SR 04-26-2016 7C
City Council
Report
City Council Meeting: April 26, 2016
Agenda Item: 7.C
To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department
Andy Agle, Director
Subject: Modifications to the Minimum Wage Ordinance
Recommended Action
Staff recommends that the City Council:
1) Introduce for first reading the attached ordinance amending Chapters 4.62 and
4.63 of the Santa Monica Municipal Code requiring a minimum wage for
employees with a phased approach to reach $15 per hour by 2020 for most
businesses, and a living wage for hotel workers to reach parity with the City of
Los Angeles hotel wage on July 1, 2017 for hotels;
2) Receive initial staff analysis of California Senate Bill No. 3 \[Minimum wage; in-
home supportive services; paid sick days\] setting a minimum wage increase for
the State of California; and
3) Authorize budget changes as outlined in the Financial Impacts & Budget Actions
section of this report.
Executive Summary
As part of its actions approving a minimum wage ordinance on January 12, 2016
(Attachment A), Council authorized the City Manager to form an ad-hoc working group
of business, labor, and community members to address certain issues within the
ordinance identified by Council as requiring further discussion and clarification. The
Minimum Wage Working Group has completed its meetings and recommended
changes to the ordinance responding to this direction, which staff presented in an
Information Item on March 31, 2016 (Attachment B). Staff recommends that Council
service charges, sick leave, enforcement, wage schedules, and hotel hardship waiver
procedure.
On April 4, 2016, Governor Jerry Brown signed into law a minimum wage increase
schedule for the State of California, reaching $15 per hour approximately two years
behind the Santa Monica ordinance, on a slightly different schedule, with the option to
pause wage increases based on economic or State budget conditions. The first
increase is scheduled for January 1, 2017. Staff does not anticipate material changes
t
assess its impact for Santa Monica and other cities in the region with minimum wage
laws.
1 of 18
Background
mum wage in Santa
Monica on January 12, 2016. The ordinance reflects input and feedback from Santa
Monica businesses, workers, advocacy groups, and the community, in addition to
subject matter research and expert recommendations. It includes a hotel living wage
and provisions relating to service charges, seasonal or first-time workers, paid sick
leave, and enforcement, many of which are unique to Santa Monica and reflect the
process of engaging with and incorporating feedback from stakeholders.
Testimony at the January 12th meeting affirmed community support for a Santa Monica
minimum wage. Representatives of businesses, workers, advocacy groups, and the
broader community also drew attention to elements of the ordinance that could benefit
from clarification or modification. To meet the primary goal of adopting the minimum
wage and in recognition of stakeholder contributions to the process of developing the
proposed ordinance, Council adopted the ordinance. To address outstanding concerns,
and in light of how recently the law was adopted and its potentially significant impact on
affected parties, Council authorized the City Manager to appoint an ad-hoc working
group that would meet in public and develop recommendations on issues that Council
identified as warranting further discussion and clarification. The Working Group
wage law, which staff presented to Council in an Information Item on March 31, 2016.
Discussion
This report briefly reviews the Working Group process, presents its recommendations,
and summarizes the related changes in the amended ordinance (Attachment C). It also
presents State minimum wage law provisions and a preliminary discussion of potential
implications for Santa Monica.
Working Group
Following Council direction at the January 12th, 2016 meeting, the City Manager
established an ad-hoc Working Group. The charge of the Working Group was to review
2 of 18
issues identified by Council and to recommend changes to strengthen the ordinance or
make it clearer through revised provisions. The Working Group included business,
labor, and community representatives: five voting and three ex-officio members. The
Working Group met three times in February. In accordance with the Brown Act, staff
minutes, shared documents, meeting recordings, and public correspondence on a
Minimum Wage Working Group website (Attachment E), accessible through
http://www.smgov.net/minimumwage. Through discussion and a give-and-take process
during which business and labor representatives negotiated for common ground, the
Working Group unanimously approved recommendations to amend the minimum wage
ordinance. The discussion below describes each issue and recommendation in greater
minutes and audio recordings, which can be found on the Minimum Wage Working
Group website.
Issues and Recommendations
At its January 12, 2016 meeting, Council identified five provisions of the ordinance for
the Working Group to evaluate and consider, including service charges, sick leave, first-
time worker exception, education and enforcement, and the mechanics of wage level
alignment and the hotel hardship waiver.
