SR-040808-7D~,tYOf City Council Report
Santa Monaca
City Council Meeting: April 8, 2008
Agenda Item: ~~
To: Mayor and City Council
From: Marsha Moutrie, City Attorney
Carol Swindell, Director of Finance
Subject: Amending the Living Wage Law Municipal Code Chapter 4.65, to Modify
its Applicability, Add a Waiver Provision and Eliminate the Annual
Adjustment to the Contract Threshold
Recommended Action
Staff recommends that the City Council introduce for first reading an ordinance
modifying Santa Monica Municipal Code (SMMC) Chapter 4.65 to update and amend
ordinance fVumber 2152.
Executive Summary
On July 1, 2005, an ordinance establishing a living minimum wage of $11.50 an hour
became effective for employees performing work under contracts for service to the' City
in an amount of $50,000 or more. The ordinance exempts government agencies, City
grantees and other non-profit corporations and allows for a waiver for employees of
contractors participating in bona fide collective bargaining agreements where such
agreement sets forth the waiver in clear and unambiguous terms. No provision allows
for any other exemption or waiver. Both the minimum wage and the contract amount
threshold for applicability of the ordinance are adjusted annually by a consumer price
index. The living minimum wage this fiscal year, is $12.48 and the ordinance applies to
contracts in an amount of $54,200 or more.
The proposed ordinance amendment clarifies that the ordinance does not apply to the
wages of a worker who spends less than 25% his or her work time on a City contract,
empowers the City Manager to waive the requirements of the ordinance where
enforcement limits the City's ability to procure services, and removes the provision
requiring an annual adjustment of the contract amount to avoid confusing contractors.
Discussion
The City's ordinance is currently applied to all contracts for services without any
provision for exemption or waiver other than those noted above. Recent efforts to
procure a banking services provider have precipitated a request by staff to more
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narrowly define applicability of the ordinance and to provide for a waiver where, for
instance, no provider of services can certify compliance with the City's ordinance.
Staff is also recommending that the annual adjustment of contract amount be
discontinued to ease administration of the ordinance. The annual adjustment of the
threshold is confusing to contractors.
The City's current contract for banking services, executed prior to the effective date of
the City's ordinance, expires on September 30, 2008. City staff recently surveyed three
major banking institutions, Bank of American, Union Bank of California and Wells Fargo
and found that none of the three banks would be able to certify compliance with the
City's living wage ordinance. City staff subsequently surveyed other cities with living
wage ordinances and found that the living wage ordinance was .not applied to banking
services for a number of reasons. Either the definition of service contracts for which the
ordinance was applied was more narrowly defined by ordinance or the City Manager
had authority to waive the requirements. Staff also found that while the minimum living
wage is adjusted annually, no other city surveyed reported a requirement to annually
adjust the contract amount.
Alternatives
Other cities' laws limit living wage requirements and provide flexibility in various ways
that Council may wish to consider. The City of Berkeley, for example, covers for-profit
service providers. providing services valued at $25,000 or more in a 12-month period
that have 6 or more employees and only applies to employee working 25% or more their
compensated time engaged in work related to City of Berkeley contracts. The City of
Pasadena ordinance only applies to service contractors where the services are
physically performed in the City of Pasadena. The City of Los Angeles determined that
banking services does not. fall within the definition of service contract subject to the
living wage because the services could not feasibly be performed by City employees,
the services are not rendered by employees whose work site is on property owned by
the- City, and applicability would not further the proprietary interests of the City of LA.
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The City of West Hollywood gives the City Manager responsibility for evaluating whether
or not the living wage applies to a specific contract.
Staff Recommendations
After considering the various alternatives, staff recommends that the ordinance be
amended to apply to employees who spend more than 25% of their compensated time
engaged in work for Santa Monica, to give the City Manager authority to waive the
requirements of the ordinance where a waiver is in the best interest of the City and will
not contravene the ordinance's purposes, and to eliminate the annual adjustment of the
contract threshold.
Financial Impacts & Budget Actions
No financial impact is anticipated as a result of fhese amendments to the living wage
ordinance.
Prepared by:
Candace Tysdal, Financial Operations Manager
Marsha Jones Moutrie, City Attorney
Approved: Forwarded to Council:
Approved:
C, ~~!GUl
Carol Swinde I
Director of Finance
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F:\Atty\Muni Law\Laws\MJM\LivingWageOrdinance
City Council Meeting: April 8, 2008 Santa Monica, California
ORDINANCE NUMBER (CCS)
(City Council Series)
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
SANTA MONICA AMENDING SANTA MONICA MUNICIPAL CODE SECTION
4.65.030 RELATING TO LIVING WAGE EXEMPTION AND WAIVER
WHEREAS, In May of 2005, the City. Council adopted Ordinance 2152 to require
that persons working on City contracts receive a living wage; and
WHEREAS, ,The findings approved as part of that ordinance establish that its
purposes include ensuring that those workers have sufficient income to pay the high
costs of living in the City, region, and state, to cover costs of health care, and to have
the leisure to participate in civic life; and
WHEREAS, The ordinance is broadly applicable to all City- contracts over
$50,000. in amount, plus the annual adjustment, and has very limited exceptions
applicable only to government and noh-profit contracts; and
WHEREAS, Recent experience has demonstrated that in some circumstances
strict adherence to the requirements of the ordinance is detrimental to the City's welfare
and does not serve the ordinance's purposes; and
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WHEREAS, Accordingly, the Council hereby finds that the scope of the
ordinance should be modified and a limited exemption and waiver provision should be
added to the ordinance to protect the City's welfare; and
WHEREAS, Costs of administering the annual adjustment have been
significantly greater than anticipated and are unduly burdening the City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Santa Monica Municipal Code Section 4.65.020 is hereby amended
to read as follows:
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
Four Tthousand Two Hundred Ddollars ($54,200.00) or more
shall pay at least the minimum wage to any employee
working on that contract for work done on the contract. Tq+s
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Seaa#~-Salffernia: (Added by Ord. No. 2152CCS § 1 (part),
adopted 3/8/05)
SECTION 2. Santa Monica Municipal Code Section 4.65.030 is hereby amended
to read as follows:
4.65.030 Exemption: And Waiver.
The requirements of this Chapter shall not apply to ~,.v~--~-~
employers that are government agencies, City grantees, aad d.- C.~^~'O Y
or other nonprofit corporations r to wa es„that are paid to ~~°^'i`""'"S p'"'~'}"~
any worker who spends less than twenty-five percent of his
or her daily work hours working on a contract with the City.
A itionall the Ci Mana er ma waive the
re uirementso his Cha ter for a s ecific contract or ortion ~~ /
of a contract if he ors finds that-both of the followin ~ Xn~'/17`''QJ
conditions are met: a waive ould serve the Ci 's best
interests because for exam le the dinance's
requirements significantly impair the City's ability to procure
necessary services; and (b) waiver would not contravene the
purposes of this Chapter. These purposes include ensuring
that workers in this community. region and state have
adeauate resources to meet the high costs of living to
participate in civic life. and to avoid depending on public
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assistance. (Added by Ord. No. 2152CCS § 1 (part);
adopted 3/8/05)
SECTION 3. 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 4. 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 5. 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.
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APPROVED AS TO FORM: