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SR-703-003 (13) f:\atty\muni\strpts\mjm\livingwage2d.wpd City Council Meeting 6-26-01 Santa Monica, California TO: Mayor and City Council FROM: City Staff SUBJECT: Ordinance Adding Chapter 4.65 to the Santa Monica Municipal Code Creating Minimum Wage Requirements Applicable to Certain Businesses Located in the Coastal Zone and Extended Downtown Core and to the City and its Service Contractors Introduction At its meeting of June 12, 2001, the City Council directed staff to make specified changes to the proposed Living Wage Ordinance and return it to the Council for first reading. This staff report and the attached ordinance fulfill that directive. Background The previous version of the Living Wage Ordinance, submitted to the Council for second reading on June 12, 2001, needed revision to eliminate ambiguities and thereby ensure effectuation of the Councils intent. In particular, the Council directed staff to reword for = claritys sake provisions establishing boundaries for the area governed by the ordinance = and defining the class of employers subject to the laws minimum wage and benefit = requirements. Additionally, Council directed that the national price index specified in the 1 proposed ordinance be eliminated and that a local index be utilized instead. Finally, the Council asked staff to correct a typographical error. 2 Discussion The attached draft includes the changes which the Council requested. Four of the definitions have been changed. The definitions of Coastal Zone and Downtown Core A@A@ have been revised to enhance clarity. The definition of Employee has been changed to A@ make clear that employees of contractors, subcontractors, lessees or sublessees working == for covered employers may also be entitled to the protections of the ordinance. The definition of Employer has been revised to include both the employer itself and its A@ contractors and subcontractors. Other changes directed by the Council have also been made. The index applicable to wages, benefits and the gross receipts threshold has been changed to a local index. Also, a spelling error was corrected. In addition to the changes directed by the Council, minor editing changes have been made in the wording of various provisions to improve grammar, syntax, stylistic consistency and clarity. These changes were not substantive. Recommendation Staff recommends that the Council introduce the attached ordinance for first reading. PREPARED BY: Marsha Jones Moutrie, City Attorney f:\atty\muni\laws\mjm\livingwage-1.wpd City Council Meeting 6-26-01 Santa Monica, California 3 ORDINANCE NUMBER _____ (City Council Series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA ADDING CHAPTER 4.65 TO THE SANTA MONICA MUNICIPAL CREATING MINIMUM WAGE REQUIREMENTS APPLICABLE TO BUSINESSES IN THE COASTAL ZONE AND EXTENDED DOWNTOWN CORE WITH GROSS RECEIPTS OVER $5,000,000 AND TO THE CITY AND ITS SERVICE CONTRACTORS WHEREAS, the public welfare requires wages and benefits sufficient to ensure a decent and healthy life for workers and their families; and WHEREAS, many Santa Monica employers pay wages so low as to imperil the public welfare; and WHEREAS, many Santa Monica workers earn wages insufficient to support themselves and their families; and WHEREAS, many Santa Monica workers receive no health care benefits and therefore cannot protect their own health and the health of their families; and WHEREAS, many Santa Monica workers cannot participate in civic life or pursue educational, cultural and recreational opportunities because they must work such long hours to meet their households most basic needs; and = 4 WHEREAS, workers who do not receive adequate wages must rely upon federal, state and local public assistance and social services funded by taxpayers and may never escape poverty; and WHEREAS, workers who do not receive health care benefits may be unable to maintain their own health or the health of their children, may be forced to utilize publicly- funded health and emergency care services, and may unintentionally imperil the health of others; and WHEREAS, workers who do not have sufficient income and time off work to participate in the civic affairs and to pursue educational, cultural and recreational opportunities may become alienated from their communities, their states and their nation; and WHEREAS, minimum wage laws promote the general welfare by ensuring that workers can support and care for their families through their own efforts and without governmental intervention; and WHEREAS, creating decent job opportunities through minimum wage and benefit laws is a better way to protect individuals and families than public assistance because the availability of decent job opportunities fosters independence, self-reliance and family unity; and WHEREAS, laws mandating or encouraging the provision of health care benefits to workers promote the general welfare by minimizing health risks to the general population and reducing the cost of emergency and other health care to the taxpayers; and 5 WHEREAS, minimum wage and benefit laws also assure workers the means and leisure to participate in civic life and pursue educational and cultural opportunities and thereby strengthen the fabric of our society; and WHEREAS, minimum wage and benefit laws also benefit employers and the economy as a whole by improving employee performance, reducing employee turnover, lowering absenteeism, and thereby improving productivity and the quality of the services provided by employees; and WHEREAS, in recognition of these realities, the federal government mandates the payment of a minimum wage; and WHEREAS, in recognition of the fact that the cost of living and other circumstances vary substantially through the United States, federal law explicitly authorizes states and municipalities to set more stringent wage standards than those established federally; and WHEREAS, the State of California has exercised its power to set a minimum wage higher than the minimum set by federal law in part because the cost of living in California is higher than in most states; and WHEREAS, the California Legislature has recognized that localities