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f:lattylmunilstrptslmjmlminimumwage.wpd
City Council Meetir~g6-26-01 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Supplemental Report on the Minimum Wage Ordinance
Since the agenda packet was distributed, the City Attomey's Office has received several
communications about the text of the proposed minimum wage ordinance. Two of the
communications were written and were from attorneys representing groups which support
and oppose the measure. Those communications are attached for the Council's and
public's consideration.
Both the attached written communications and some telephone calls received by the office
addressed the definition of "Employer" in the proposed ordinance. Some found it
confusing, perhaps because it covers both private companies in the zone and contractors
who perForm part of their business activities. Others asked about the boundaries for the
area covered by the proposed ordinance. Legal staff has evaluated these comments and
considered various ways of clarifying the language of the proposed ordinance.
Suggested langwage is attached to this supplemental report. Staff believes that it
addresses the concerns which have been raised about the current proposal. Additionally,
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SUPPLEMENT
To '?A
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staff's mark up of ordinance pages 6-11 is attached to help the Councii visualize the
modified proposal.
PREPARED BY: Marsha Jones Moutrie, City Attorney
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Reply tu
X San Fmosrn
1~O Van Ness Avenue, 20th Floor
San Francisco, CalHomia 941@
415.626.1880
fax d15.626.2860
Barry S. Jellison (C1Q
1. Thomas 8owen (CA, NV)
Steven L Stertrertnan (CqNVj
Ri[hard G. McCncken (Cq N~
W. David Holsberry ((A, N1~
Eliza6eM Ann Lawre~te (Cq NV~
Mdrcw 1. Kahn ICA NV, AZ)
w.a, ~. ~a.~~, ;;. ~w;
Florerxe E. Culp (CA, IJV)
Michxl T Andenon ICA NV, ~C MA)
rmothy Sears (C0. NV. DO
Kristin L Martin (CA)
of caunul:
Philip Paul Bowe IW
Mark Brooks RN)
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115515th Street N.W., Sui[e 005
Washington DC20005
1~ A V I[ ~O W~ 1 1 R, R n~A/ F i` o
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Counselors and Attorneys at Law
June 21, 2001
Marsha Jones Moutrie
Santa Monica City Attorney
C'itv nf Santa Mnnica
BOX 2.ZO0
Janta Monica, t;A yU4U i-ZZllU
Re: Santa Monica Living Wage Ordinance
Dear Ms. Moutrie:
VIA FACSIMILE & U.S. MAII,
310/395-6727
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I have been asked to forward to you the nronosed amendments t~ the c~raf
living wage ordinance that were raised at the last meeting of the City Council. They are
as follows:
The exemption language is susceptible to the interpretation that "
ross
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Fax 702223.8651 receipts" does not include the receipts of another entity with which the person has
contracted to perform a part of the person's business activities. This can be remedied
George R. Murphy (DC)
lenniterMatis(DC NY, MD) by adding the following at the end of the definition of "employer":
~ ..., including the gross receipts of another entity with
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a ueacon iiree[, 4ifi Fioor \rv~u~u tuc iJvutt aa,~vi ~~ci Si~ii i~i i.i~iYvZSiivu iiaa
Boston, MA W108
c»>n,c»n contracted to perform a part of its business activities."
Fax 677.227.5767 .
2. T'he recommended tightenine of the descrintion of the CPI adiustment is
r V ~ ~
Micnael i. a~derson (Gq tav, DC MN ~ fO1~Ow5:
0.obert V. Cowell (7931 -1980)
...(.~a.~.. <
~ eoM~a~y
1630 5. Commvtt Street Suhe A-1
Ws vegas, Nevada 89102
702.386.5107
Fax 702.386.9848
"Such rates shall be upwardly adjusted annually each July
ls', beginning in 2003, in proportion to the increase as of
}hr immPrliatr lv nrPrP~ina AAorr}. 2151 n~.ar t1.P ~.P~r
...~ t .............b ..a......, .... v. va uav ) va.u
earlier level of the Consumer Price Index of Urban Wage
Earners and Clerical Workers for Los Angeks as
published by the Bureau of Labor Statistics, U.S.
Department of Labor."
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D A V i 5, C O W E L L & B O W E, L L P
Marshal Jones Moutrie
June 21, 200]
Page 2
I would also like to take this opportunity to commend you on the drafiing of the
ordinance, which I thought was first-rate. The statement of reasans for the ordinance
was particularly persuasive.
Very truly yours,
. ~
Richard G. McCracken
RGM:rr
cc: Vivian Rothstein
SO1C:V.9y DacumcntsV2GhMdo06-21 Moutrie.wpd
6212001l13:19~J4 ISDO 6900
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~ Marsha Moutrie - Minimum Wage Ordinance ~ Page 1',
From: ~ <Trlarmore@aol.com>
To: ~marsha-moutrie@santa-monica.org>
Date: 6124/01 7:20PM
Subject: Minimum Wage Ordinance
Marsha: I think the definitions of "Employee" and "Employer" are still quite
confusing. Consider the following:
1. Does a City employee have to work at the City's "place of business"
inside the Zone in order to be covered? Presumably not; h~wever, if the
definition of "Employee" is read to include to require both employment by an
Employer of a contractor working for an Employer and working in the Zone,
this would be the result.