Service charges
Provisions in adopted ordinance
The service charge and surcharge provisions in the adopted ordinance include
requirements for employers to follow, if they elect to use service charges or other
surcharges at their businesses. The ordinance provisions are focused on employee
protection and transparency to consumers drawing largely from language proposed by
Unite Here Local 11, the Restaurant Opportunities Center (ROC), and the CLEAN Car
Wash campaign. Some key aspects of these provisions are:
3 of 18
Service charge proceeds must go to employees who generally provide the
service
Employees are eligible to receive service charge proceeds unless they have a
primarily managerial or supervisory role
Employers must disclose service charge distribution to all employees
Other surcharges are allowed as long as clearly described and used as stated;
healthcare surcharges must be used entirely on employee healthcare or
otherwise spent on the employee
Businesses must clearly describe any charges and their use to customers
Protections are put in place for employees who currently receive service charge
proceeds for banquets and catering services, room service, and porterage
service
Council direction
abuses related to the use of surcharges, with particular concerns for the definition and
implementation of healthcare surcharges. Council also asked the Working Group to
review and confirm transparency requirements and consider clarifying operational
differences between hotel and restaurant service charges. Council direction included:
Consider differentiating between hotel and non-hotel in service charges,
especially in 4.62.040(2)(A)-(C) (banquets and catering, porterage, and room
service)
Consider Alternative 2 (Unite Here, ROC, CLEAN Car Wash recommendation)
as presented to Council in the January 12, 2016 staff report
Ensure strong transparency for employers and consumers (make sure customers
are aware of any service charges / surcharges before purchasing meal / hotel
accommodation)
Add supervisor definition, if necessary
Discussion
4 of 18
definition, and reviewed typical employee duties or roles that do not fall cleanly in these
categories, the complexity of managing funds collected to provide for employee
healthcare, and lessons from healthcare surcharge litigation in San Francisco.
Recommendations
Working Group members approved recommendations that clarify which service charge
provisions apply to hotels only, and that incorporate healthcare and benefits surcharges
into the service charge definition and provide narrow guidelines for their collection and
use. Changes are included in the recommended ordinance, and are detailed below:
Specify that the provisions in Sections 4.62.040(2)(A)-(C) for banquets and
catering, porterage, and room service, apply to hotels only
definition and use
Remove regulations for other surcharges
Add directions for use of healthcare surcharges to Section 4.62.040(a)(1) to
control
in the description of how to distribute service charges
Comments
Working Group members agreed on the importance of transparency requirements. The
group determined that the ordinance language requiring businesses to provide clear
and obvious notice of any service charges and their use meets transparency needs.
Staff actions / commitments
As the Working Group recommended, the City Attorney, in coordination with Working
Group member Jeremy Blasi, developed amended language for Section 4.62.040 to
-upon recommendations. This language is included
in the revised ordinance.
5 of 18
Within the first year of implementation, staff will solicit feedback on how employers and
employees are using surcharges to assess need for additional changes or clarification.
Seasonal/First-Time Workers
Provision in adopted ordinance
The adopted ordinance language builds on a State law provision for first-time workers.
It differs in providing for a longer timeframe in which first-time workers could be paid
less than the minimum wage, to accommodate employers with full-time summer or part-
time longer term seasonal workers. The existing provision provides for:
Exception at 85% of minimum wage for the first 480 hours or six months,
whichever is sooner, for employees working in an occupation or activity for the
first time (480 hours=6 months @ 20 hours, 3 months @ 40 hours).
Council direction
earn the same wage as other employees, and the possibility for increased job turnover
in youth or first-time worker positions. Council asked the Working Group to:
Review potential impacts on youth employment
Review potential for increased job turnover
If no seasonal exemption is proposed, consider impacts to the businesses and
the City's goals for Pier affordability
Discussion
Working Group members reviewed seasonal or first-time worker provisions in other
cities, and discussed youth financial obligations, the importance of youth employment
and providing equal pay for equal work, and potential for greater employee turnover due
to the ordinance provision. They also considered costs associated with training first-
time workers, creating pathways to employment for first-time workers, the ambiguity of
a Monica aligning with established State
law and with the City of Los Angeles ordinance on the issue.
6 of 18
Recommendations
Working Group members recommended modifying the adopted ordinance to match the
State learner provision: 85% of the minimum wage for the first 160 hours of work in an
activity in which the employee has no similar or related experience. The exemption is
narrow, matches the State and the City of Emeryville, and is not age specific.
Comments
Regarding the potential impact on youth employment, job turnover, or pier affordability,
the group felt that there was not sufficient data to draw any reliable conclusions, but that
these would be areas to monitor going forward.
Staff actions / commitments
Staff committed to work with the State to cl
research yields insufficient information, staff could promulgate administrative regulations
clarifying use of the provision. Staff further agreed to include information related to this
area, including information gathered from the State, as a part of frequently asked
questions or a similar guide to accompany the minimum wage ordinance.
