SR-703-003 (17)
Council Meeting: February 22, 2005 Santa Monica, CA
TO: Mayor and City Council
FROM: City Staff
SUBJECT: An Ordinance for First Reading Requiring that Certain Contractors
Providing Services to the City of Santa Monica Pay a Living Wage to
Employees Performing Work Under Contracts With the City
Introduction
This report presents an ordinance for first reading requiring that effective July 1, 2005,
certain contractors providing services to the City of Santa Monica pay a living wage to
employees for work performed under their contracts with the City.
Background
Pursuant to City Council direction, staff is preparing to implement a living minimum
wage of $11.50/hour for City employees and for employees performing work under
contracts for service to the City in an amount of $50,000 or more. An initial step was
taken with adoption of a salary resolution governing City as-needed job classifications at
the City Council meeting of February 8, 2005. Institution of the living wage for City
employees covered by collective bargaining agreements will be a subject of
negotiations over the next year. While the salaries of City employees are set by
resolution, an ordinance is required to implement the living wage for City contractors.
Other local governments in the region, including the City of Los Angeles, Los Angeles
County, Pasadena and West Hollywood have adopted similar requirements at varying
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wage levels in recent years. The currently applicable wage in each is listed in
Attachment ?B? to this report.
Discussion
In addition to establishing a wage requirement of $11.50 per hour the attached
proposed ordinance:
?
Specifies an applicability threshold of contracts in excess of $50k;
?
Establishes exceptions for government agencies, City grantees and other
nonprofits;
?
Includes escalator clauses for both the wage level and the contract threshold;
and
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Provides for an effective date of July 1, 2005.
Commentary on the impact of establishing a living wage for government contractors
suggests that prospective application of the wage as contracts are competitively bid will
serve to control the incremental contract cost increases to the City. Additionally,
applying the requirements only to new contracts as they are bid will avoid legal disputes
with existing contractors, promote fairness and avoid significant administrative
difficulties. As directed by Council, that is the way in which the proposed ordinance will
be implemented. Both the amount of the wage ($11.50) and the threshold contract
amount for applicability ($50,000) will increase annually on July 1, based on the January
to January Consumer Price Index for Urban Wage Earners and Clerical Workers
1967=100 for Los Angeles-Riverside-Orange County, CA published by the U.S.
Department of Labor, Bureau of Labor Statistics. Findings to support the institution of a
living wage are made in the ordinance.
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Budget/Financial Impact
It is not possible to predict with any certainty the financial impact on contract costs
stemming from the requirement that contractors pay a higher wage. To inform prior
Council deliberations estimates of from $500,000 to several million dollars were
provided. As planning for the FY 2005/06 budget goes forward, provision will be made
to include a prudent amount, based on contracts anticipated to be bid during the fiscal
year.
Recommendation
It is recommended that the City Council hold first reading of the attached ordinance
establishing a minimum living wage of $11.50/hour for employees performing work
under contracts for services to the City of $50,000 or more, to be effective July 1, 2005.
Prepared by: Susan E. McCarthy, City Manager
Marsha Jones Moutrie, City Attorney
Attachments: A) Ordinance
B) Current Living Wage Amounts in the Region
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F:\atty\muni\laws\mjm\livingwage-1.doc
City Council Meeting 2-22-05 Santa Monica, California
ORDINANCE NUMBER _________ (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA ADDING CHAPTER 4.65 TO THE SANTA MONICA MUNICIPAL
CODE CREATING MINIMUM WAGE REQUIREMENTS APPLICABLE TO CITY
CONTRACTORS
WHEREAS, minimum wage laws 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, improving the productivity and performance of employees working
on government contracts directly benefits the public; and
WHEREAS, minimum wage 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, workers who do not have sufficient income 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
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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, 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, creating decent job opportunities through minimum wage 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, 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
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WHEREAS, a number of California cities have exercised their power to establish
laws requiring the payment of minimum wages to city contractors; and
WHEREAS, the federal minimum wage has declined steadily in real dollars for
two decades; and
WHEREAS, the federal minimum wage and the California minimum wage have
declined in real dollars for many years and are inadequate to meet the needs of workers
in the Los Angeles region where the cost of living is much higher than in almost all other
parts of the country and state; and
WHEREAS, housing costs in Santa Monica and 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, a necessity which
adversely impacts those workers, the environment, and therefore, the general welfare;
and
WHEREAS, the City Council wishes to address these realities, promote the
general welfare and protect works on City contracts by creating minimum wage
requirements applicable to employees of City contractors,
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:
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CHAPTER 4.65
LIVING WAGE
Section 4.65.010. Definitions.
Employee.
Any person who does not actually work
as a manager, supervisor, or confidential employee, and
who is not required to possess an occupational license.
Minimum Wage.
A wage payment at an initial hourly
rate of $11.50 per hour. This rate shall be adjusted annually
each July 1st, beginning in 2006, by an amount
corresponding to the previous year?s change (January to
January) in the Consumer Price Index for Urban Wage
Earners and Clerical Workers 1967=100 for Los Angeles-
Riverside-Orange County, California.
Section 4.65.020. Minimum Wage Payment
Requirements for City Contractors.
Any contractor providing services to the City of Santa
Monica pursuant to a contract in the amount of Fifty
Thousand Dollars ($50,000) or more shall pay at least the
Minimum Wage to any Employee working on that contract
for work done on the contract. This contract amount shall be
adjusted annually each July 1st, beginning in 2006, by an
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amount corresponding to the previous year?s change
(January to January) in the Consumer Price Index for Urban
Wage Earners and Clerical Workers 1967=100 for Los
Angeles-Riverside-Orange County, California.
Section 4.65.030. Exemption.
The requirements of this Chapter shall not apply to
government agencies, City grantees and other non-profit
corporations.
Section 4.65.040. Supercession by Collective
Bargaining Agreement.
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 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 4.65.050.Effective Date and
Implementation.
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The obligations imposed by this Chapter shall
become effective as of July 1, 2005, and shall apply only to
contracts executed after that date.
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 newspaper within 15 days after its adoption. This Ordinance shall become
effective 30 days from its adoption.
APPROVED AS TO FORM:
_________________________
MARSHA JONES MOUTRIE
City Attorney
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Attachment B
Current Living Wage Required of Contractors
by Other Public Agencies in the Region*
Pasadena $10.28
City of Los Angeles**
$10.03
County of Los Angeles $9.46
*
Listed wages include health benefit amount
**
West Hollywood follows the City of Los Angeles formula