprocess, andwillprovide additional information asavailable, including any implications for law, withtherevised ordinance onApril26, 2016.
PreparedBy: Stephanie Lazicki
Attachments
A. Minimum Wage Issue ListandRecommendations
3 ATTACHMENTB
ATTACHMENT A
aƒ Da
wƒƒ L
CouncilDirectiona.Reviewproposals for phasingin days (9days / 5daysdepending on size ofbusiness), orestablishing 6days
forallbusinessesb.Considerlogistics issuesfor businesses (i.e. useofaccruedsickleave before endingemployment) c.Ensurestrongsick leaveuse
protection (ROC
recommendation) OrdinanceRecommendations: Phaseinsick
daysas follows: January1, 2017: 4days (small businesses); 5 days (large businesses) January1, 2018: 5days (small businesses); 9 days (largebusinesses) Clarifythataccrualofpaidsickdaysbeginsuponthehiredatebutemployees cannotuseuntilthe90th dayofemployment (Section 4.
62.025(a)) Addlanguage clarifyingthataccrualcapmaybe measured bycalendar, fiscal, or date
ofhireyear. RemoveSection 4.62.025(g) toavoidconfusionwiththeStatesickleavelaw regulations foruse ofsickleave (noteSection 4.62.025(c) provides thatemployeesmayuse paidsickleaveconsistentwithState sickleavelaws). Thisprovisionensuresstrongsickleave use protection foremployees. Additionalclarification mayberequired inthe Ordinance. L
9 9ƒ Council Directiona.Ensureenforcement provisions for grievances adequatelyprotectworkersb.Ensurerecordkeepingrequirements applyto all areasofordinance c.Review thepenalty accrualprovisions ( e.g. daily vs. bypayperiod); review
San Franciscowaiverprovisiond.Suggestbestpractices foroutreach toemployees
andemployersOrdinance Recommendations: Reducetherebuttablepresumption periodfrom 180to90days (Section
4. 62.070(a)). Section
4.62. 110(a)). Other Recommendations: Citytoreviewthe Ordinance inoneyear, similartoactionstaken for someothernewordinances, toassess
needforfurther adjustments. CitytoresearchSanFrancisco educationandenforcement practices, includingworking withcommunitybasedorganizations, andfollowtheserecommendations. City toworkwithStateandother
ATTACHMENTB
ATTACHMENT A
L h
CouncilDirection
a.Alignvariouswagerates (generalminimumwage, hotelwage, Citylivingwage; tietoLAhotels) overtime
b.Potentialtoincorporate publichearingorworkertestimony intohotelhardshipprocess, without requiringhoteltoshareprivatefinancialinformation
OrdinanceRecommendations:
AligntheSantaMonicahotelwagetotheLosAngeleshotelwageonJuly1, 2017. AlignSanta onJuly1, 2018.
Includeaprovisiontonotifyemployeesofanyhotelhardshipwaiverapplication, toaffordthe opportunity foremployees tobeheardintheexistingadministrative hearingprocess.
L
CouncilDirection
a.Considerdifferentiating betweenhotelandnon-hotelinservicecharges, especially in4.62.040(2)(a) banquetsandcatering)
b.ConsiderAlternative 2 (UniteHererecommendation)
c.Ensurestrongtransparency foremployers andconsumers (makesurecustomers areawareofany servicecharges / surcharges beforepurchasing meal / hotelaccommodation) d.Addsupervisor definitiontostatute
OrdinanceRecommendations:
Specifythattheprovisions in4.62.040(2)(A-C) forbanquets / catering, porterage, androom service, applytohotelsonly
nitionand
use.
Removeregulations forothersurcharges.
Adddirectionsforuseofhealthcare surcharges to4.62.040(a)(1) toensurerelatedrevenueis orothercompens
description ofhowtodistributeservicecharges (Section4.62.040(a)) OtherRecommendations:
discussed duringthemeeting,
careorbenefitsurcharge revenueistransparent totheworkerandunderhisorhercontrol, whileattemptingtoaccommodate existinghealthcareplansthatmeet TheCityAttorneywouldmeetwithJeremyBlasitoreviewlanguage andensurethatitis consistentwiththeWorkingGroupdiscussion andagreement.
Withinfirstyear, Citytosolicitfeedbackonhowemployers andemployees areusing healthcare/benefitsurcharges inordertoassesstheneedforadditional changes.
ATTACHMENTB
ATTACHMENT A
L C
Council
Direction a.Reviewpotential impactsonyouth
employmentb.Reviewpotentialforincreased job
turnover c.Ifnoseasonal exemption, considerimpactstothebusinessesandCity'sgoalforPier affordabilityOrdinance
Recommendations Decrease thehours intheexemption tomatchtheStatelearner provision: 85% ofthe minimumwagefor160 hours. Theexemption wouldalignwiththeStateand Emeryville, andisnot age specific (Section4.62.015(
e)). Other
RecommendationsCitytoworkwiththeState DivisionofLaborStandards Enforcementoseekaformal opinionletterinorderto clarify . Ifthisresearchyields
insufficient information, staffcouldpromulgate administrative regulations clarifyinguseofthe provision. Citytoincludeinformation relatedtothistopicnfrequentlyaskedquestionsorsimilarguide toaccompany theminimumwage
ordinance. Thereisnot
sufficiimpactonyouth employment, job turnover, orpier affordability. Theissuesshould bemonitoredgoing
Addto7-C
04/26/2016
AnneSamartha
From: CarlHansen <[email protected]>
Sent: Tuesday, April26, 20165:25PM
To: councilmtgitems
Subject: SantaMonicaChamberSupportLetter - Item7C - April26thCouncilMeeting - Modifications totheMinimum WageOrdinance
FollowUpFlag: Followup
FlagStatus: Completed
5/
hƒ
a/
a
CarlHansen Directorof Government AffairsLaurelRosen IPresident / CEO CommerceSanta MonicaChamber Santa Monica Chamberof
Street, Suite 100th of Commerce 12346
Suite100th 12346Street,
Santa
MinimumWageLaw
Modifications
SantaMonicaCityCouncil
April26, 2016
Background
Jan. 12, 2016CouncilAction
MinimumWageWorkingGroup
PackageofRecommendations
CouncilDirection:
ServiceCharges
SickLeave
First-timeWorkerException
Enforcement
WageLevelAlignment
HotelHardship
ServiceCharges:
Clarifyhotel-specificservice-chargeprovisions
Includehealthcareandbenefitssurcharges
Provideguidelinesforhealthcareandbenefitssurcharges
SickLeave
PhaseinwithJanuarystartdate
January1, 2017: 4days / 5days
January1, 2018: 5days / 9days
Removeemployeenotification
First-timeWorkerException
MatchState “Learner” provision
85% minimumwageforfirst160hours
Noagerestriction
Enforcement
Adjustperiodoftimewhereretaliationispresumed
Betterdefineunlawfulcompensationorotherbenefitreductions Provideflexibilityincivilpenaltyassessments
WageLevelAlignment / HotelHardship:
HotelwageparitywithLosAngelesonJuly1, 2017
AligncontractorlivingwagewithhotelwageonJuly1, 2018
Requireemployeenotificationforhotelsseekingahardshipwaiver KeyDates:
July1, 2016: Minimum WageIncreaseEffective
January 1, 2017: SickLeaveIncreaseEffective
Fall2017: One-YearAssessment
Short-TermActions
Communication:
NoticesandAds
Resources
SocialMediaCampaign
Enforcement:
LACounty
Community-BasedOrganizations
OngoingActions:
Monitorimplementation
Review annually
Review partners’ efforts
Evaluate potential modifications
Coordinate regionally
QUESTIONS
www.smgov.net/minimumwage