Sick Leave
Provision in adopted ordinance
The adopted ordinance provides for sick leave in excess of State law, and matches
State conditions for use. It provides that:
Employees accrue 1 hour for every 30 hours worked (same as State). Accrual
cap is 72 hours (9 days) for businesses with 26 or more employees; and 40
hours (5 days) for smaller businesses.
Accrued time can be used for sick leave only; employees can carry over hours up
to the accrual cap; the ability to cash out sick leave is not required.
Council direction
7 of 18
Council responded to business owner and worker advocacy concerns regarding the
increase in sick days and potential issues with use. Council asked the Working Group
to:
Review proposals for phasing in days (9 days / 5 days depending on size of
business), or establishing 6 days for all businesses
Consider logistics issues for businesses (i.e. use of accrued sick leave before
ending employment)
Ensure strong worker protections for use of sick leave
Discussion
The group discussed logistics related to sick leave administration and the impact on
businesses of the increases required in the ordinance, including potential for employee
abuse of sick days. The group also discussed how larger and smaller businesses differ
in their ability to provide sick leave.
Recommendations
The Working Group recommended phasing in the required sick leave over two years,
with a January instead of July start date, to provide businesses additional time to adjust
operations and conduct workforce planning in consideration of increased sick leave
amounts. Their recommendation would phase in sick days as follows:
January 1, 2017: 4 days (small businesses); 5 days (large businesses)
January 1, 2018: 5 days (small businesses); 9 days (large businesses)
The group also recommended removing a provision stating that employers can require
employees to provide reasonable notification of an absence (4.62.025(g)), given that
State guidelines for use of sick leave address the issue.
Comments
Working Group members considered the logistics issues discussed at the Council
meeting, including the potential that an employee could choose to take up to nine sick
days upon giving notice, which would create significant difficulties for employers. While
8 of 18
employers agreed that this and similar issues may occur, and labor advocates
expressed willingness to work with employers on these issues, group consensus was
that State labor regulations govern use of sick leave, and any efforts Santa Monica
might make would not supersede these or change employer requirements.
Staff actions / commitments
In addition to the Working Group recommendations, staff recommends the following
minor adjustments to clarify the ordinance provisions and align sick leave requirements
with State law. These are the following:
Modify language to show that accrual of paid sick days begins upon the hire date
(the provision that employees cannot use sick leave until the 90th day of
employment would be unchanged).
Insert language clarifying that sick leave can be carried over to the next calendar
or fiscal year, as is the case in San Francisco and Oakland.
Education and enforcement
Provision in adopted ordinance
The adopted ordinance requires businesses to post minimum wage law requirements
and retain payroll and other records; provides for fines, administrative citations, and
criminal penalties; gives employees private right of act
fees and costs, and includes retaliation protection. These provisions are common
among other minimum wage ordinances, and are among those that the UCLA Labor
Center and other worker advocacy groups recommend.
Council direction
enforcement provisions be comprehensive; and responded to business testimony about
excessive penalties. Council also asked the group to consider outreach and education
Group to:
Ensure enforcement provisions for grievances adequately protect workers
9 of 18
Ensure record keeping requirements apply to all areas of the ordinance
Review the penalty accrual provisions (e.g. daily vs. by pay period); and review
Suggest best practices for outreach to employees and employers
Discussion
The Working Group discussed reasons for and potential unintended consequences of
the ordinance enforcement provisions, focusing on retaliation and penalty guidelines.
Members balanced the need for strong deterrents against retaliation, wage theft, and
other violations with the potential for unfounded and costly lawsuits incentivized by high
penalty limits. Members also considered the interpretation of compensation and non-
wage benefits in the context of adjustments employers are prohibited from making to
fund the wage increase. The group discussed the type of employer activity that would
reasonably constitute a valid wage claim, and ways to decrease the chance that smaller
misdemeanor penalties escalate into extreme situations that might force businesses to
close. The group also discussed some best practices for outreach and education,
including reference to San Francisco as a model.
Recommendations
Working Group members agreed on adjustments to provide flexibility in penalty
assessments, the need to better differentiate regular operational adjustments from
unlawful compensation or other benefit reductions, and the alignment of the Santa
Monica ordinance with Los Angeles and San Francisco for length of rebuttable
presumption period (the time during which a negative employment action is presumed
to be retaliatory). Specifically, the recommendations would:
Reduce the rebuttable presumption period from 180 to 90 days (matching San
Francisco and Los Angeles)
More closely define unlawful practices to those changes made to directly fund
required wages and benefits
In civil penalt
penalties in the case of willful violations rather than a requirement to do so.
10 of 18
Staff actions / commitments
Staff will review the ordinance in one year, as has been done for some other new City
ordinances, to assess need for further adjustments. Staff committed to further
researching San Francisco education and enforcement practices, including working with
community-based organizations, and will follow these recommendations to the extent
State and other regional partners on education and enforcement where feasible and
beneficial.
Other Topics
Provisions in adopted ordinance
Wage Rates
The adopted ordinance proposes two new wage rates which differ from each other (the
minimum wage and hotel living wage), and, because of timing, from the City of Los
to ce
hotel rates. The adopted ordinance provides for:
General minimum wage at $15 per hour by 2020, increasing by the consumer
price index starting in 2022
Hotel wage at $15.37 per hour by 2017, increasing by the consumer price index
starting in 2018 (one year behind Los Angeles)
The living wage for City contractors with annual agreements greater than $52,400 (in
Chapter 4.26 of the municipal code) will be $15.87 per hour in FY 2016-17, and
increases annually by the consumer price index (CPI).
Hotel hardship waiver provision
The ordinance provides for a one-year waiver upon approval for hotels that 1) would
need to cut staff by more than 20% to avoid bankruptcy and/or shut down OR 2) would
need to cut hours by more than 30% to avoid bankruptcy and/or shut down. In this
provision, the Finance Director would grant a waiver based on expert external review of
11 of 18
ppeal the
decision to a hearing examiner.
Council direction
To avoid confusion and in response to concern about hotel worker parity with Los
Angeles, Council requested a review of options for streamlining wage rates. Council
also requested that the Working Group consider ways to make the hotel hardship
waiver process more transparent. Direction was to:
Align various wage rates (general minimum wage, hotel wage, City living wage,
LA hotels) over time
Discuss potential to incorporate public hearing or worker testimony into hotel
hardship process, without requiring hotel to share private financial information.
Discussion
The group discussed timing of the Santa Monica hotel wage increase and opportunities
for matching Los Angeles. They discussed the hardship waiver process, including the
type of analysis and review necessary to make the determination required by the
ordinance.
Recommendations.
The Working Group recommended amending the ordinance to match the Los Angeles
hotel wage, which will be $15.37 per hour plus an inflation measure, on July 1, 2017,
1, 2018.
The group recommended that the ordinance require a hotel applying for a waiver to
notify its employees
accessible to all employees. This would afford workers the opportunity to be heard in
Staff actions / commitments
12 of 18
Staff will assess when and by what method it makes the most sense to adjust the living
wage applied to City contractors based on inflation measures in the next two years.
The Working Group unanimously approved the recommendations above.
State of California Minimum Wage Bill
Governor Jerry Brown signed Senate Bill No. 3 (Minimum wage; in-home supportive
services; paid sick days) into law on April 4, 2016.
Major provisions
The law requires incremental minimum wage increases to $15 per hour, and extends
the State sick leave provision to in-home supportive services (IHSS) workers, following
the schedule below:
Year* Wage Rate** Sick Leave
Large Businesses Small Businesses IHSS Workers
(26 or more employees) (25 or fewer employees)
2017 $10.50 $10.00
2018 $11.00 $10.50 8 hours
2019 $12.00 $11.00
2020 $13.00 $12.00 ***16 hours
2021 $14.00 $13.00
2022 $15.00 $14.00 ***24 hours
2023 $15.00 $15.00
*Wage rates are effective January 1st of each year. Sick leave hours are effective July 1st.
**The wage rate progression depends on annual assessment of economic and budget conditions described below.
13 of 18
***Sick leave thresholds beyond the initial 8 hour requirement are linked to the large business wage rate
thresholds ($13 per hour and $15 per hour) rather than the year.
Following the minimum wage reaching its final target of $15 per hour in the schedule for
large and small businesses, the wage will increase annually by the lesser of 3.5% or the
July-June CPI inflation measure.
The law provides the Governor an option to pause increases in this schedule if he or
she determines that either economic or budget conditions demonstrate that the State
cannot support the next scheduled increase. The Governor will indicate his or her
s wage increase by September 1 prior to the planned
increase, and would make this decision by proclamation. The Governor can pause
increases a maximum of two times. Thus, the latest that the State minimum wage
would reach $15 per hour is 2025 for large and 2026 for smaller businesses.
Economic conditions
The Governor may choose to suspend the next scheduled increase if either A) or B) is
met AND C) is met.
A. Employment decrease for three months from April to June prior to the adjustment
(total nonfarm employment, seasonally adjusted)
B. Employment decrease for six months from January to June prior to the
adjustment (total nonfarm employment, seasonally adjusted)
C. Sales and Use tax receipts show an annual decrease (July 1 to June 30 before
the increase)
Budget condition
The Governor may choose to suspend the next scheduled increase if the State General
Fund would be in a deficit in either the current or either of the two following fiscal years
(defined as a negative balance in the Special Fund for Economic Uncertainties that
exceeds 1 percent of total state General Fund revenue and transfers).
Implications for Santa Monica
14 of 18
When overlapping labor laws exist, employers must abide by the most generous and
e rate for large and small
businesses and for hotels will be more generous than those required by the State law;
thus this law does not change circumstances materially for Santa Monica businesses or
workers. There is one exemption that will be less important for affected organizations
because of the higher State law:
Transitional worker exemption
. The ordinance provides for below minimum
wage payments for employers that provide transitional jobs for the hardest to
employ during the first 18 months of th
This exemption would still be valid, but will provide less relief for the transitional
employer.
Santa Monica employers should also be aware of one area where State minimum wage
law requirements are more generous than those prescribed in the local law:
IHSS sick leave requirements
. Affected providers in Santa Monica must abide
by the State law requiring sick days, although these employers are exempt from
the local sick leave and minimum wage requirements.
Regional implications and actions
Los Angeles City and County staff are reviewing the State law to determine how if at all
it will impact their respective minimum wage laws. Staff will continue to coordinate with
Los Angeles City and County, and other area cities with local minimum wage
ordinances, and communicate any response to City Council.
Alternatives
result in moving forward with the ordinance as adopted on January 12th, 2016.
The recommended changes represent significant thought and research from Working
Group members, and reflect compromises to provide workable solutions for some
difficult and contentious issues. Staff believes that the proposed changes make the
15 of 18
ordinance stronger and clearer, and recommends that Council adopt the ordinance with
the recommended amendments.
Next Steps
If Council adopts the amended ordinance, the law would proceed to second reading and
go into effect after 30 days. Staff would then continue with activities related to its
implementation.
Communication, Outreach and Education, Enforcement
webpage at http://www.smgov.net/minimumwage (Attachment D), and responds to
minimum wage questions. Internally, staff has prepared a communications plan
building on existing business and community networks and resources; communications
tion on proposed amendments. Staff is also
coordinating with Los Angeles County on communication and outreach efforts, to
maximize existing resources and provide a consistent regional message.
Staff is continuing discussion with the Los Angeles County Department of Consumer
and Business Affairs (DCBA) Wage Enforcement Program (WEP) to provide
enforcement services for Santa Monica, and will return to Council with a partnership
proposal before the end of the fiscal year.
In the January 12, 2016 report, staff proposed an initial budget of $80,000 to fund the
Based Organizations (CBOs), but did not formally request the budget at that time. Staff
requests an appropriation of $80,000 to fund these activities, based on the amount that
San Francisco appropriates for CBO contracts annually.
Reporting
As the Working Group requested, and as Council and the City Manager suggested at
the January 12th, 2016 adoption, staff will
will report to Council on lessons learned.
16 of 18
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. Approving a budget for communication, outreach and education
efforts requires the following FY 2015-16 appropriation:
01221.555060 $80,000
The amount includes one-time costs for communication, outreach, and education efforts
associated with the new minimum wage law. It is likely that staff will require an ongoing
annual amount for the services. Staff will request the budget at a later time with better
information about ongoing program needs.
Prepared By:
Stephanie Lazicki, Principal Administrative Analyst
Approved Forwarded to Council
Attachments:
A. January 12, 2016 (Web link)
B. Information Item - Minimum Wage Working Group Recommendations
C. Amended Minimum Wage Ordinance
D. Minimum Wage Website
E. Minimum Wage Working Group website
F. Written comments
17 of 18
G. Powerpoint
18 of 18
ATTACHMENT B
Information Item
Date:March 30, 2016
To: Mayor and City Council
From: Gigi Decavalles-Hughes, Finance Director
Andy Agle, Housing and Economic Development Director
Subject: Minimum Wage Working Group Recommendations
Introduction
This report presents the Minimum Wage Working Group recommendations for amending
on January 12, 2016. Staff
will present Council with a revised ordinance, incorporating these recommendations, on
April 26, 2016.
Background
developed through eight months of community,
business, and labor engagement and discussion. Continuing this open and participatory
process, Council directed the City Manager to form an ad hoc Minimum Wage Working
Group (Working Group) to address technical issues Council members identified when
they adopted the minimum wage ordinance on January 12, 2016. These issues include
elements of the service charge and sick leave provision, discussion of the first time worker
provision, approaches to education and enforcement, and alignment of Santa Monica
minimum wage levels. Council directed that the Working Group discuss the identified
issues and recommend modifications that would help to strengthen and clarify the
ordinance. This report shares the Working Group recommendations to provide the
community, stakeholder groups, and Council with information regarding the policy
direction of the revised ordinance.