may need to set more stringent wage standards than those set by state law and has therefore specifically authorized the adoption of such standards in Labor Code Section 1205; and WHEREAS, in Opinion Number 89-502, the California Attorney General has recognized the power of local governments to set wage requirements higher than those set by state law; and 6 WHEREAS, the federal minimum wage has declined steadily in real dollars for two decades; and WHEREAS, the California minimum wage has also declined in real dollars; and WHEREAS, the California minimum wage is inadequate to meet the needs of workers in the Los Angeles region where the cost of living is much higher than in most parts of the state; and WHEREAS, housing costs in the region are particularly high relative to most parts of California, and low-income workers must therefore spend a disproportionate percentage of their income sheltering themselves and their families; and WHEREAS, disproportionately high housing costs force workers to locate far from their jobs and spend long hours traveling to and from work; and WHEREAS, the taxpayers of the Los Angeles region must pay the cost of meeting workers needs through the provision of social services because the state minimum wage = is not adequate to meet those needs; and WHEREAS, a minimum wage standard which condemns a full-time workers family = to abject poverty is simply inadequate to achieve the long-recognized and salutary goals of the minimum wage laws; and WHEREAS, the inadequacy of the state minimum wage is particularly detrimental to the public welfare in Santa Monica where the cost of living is very high and where thousands of workers labor long hours at very low-paying jobs; and WHEREAS, the highest concentration of low-income workers in Santa Monica is in the coastal zone and the extended downtown core; and 7 WHEREAS, this same area is home to some of the Citys largest and most = profitable businesses, including luxury hotels, gourmet restaurants and large, national retailers which can afford to pay their employees decent wages and can pass the cost of paying increased wages to consumers; and WHEREAS, most workers in this area are heads of household who bear primary responsibility for supporting their families; and WHEREAS, eighty per cent of these workers have incomes inadequate to meet their families basic needs; and = WHEREAS, the vast majority of these workers have no private health insurance; and WHEREAS, tourists staying in the hotels in this area may pay more than $400.00 per night for their rooms, but the workers changing their bedding and serving their food cannot support their own families; and WHEREAS, businesses in this area have reaped the benefits of various City policies and investments; and WHEREAS, the City has actively improved this area through capital investments, operating expenditures, the promotion of tourism and the adoption of policies which restrict growth and limit competition among certain businesses; and WHEREAS, these investments, expenditures and policies have fostered huge profits for some businesses in the area which employ large numbers of low-wage workers; and 8 WHEREAS, the City Council wishes to adopt a local requirement to effectuate the purposes of the federal and state minimum wage law, to address the needs of workers, and to promote the public welfare; and WHEREAS, increasing the wages of low-wage workers will help achieve Santa Monicas sustainable city goals by helping low-wage workers live closer to work, reducing = commute distances, and facilitating use of public transit; and WHEREAS, the City Council also wishes to protect local busineses and their employees by ensuring that no business suffers economic hardship so severe as to render it nonviable as a result of this ordinance; and WHEREAS, the Council wishes to take all possible action to address the problems caused by inadequate wages and benefits, and Council therefore intends that the severance doctrine shall be liberally applied to effectuate the policy served by this law, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Chapter 4.65 is hereby added to the Santa Monica Municipal Code to read as follows: CHAPTER 4.65 LIVING WAGE Section 4.65.010. Definitions. Coastal Zone. That area bounded by the Pacific Ocean on the west, by the City border on the south, by the San Vicente Boulevard centerline and 9 the City border on the north, and, on the east, by the Lincoln Boulevard centerline south of Pico Boulevard and Fourth Street north of Pico Boulevard. Properties adjacent to the east side of Fourth Street between Pico Boulevard and Colorado Boulevard are included within the zone; otherwise the Fourth Street boundary shall be at the centerline. Extended Downtown Core. That area bounded by Ocean Avenue on the west, Wilshire Boulevard on the north, Fifth Court on the east, and Colorado Boulevard on the south. Properties on both sides of the boundary streets shall be included within this definition. Employee. Any person who does not actually work as a manager, supervisor, or confidential employee, who is not required to possess an occupational license, who is employed either by an Employer or a contractor, subcontractor, lessee or sublessee working for an Employer, and who works at an Employers place of business in the Coastal Zone or Extended = Downtown Core at least half of his or her work time. Employer. The City of Santa Monica, any contractor or subcontractor working for the City on a service contract, any private person or private corporation doing business at a location in the Coastal Zone or Extended Downtown Core with gross receipts over the Gross Receipts Threshold for the previous two years at that location, and any contractor, subcontractor, lessee or sublessee working for such a private person or private corporation. Gross Receipts Threshold. Gross receipts over $5 million per year 10 which amount shall be adjusted annually each July 1st, beginning in 2003 by an amount corresponding to the previous years change in the Consumer = Price Index - Urban Wage Earners and Clerical Workers Los Angeles- Riverside-Orange County, CA. Health Benefit. A payment towards the provision