SR 06-14-2016 3G
City Council
Report
City Council Meeting: June 14, 2016
Agenda Item: 3.G
To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department
Andy Agle, Director
Subject: Approve Agreement for Minimum Wage Enforcement Services with Los
Angeles County
Recommended Action
Staff recommends that the City Council:
1) Authorize the City Manager to negotiate and execute an agreement with Los
minimum wage. The agreement is for an amount not to exceed $125,000 for one
year, with four one-year renewal options, for a total not to exceed amount of
$625,000 over a five-year period, with future year funding contingent on Council
budget approval; and
2) Authorize budget changes as outlined in the Financial Impacts & Budget Actions
section of this report.
Executive Summary
adoption, staff indicated its intent to work with Los Angeles County for wage
enforcement. goes into effect July 1, 2016. The City
businesses abide by the new law. Los Angeles County has established and funded a
wage enforcement division to enforce its minimum wage law in the Los Angeles r
unincorporated areas, which include some areas near Santa Monica. This enforcement
division is also set up to provide enforcement services to cities within the Los Angeles
County region. Partnering with Los Angeles County will support a regional approach to
wage enforcement, and is an effective use of resources as staff cannot estimate the
level of wage enforcement activity. Staff recommends entering into an agreement with
Los Angeles County to provide wage enforcement services for the City of Santa Monica.
The agreement is based on a $90 per hour rate, which references a fully loaded staff
cost, for an estimated not to exceed total of $125,000 for FY 2016-17. Staff is also
ees
through advertising and social media, and agreements with community organizations.
Background
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Los Angeles County passed its minimum wage law in July 2015, and announced a
wage enforcement plan the following November, which the Board of Supervisors
approved and funded in April 2015. Since November, staff has worked with the
possibility of the City contracting with the DCBA for minimum wage enforcement.
Council adopted Santa Moni
(Attachment A), and adopted amendments to finalize the ordinance provisions on April
26, 2016 (Attachment B). Wage provisions take effect starting July 1, 2016.
Discussion
The State is currently responsible for enforcing labor laws. Santa Monica has no
enforcement experience in this area, and does not have existing staff available to
pursue wage law violations or claims. Therefore, wage enforcement would be a new
function for the City. Staff analyzed how other cities with new local minimum wage laws
have conducted enforcement, and how those cities compare to Santa Monica.
Designating an enforcement agency or function has contributed to effective wage
enforcement in San Francisco, which has a strong record of wage recovery and
successful claims; and the UCLA Labor Center and other wage enforcement experts
recognize it as an enforcement best practice. All California cities with local minimum
wage laws including Berkeley, Oakland, Sunnyvale, Mountain View, San Jose,
Richmond, San Diego, and recently Los Angeles City and County have established
wage enforcement functions or identified an agency outside of the organization to take
on this role. Enforcement functions vary in scale and level of dedicated resources.
Larger cities, namely San Francisco, San Jose, and Los Angeles City and County, have
added staff and funding to support this function. San Diego, whose wage is pending a
ballot result in November, plans to add staff and resources for this purpose. Smaller
cities have chosen to proceed in a variety of ways. Pasadena, which adopted its
minimum wage law this year, is in the process of developing an internal wage
enforcement function. However, Mountain View and Sunnyvale, both of which adopted
minimum wage laws that took effect July 1, 2015, have contracted with neighboring San
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population, is geographically close by, and has established and funded a wage
enforcement agency. Staff spoke with city representatives from the client cities
(Mountain View and Sunnyvale), who reported a very positive experience with the
arrangement, and recommended it as an option for smaller city enforcement.
Vendor Selection
Staff recommends Los Angeles County to provide wage enforcement services as an
exception to the competitive bidding process, based on the lack of competition in this
area. Research and discussion with other cities indicated that contracting with another
government entity is the best, and potentially only, alternative to internal enforcement.