2. However, if working in the Zone is not required if one's employer is an
"Employer" but only if one's employer is a contractor working for an
"Employer," then you have the strange result that employees outside the Zone
will be covered if they are employed by a~ "Employer," for example, someone
like The Gap that has a location in the Zone and generates $5MM in annual
revenue.
3. Similarly, are service contractors required to pay the high minimum wage
to all of their employees or only to those working on City contracts? or only
to those working in the Zone? or only ta those working on City premises in
the Zone? If the definition of "Employee" is read to limit the wage
requirement to those employees working in the Zone, then not all employees of
City service contractors will be covered, which was probably not the
intention. However, nothing in the definitions limits the payment
requirement to employees working on City contracts, which was probably also
not the intention. Again, if the work location requirement is not applicable
to service contractors, then the ordinance seems to require that service
contractors pay all of their employees the new minimum wage, which was also
probably not the intention.
4. If a service contractor subcontracts out a portion of the work, is the
subcontractor an Employer? If so, as seems likely from the definition of
"Employer," then all of the same questions arise with respect to that
employer. If not, then the only employees of the subcontractor covered by
the ordinance are those who work at the contractor's (or perhaps the City's)
place of business in the Zone. If not in the Zone, then the ordinance does
not apply.
5. Does the work location apply to private persons or corporations in the
Zone which meet the $5MM test?
6. Contractors, subcontractors, lessees and sublessees who work for such a
private party are themselvers "Empioyers." Does this mean that employees of
these businesses are covered by the new minimum wage irrespective of where
they work? or only if they work in the Zone? or only if they work on the
contractors place of business in the Zone? What if the contractor has no
place of business in the Zone? Presumably, you meant that only employees who
work in the Zone for the "real" employer, i.e., the one which meets the $5MM
test; however, the definitions don't work this way.
I don't think these deflnitions work very well and could use some reworking.
MINIMUM WAGE ORDINANCE
PROPOSED REVISIONS TO DRAFT
1. The definition of "Employee" should be shortened by eliminating the language after the
word license.
2. The definition of `Bmployer" should be deleted.
3. Section 4.65.020, "Minimum Compensation for Employees", should be deleted.
4. The following should be substituted:
Section 4.65.010. Definitions.
Coastal Zone.
(New definition to eliminate confusion about using both San Vicente
centerline and City border as northern boundaries.)
That area bounded by the Pacific Ocean on the west, by the City border on
the south, on the north by the San Vicente Boulevazd centerline from the eastern
border of the City to its intersection with the norther City border and along the
City border west to the Pacific Ocean, 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 aze included within the area defined by this subsection;
otherwise the Fourth Street boundary shall be at the centerline.
Extended Downtown Core.
(Altemate definition to set boundaries at centerline.)
That azea bounded by the centerline of Ocean Avenue on the west, the
centerline of Wilshire Boulevard on the north, the centerline of Fifth Court on the
east, and the centerline of Colorado Boulevazd on the south.
(Altemate definition to set boundaries at centerlines on Ocean Avenue and
Fifth Court.)
That area bounded by the centerline of Ocean Avenue on the west,
Wilshire boulevard on the north, the centerline of Fifth Court on the east, and
Colorado Boulevazd on the south. Properties adjacent to the north side of
Wilshire Boulevard and the south side of Colorado Boulevard are included within
the area defined by this subsection.
The following shouid be added:
Minimum Waee.
(This would move the minimum wage specification to the definition
section for clarity's sake.)
A wage payment at an initial hourly rate of $10.50 per hour with Health
Benefits or $12.25 per hour without Health Benefits. These rates shall be adjusted
annually each July 19`, beginning in 2003, by an amount corresponding to the
previous year's change in the Consumer Price Index-Urban Wage Earners and
Clerical Workers of Los Angeles-Riverside-Orange County, CA.
Section. 4.65.025. Minimum Wage Payment Requirements.
(This new section would promote clarity by eliminating the need for the
definition of the term "Employer." The bracketed language may be included or
not as a matter of policy.)
The Minimum Wage required by this Chapter shall be paid by:
(a) the City of Santa Monica to all workers employed by the City.
{b) any contractor or subcontractor working for the City of Santa Monica
on a service contract to workers performing the work on that contract.
(c) 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 at that location for the previous two years to Employees
working at that location. [The gross r,~e eipts aE~esatic~n of a contractor,
subcontractor, lessee or sublesse~perforniing par~Of t~ie business activities of the
private person ar corporation shall be included in determining whether the Gross
Receipts Threshold is exceeded.]