of health care benefits for Employees and their dependents in the amount of $1.75 per hour in the first year that this Chapter is in effect, $2.50 per hour in the second year that this Chapter is in effect, and thereafter adjusted annually st each July 1, beginning in 2004, by an amount corresponding to the previous years change in the Consumer Price Index - Urban Wage Earners = and Clerical Workers Los Angeles-Riverside-Orange County, CA. Section 4.65.020. Minimum Compensation for Employees. Employers shall pay Employees a wage of no less than the hourly rate established by this Chapter. The initial hourly rate shall be $10.50 per hour with Health Benefits or $12.25 per hour without Health Benefits. Such rates shall be adjusted annually each July 1st, beginning in 2003, by an amount corresponding to the previous years change in the Consumer Price = Index - Urban Wage Earners and Clerical Workers Los Angeles-Riverside- Orange County, CA. Section 4.65.030. Exemption for Severe Economic Hardship. 11 An Employer who contends that compliance with this Chapter would constitute a severe economic hardship may apply to the City Manager for a waiver applicable to all or part of the Employers work force. Criteria for = determining hardship shall include whether: (a) compliance with the requirements of this Chapter would render the Employers business = nonviable; (b) the Employers business depends for its viability upon young = people and other first-time workers who are employed on a seasonal basis; and (c) whether granting a waiver would otherwise advance the policies underlying this Chapter. The City Manager shall promulgate an Administrative Instruction establishing specific criteria applicable to and procedures for processing hardship applications. Said Administrative Instruction shall set forth information to be included on the hardship application, procedures for filing and processing applications, and procedures for administrative review by a City hearing examiner whose final decision shall be subject to judicial review. Section 4.65.040. Prohibitions Against Retaliation and Circumvention. It shall be unlawful for any Employer or Employers agent or = representative to take any action against an Employee in retaliation for the exercise of rights under this Chapter. This Section shall also apply to any 12 individual working in or for the City who mistakenly, but in good faith, alleges noncompliance with this Chapter. Taking adverse action against an Employee within sixty (60) days of the Employees assertion of rights shall raise a rebuttable presumption of = having done so in retaliation for the assertion of rights. Additionally, it shall be unlawful for any Employer to intentionally circumvent the requirements of this Chapter by contracting portions of its operation or leasing portions of its property. Section 4.65.050. Remedies. (a) Criminal Penalty. Any person who is convicted of violating this Chapter shall be guilty of a misdemeanor and upon conviction shall be punished by a fine of not greater than five hundred dollars or by imprisonment in the county jail for not more than six months, or by both such fine and imprisonment. (b) Civil Action. Any person, including the City, may enforce the provisions of this Chapter by means of a civil action for injunctive and monetary relief. The burden of proof in such cases shall be preponderance of the evidence. Any person who violates or aids or incites another person to violate the provisions of this Chapter is liable for each and every such offense for the actual damages suffered by any aggrieved party or for statutory damages in the sum of five hundred dollars, whichever is greater, 13 and shall be liable for such attorney's fees and costs as may be determined by the court in addition thereto. The court may also award punitive damages to any plaintiff, including the City, in a proper case as defined by Civil Code Section 3294. The burden of proof for purposes of punitive damages shall be clear and convincing evidence. 14 (c) Administrative Complaint. Any Employee claiming violation of this Chapter may file an administrative complaint with the City Manager or his or her designee who shall investigate the complaint and render a determination on it. If the City Manager or Managers designee concludes that a violation = has occurred, he or she may issue orders to the Employer appropriate to effectuate the complaining Employees rights, including, but not limited to, = back pay and reinstatement. If the Employer refuses to comply with such orders, the City Manager may revoke the Employers business license. The = City Managers determination shall be appealable to a hearing officer who = shall conduct an evidentiary hearing and issue a written decision thereon. The hearing officers decision shall be reviewable in court. = (d) Nonexclusive Remedies and Penalties. The remedies provided in this Section are not exclusive, and nothing in this Chapter shall preclude any person from seeking any other remedies, penalties or relief provided by law. Section 4.65.060. Supercession by Collective Bargaining Agreement. All of the provisions of this Chapter, or any part thereof, may be waived in a bona fide collective bargaining agreement, but only if the waiver is explicitly set forth in such agreement in clear and unambiguous terms. Unilateral implementation of terms and conditions of employment by either 15 party to a collective bargaining relationship shall not constitute, or be permitted as, a waiver of all or any part of the provisions of this Chapter. Section 4.65.070. Effective Date and Implementation. Employers obligations under Section 4.65.020 shall be effective as of = July 1, 2002. SECTION 2. Any provision of the Santa Monica Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Mayor shall sign and the City Clerk shall attest to the passage of this Ordinance. The City Clerk shall cause the same to be published once in the official 16 newspaper within 15 days after its adoption. Except as provided in Section 4.65.070, this Ordinance shall become effective 30 days from its adoption. APPROVED AS TO FORM: ____________________________ MARSHA JONES MOUTRIE City Attorney 17