Staff contacted Los Angeles City and County, the two possibilities for providing this
service. The City of Los Angeles was not prepared to offer wage enforcement services
to Santa Monica at this point in the development of its enforcement program. The
County program is set up to provide these services, and based on the proposed
program, staff believes it is the best option for wage enforcement in Santa Monica.
wage enforcement plan that includes the potential to provide wage enforcement
services to other cities within Los Angeles County. The County plans to provide robust
and proactive wage enforcement in its area of jurisdiction, including an in-depth and
multi-faceted approach to education and outreach, meaningful enforcement, and
additional services. It has begun a comprehensive media outreach campaign, and
wage enforcement staff have participated in trainings with the U.S. Department of Labor
Field Enforcement (BOFE) to prepare for enforcement activity and to create connections
with State enforcement.
Staff believes the LA County program presents a comprehensive and effective
services, to be made available to the City as needed under the terms of the agreement,
include:
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Responding to inquiries from the public (multilingual assistance in person, by
phone, or online)
Making initial contact, taking complaints, conducting investigations, and writing
reports
Taking enforcement actions, including issuing administrative citations and
conducting settlement negotiations
Participating in the administrative hearing process and court proceedings, in
Collecting and disbursing back wages
Conducting proactive site visits to employers
In addition to the services above, LA County staff would:
Respond to City staff questions
Gather data and track wage claims activity
Provide regular reports to the City
The budget and term of the proposed agreement takes into account the uncertainty in
the initial year of the new law. Staff cannot predict the volume or type of enforcement
activity resulting from the minimum wage law in Santa Monica, and LA County staff also
have no clear indication of workload or the amount of time they will spend on given
tasks. The contract cost is based on an hourly rate, which comes from the average fully
loaded cost of DCBA staff working on a wage enforcement activity. This method is
flexible enough to cover the wide variety of services required for Santa Monica
enforcement, and provides a basis for an estimated cost to the City. The estimated not
Staff believe
proposed agreement is for one year, with four one-year options to renew. This provides
the opportunity to reassess needs once both parties have more information, and gives
the City the
$15 per hour. It also provides flexibility to change strategy once the State rate also
reaches $15 per hour.
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Other Actions
To complement enforcement efforts and reduce the need for punitive action, the City will
reach businesses and workers through advertising, direct information and social media,
and has enlisted community partners to broaden this outreach and support.
Communication. Staff has created ads for the Big Blue Bus and City parking
structures; developed legal posters, paycheck inserts, frequently asked questions
and one-page summary resource for employers; and notified employers through
business license reminders and direct mailing. Staff has also developed social
media messages in support of the project.
Outreach and Education. The City has awarded small grants to community
employees. Staff selected these organizations based on their knowledge of
Santa Monica, experience in communications and with providing business and
worker training, and capacity to provide the services needed. These
organizations will seek out and provide direct service to Santa Monica
businesses and workers. They will track information such as number and type of
trainings conducted and employees and businesses reached, and will provide
reports to staff. Staff will include this information in future reports to Council on
Alternatives
The City could establish a wage enforcement function within Santa Monica. This would
involve, at a minimum, additional training for existing staff, and hiring one full-time and
potentially additional as-needed staff members to respond to inquiries and handle
investigations and citations. This could provide the City more direct control over the
process, and better ensure prompt and appropriate response to complaints. However,
this model would be less flexible in being able to adjust to volume and complexity of
wage complaints and changes as the State rate reaches $15 per hour, and could
potentially be significantly more costly to the City. If Council chooses this option, staff
would return quickly with a plan for the enforcement structure, and request for funding.
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Council could also choose to enforce the law with existing staff and resources, relying
on a complaint-
organization partners. Discussions with other cities indicate that this approach strains
existing staff resources, and wage enforcement research indicates this reactive
approach to enforcement is not the most effective.
Financial Impacts and Budget Actions
Approving the agreement with Los Angeles County to provide wage enforcement
services requires a one-time appropriation of $125,000 to account 01221.555060 in FY
2016-17. The account will be charged based on services provided. If the City chooses
to renew after one year, staff will submit a budget request with the FY 2017-18 budget
based on information from the first year of implementation.
Prepared By:
Stephanie Lazicki, Principal Administrative Analyst
Approved Forwarded to Council
Attachments:
A. January 12, 2016 Staff Report (Web link)
B. April 26, 2016 Staff Report (Web link)
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