(d) any contractor, subcontractor, lessee or sublessee performing part of
the business of a private person or private corporation described in subsection (c)
to Employees doing that work during at least half of their work time.
f:lattylmuni\strptslmj m~reviseminimumwage.wpd
2
WHEREAS, increasing the wages of low-wage workers will hetp achieve Santa
Monica's 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 Gouncil 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 fhis ordinance; and ~
WHEREAS, the Council wishes to take all possible action to address theproblems
caused by inadequate wages and benefits, and Council therefore intends that the
severance doctrine shall be liberaflv aoolied-to effectuatethe oolicv served bv this law_
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SECTIOIV 1. Chapter 4.65 is hereby added to the Santa Monica Municipal Code to
read as follows:
CHAPTEf~ 4.85
, ~ , LIVING WAGE
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_r,'P / ~ ~.~ Section 4.fi5.010. Definitions. '~
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~1 oy ine ~iry oo~oe~ on ine souin, oy ine San vicenie 8ouieva~a cenienine ano
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` ~ the City border on the north, and, on the east, by the Lincoln 8oulevard
~ cente~line south of Pico Boulevard and Fourth Street north of flico
Boulevard. Properties adjacent to the east side of Fourth Street between
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/ Pico Boulevard and Colorado Boulevard are incl~ded within the zone;
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~ otherwise the Fourth Street boundary shall be at the centerline.
Extended Downtown Core. That area bounded by Ocean Avenue on
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y the west, `Wilshire Boulevard on the north, Fif#h Court on the east, and
~'~ ~y}'~ olo~rado Boulevard on the south. Properties on both sides of the boundary
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°~ ~~ o'v~y?`~ treets shall be included within this definition.
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~"~ ~ Emoloyee. Any person who does nvt actually work as a manager,
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supervisor, or confidential employee, who is not required to possess an
occupationa! license~ . ,
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Gross Receiats Threshold. Gross receipts over $5 million per year
whir.h am~unt shall be adiusted annuallv each Julv 1 st. beainnina in 2003 bv
..i i. ...~:n.. 4r. #L.e vn~r'c nM~nnn in 4hc (~nncumor
GII O~i~i~unt ~.ini°c.°.jrv~wn~~y w uiv Ni°c`r'ia^iu~ )~.a~ .~ vna~.y.. u. .~~v vv.w...~~v.
Price Index - Urban Wage Earners and ~lerical Workers Los Angeles-
Riverside-Orange County, CA.
7
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 each July
151, beginning in 2004, by an amount corresponding to the previous year's
change in the Consumer Price Index - Urban Wage Eamers and Clerical
~ Ua Woricers Los Angeles-Riverside-Orange County, CA.
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l~'~ ~~ Section 4.65.030. Exemption for 5evere Economic Harclship. .
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~~1~ An~ployer who contends that wmpliance with this Chapter would
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,-~ r,~~- constitute a severe economic hardship may apply to the City Manager ~or a
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waiver applicable to all or part of the~mployer's woric force. Criteria for
determining hardship shall include whether: (a) compliance with the
requirements of this Chapter would render ihe ~mployers business
8
~onviable; {b) the~ployer's 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 othervvise advance the policies
undehying 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 shail be unlawful for any~nployer or~ployer's agent or
representative to take any action against an Employee in retaliation for the
exercise of rights under this Chapter. This Section sha!! also apply ta any
individual working in or for the C1ty who mistakenly, but in good faith, alleges
noncompliance with this Chapter.
Taking adverse action against an Employee within sixty{80) days of
the Employee's assertion of rights shall raise a rebuttable presumption of
having done so in retaliation for the assertion of rights.
9
Additionally, it shali be unlawful for any~mployer 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 Penaltv. Anq person who is convicted of violating this
Chapte~ shall be guilty of a misdemeanor and upon conviction shall be
punished by a fine of not greater than five hundred doHars 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, inciuding the City, may enforr,e the
provisions of this Ghapter by means of a civil action for injunctiv.e 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 o~ for
statutory damages in the sum d'f five hundred dollars, whichever is greater,
and shall be liable for such attomey's fess and costs as maybe detertnined
by the court in addition thereto. The court may also award punitive damages
to any plainfiff, 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_
10
(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 ~r Manager's designee concludes that a violation
has occurred, he or she may issue orders to the~mployer appropriate to
effectuate the complaining Employees' rights, including, but not limited to,
back pay and reinstatement. If the~mployer refuses to comply with such
orders, the City Manager may revoke the~mployers business license. The
City Manage~s determination shall be appealable to a hearing officer who
shall conduct an evidentiary hearing and issue a written decision thereon.
The hearing officer's decision shall be reviewable in cou~t.
(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 Cotlective 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 waiv2r
is explicitly set forth in such agreement in clear and unambiguous terms_
Unilateral implementation of terms and conditions of employment by either
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