1
ATTACHMENT B
Discussion
Council authorized the City Manager to establish the Working Group: a small body
representing Santa Monica business, labor, and community members. The City Manager
appointed the following individuals:
Voting Members
Hunter Hall, Santa Monica Neighborhood Restaurant Coalition
Stephen Sowards, Le Méridien Delfina Santa Monica Hotel
Jeremy Blasi, Unite Here Local 11
Sophia Cheng, Restaurant Opportunities Center
Frank Gruber, Santa Monica resident (Chair)
Ex-officio / Non-voting Members
Jeff Klocke, Pacific Park
Paloma Nicholas, Santa Monica High School Student
Carl Hansen, Santa Monica Chamber of Commerce
In accordance with the Brown Act, staff posted Working Group agendas through the City
public correspondence on a Minimum Wage Working Group website, accessible from
http://www.smgov.net/minimumwage.
The Working Group met on February 17, February 24, and February 29, 2016. The public
was welcome to attend all meetings, and each meeting included public testimony.
Estimated public attendance, in addition to Working Group members and staff, was as
follows:
February 17: 2
February 24: 40
February 29: 25
2
ATTACHMENT B
Representatives
Department, and the Finance Department also attended each Working Group meeting.
The
Working Group members discussed the issues that Council outlined for further discussion
and resolution. The group considered information that stakeholders and Working Group
members submitted regarding Council-identified issues for consideration,
resources recommended by various Working Group members, and information and
clarifications requested from staff. Following discussion of the issues, members
The recommendations reflect a complete set of recommendations by the Working Group
members, with representatives of business and labor seeking to reach common ground
through prioritization of issues and give-and-take negotiations. The issue list with
associated Working Group recommendations is included as Attachment A.
Staff will present an amended ordinance incorporating these recommendations for first
reading on April 26, 2016.
On March 28, 2016, Governor Jerry Brown announced a proposal to increase the State
minimum wage gradually to $15 by 2022 for most businesses, with a one-year delay for
businesses with 25 or fewer employees. This plan reaches $15 per hour two years after
Santa Monica, and on a slightly different wage schedule. The proposal also includes
options to pause wage increases based on either economic or budget challenges. This
initial proposal must go through State Legislature review and vote. Staff will continue to
monitor the process, and will provide additional information as available, including any
implications for law, with the revised ordinance on April 26, 2016.
Prepared By:
Stephanie Lazicki
Attachments
A. Minimum Wage Issue List and Recommendations
3
ATTACHMENT B
ATTACHMENT A
aźƓźƒǒƒ ğŭĻ ƚƩƉźƓŭ DƩƚǒƦ aĻĻƷźƓŭ ЋΉЋВΉЋЉЊЏ
{ǒƒƒğƩǤ ƚŅ wĻĭƚƒƒĻƓķğƷźƚƓƭ
LƭƭǒĻ Њʹ {źĭƉ ƌĻğǝĻ
Council Direction
a.Review proposals for phasing in days (9 days / 5 days depending on size of business), or
establishing 6 days for all businesses
b.Consider logistics issues for businesses (i.e. use of accrued sick leave before ending employment)
c.Ensure strong sick leave use protection (ROC recommendation)
Ordinance Recommendations:
Phase in sick days as follows:
January 1, 2017: 4 days (small businesses); 5 days (large businesses)
January 1, 2018: 5 days (small businesses); 9 days (large businesses)
Clarify that accrual of paid sick days begins upon the hire date but employees cannot use until
the 90th day of employment (Section 4.62.025(a))
Add language clarifying that accrual cap may be measured by calendar, fiscal, or date of hire
year.
Remove Section 4.62.025(g) to avoid confusion with the State sick leave law regulations for use
of sick leave (note Section 4.62.025(c) provides that employees may use paid sick leave
consistent with State sick leave laws). This provision ensures strong sick leave use protection for
employees. Additional clarification may be required in the Ordinance.
LƭƭǒĻ Ћʹ 9ķǒĭğƷźƚƓ ğƓķ 9ƓŅƚƩĭĻƒĻƓƷ
Council Direction
a.Ensure enforcement provisions for grievances adequately protect workers
b.Ensure record keeping requirements apply to all areas of ordinance
c.Review the penalty accrual provisions (e.g. daily vs. by pay period); review San Francisco waiver
provision
d.Suggest best practices for outreach to employees and employers
Ordinance Recommendations:
Reduce the rebuttable presumption period from 180 to 90 days (Section 4.62.070(a)).
ķźƩĻĭƷƌǤ
(Section 4.62.110(a)).
Other Recommendations:
City to review the Ordinance in one year, similar to actions taken for some other new
ordinances, to assess need for further adjustments.
City to research San Francisco education and enforcement practices, including working with
community based organizations, and follow these recommendations. City to work with State
and other regional partners where possible.
ATTACHMENT B
ATTACHMENT A
LƭƭǒĻ Ќʹ hƷŷĻƩ
Council Direction
a.Align various wage rates (general minimum wage, hotel wage, City living wage; tie to LA hotels)
over time
b.Potential to incorporate public hearing or worker testimony into hotel hardship process, without
requiring hotel to share private financial information
Ordinance Recommendations:
Align the Santa Monica hotel wage to the Los Angeles hotel wage on July 1, 2017. Align Santa
on July 1, 2018.
Include a provision to notify employees of any hotel hardship waiver application, to afford the
opportunity for employees to be heard in the existing administrative hearing process.
LƭƭǒĻ Ѝʹ {ĻƩǝźĭĻ /ŷğƩŭĻΉ {ǒƩĭŷğƩŭĻƭ
Council Direction
a.Consider differentiating between hotel and non-hotel in service charges, especially in 4.62.040(2)(a)
(banquets and catering)
b.Consider Alternative 2 (Unite Here recommendation)
c.Ensure strong transparency for employers and consumers (make sure customers are aware of any
service charges / surcharges before purchasing meal / hotel accommodation)
d.Add supervisor definition to statute
Ordinance Recommendations:
Specify that the provisions in 4.62.040(2)(A-C) for banquets / catering, porterage, and room
service, apply to hotels only
nition and
use.
Remove regulations for other surcharges.
Add directions for use of healthcare surcharges to 4.62.040(a)(1) to ensure related revenue is
or other compens
description of how to distribute service charges (Section 4.62.040(a))
Other Recommendations:
discussed during the meeting,
care or benefit surcharge revenue is transparent to the worker and under his or her control,
while attempting to accommodate existing health care plans that meet
The City Attorney would meet with Jeremy Blasi to review language and ensure that it is
consistent with the Working Group discussion and agreement.
Within first year, City to solicit feedback on how employers and employees are using
healthcare/benefit surcharges in order to assess the need for additional changes.
ATTACHMENT B
ATTACHMENT A
LƭƭǒĻ Ўʹ {ĻğƭƚƓğƌ Ή CźƩƭƷ źƒĻ ƚƩƉĻƩƭ
Council Direction
a.Review potential impacts on youth employment
b.Review potential for increased job turnover
c.If no seasonal exemption, consider impacts to the businesses and City's goal for Pier affordability
Ordinance Recommendations
Decrease the hours in the exemption to match the State learner provision: 85% of the minimum
wage for 160 hours. The exemption would align with the State and Emeryville, and is not age
specific (Section 4.62.015(e)).
Other Recommendations
City to work with the State Division of Labor Standards Enforcement to seek a formal opinion
letter in order to clarify . If this research yields insufficient
information, staff could promulgate administrative regulations clarifying use of the provision.
City to include information related to this topic in frequently asked questions or similar guide to
accompany the minimum wage ordinance.
There is not suffici
impact on youth employment, job turnover, or pier affordability. The issues should be
monitored going forward.
Add to 7-C
04/26/2016
Anne Samartha
From:Carl Hansen <govaffairs@smchamber.com>
Sent:Tuesday, April 26, 2016 5:25 PM
To:councilmtgitems
Subject:Santa Monica Chamber Support Letter - Item 7C - April 26th Council Meeting -
Modifications to the Minimum Wage Ordinance
Follow Up Flag:Follow up
Flag Status:Completed
5ĻğƩ/źƷǤ/ƚǒƓĭźƌƒĻƒĬĻƩƭͲ
ĻğƩĻǞƩźƷźƓŭƚƓĬĻŷğƌŅƚŅƷŷĻ{ğƓƷğaƚƓźĭğ/ŷğƒĬĻƩƚŅ/ƚƒƒĻƩĭĻƷƚĻƓĭƚǒƩğŭĻǤƚǒƷƚğƦƦƩƚǝĻƷŷĻğƒĻƓķĻķ
ƒźƓźƒǒƒǞğŭĻƚƩķźƓğƓĭĻĬĻŅƚƩĻǤƚǒƷƚƓźŭŷƷ͵hǝĻƩƷŷĻƦğƭƷŅĻǞƒƚƓƷŷƭƷŷĻ/ŷğƒĬĻƩŷğƭŷĻğƩķŅƩƚƒƒğƓǤƚŅƚǒƩ
ğƭĻ͵ağƓǤƌƚĭğƌĬǒƭźƓĻƭƭĻƭ
ƒĻƒĬĻƩƭğĬƚǒƷƷŷĻźƩƷŷƚǒŭŷƷƭğƓķĭƚƓĭĻƩƓƭƩĻŭğƩķźƓŭƷŷĻƦƩƚƦƚƭĻķƒźƓźƒǒƒǞğŭĻźƓĭƩĻ
ğƩĻĭƚƓĭĻƩƓĻķğĬƚǒƷƷŷĻĬǒƩķĻƓğƓķĭŷğƌƌĻƓŭĻƭƷŷĻƓĻǞƚƩķźƓğƓĭĻĭƚǒƌķƦƩĻƭĻƓƷ͵ĻǞğƓƷƷƚƷŷğƓƉğƓķĭƚƒƒĻƓķƷŷĻ
ĭźƷǤĭƚǒƓĭźƌŅƚƩǤƚǒƩǝźƭźƚƓźƓŅƚƩƒźƓŭƷŷĻǞƚƩƉźƓŭŭƩƚǒƦͲǞŷźĭŷĬƩƚǒŭŷƷƷƚŭĻƷŷĻƩĬǒƭźƓĻƭƭͲƌğĬƚƩͲğƓķĭƚƒƒǒƓźƷǤ
ƒĻƒĬĻƩƭƷƚğķķƩĻƭƭźƭƭǒĻƭǞźƷŷźƓƷŷĻƚƩķźƓğƓĭĻƷŷğƷ/ƚǒƓĭźƌźķĻƓƷźŅźĻķğƭƓĻĻķźƓŭŅǒƩƷŷĻƩķźƭĭǒƭƭźƚƓğƓķ
ĭƌğƩźŅźĭğƷźƚƓ͵ĻǞĻƩĻŷğƦƦǤƷƚƭĻĻƷŷźƭŭƩƚǒƦĭƚƒĻƷƚğǒƓğƓźƒƚǒƭƩĻĭƚƒƒĻƓķğƷźƚƓğƓķǞĻŷƚƦĻǤƚǒǞźƌƌğƦƦƩƚǝĻ
ƷŷĻƚƩķźƓğƓĭĻğƭğƒĻƓķĻķƷŷźƭĻǝĻƓźƓŭ͵
{źƓĭĻƩĻƌǤͲ
|
Carl Hansen Director of Government Affairs
Laurel Rosen I President / CEO
Santa Monica Chamber of Commerce
Santa Monica Chamber of Commerce
1234 6 Street, Suite 100
th
1234 6 Street, Suite 100
th
Santa Monica, CA 90401
Santa Monica, CA 90401
310-393-9825 x116
310-393-9825 x115
www.smchamber.com
www.smchamber.com
1
Minimum Wage Law
Modifications
Santa Monica City Council
April 26, 2016
Background
Jan. 12, 2016 Council Action
•
Minimum Wage Working Group
•
Package of Recommendations
•
Council Direction:
Service Charges
•
Sick Leave
•
First-time Worker Exception
•
Enforcement
•
Wage Level Alignment
•
Hotel Hardship
•
Service Charges:
•Clarify hotel-specific service-charge provisions
•Include healthcare and benefits surcharges
•Provide guidelines for healthcare and benefits surcharges
Sick Leave
:
•Phase in with January start date
•January 1, 2017: 4 days / 5 days
•January 1, 2018: 5 days / 9 days
•Remove employee notification
First-time Worker Exception
:
•Match State “Learner” provision
•85% minimum wage for first 160 hours
•No age restriction
Enforcement
:
•Adjust period of time where retaliation is presumed
•Better define unlawful compensation or other benefit reductions
•Provide flexibility in civil penalty assessments
Wage Level Alignment / Hotel Hardship:
•Hotel wage parity with Los Angeles on July 1, 2017
•Align contractor living wage with hotel wage on July 1, 2018
•Require employee notification for hotels seeking a hardship waiver
Key Dates:
July 1, 2016: Minimum Wage Increase Effective
•
January 1, 2017: Sick Leave Increase Effective
•
Fall 2017: One-Year Assessment
•
Short-Term Actions
:
Communication:
•
•Notices and Ads
Resources
•
Social Media Campaign
•
Enforcement:
•
LA County
•
Community-Based Organizations
•
Ongoing Actions:
Monitor implementation
•
Review annually
•
Review partners’ efforts
•
Evaluate potential modifications
•
Coordinate regionally
•
QUESTIONS
www.smgov.net/minimumwage