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SR 10-23-2018 3E City Council Report City Council Meeting: October 23, 2018 Agenda Item: 3.E 1 of 5 To: Mayor and City Council From: Gigi Decavalles-Hughes, Director, Finance Department Andy Agle, Director, Housing and Economic Development Subject: Amended and Restated Agreement for Minimum Wage Enforcement Services Recommended Action Staff recommends that the City Council authorize the City Manager to negotiate and execute an Amended and Restated Agreement with the Los Angeles County Department of Consumer and Business Affairs (LA County) for minimum wage enforcement services. This action would result in an agreement for a term up to 10 years for a total contract amount not to exceed $1,250,000, with future year funding contingent on Council budget approval. Summary Staff recommends modifying the scope and term of its existing wage enforcement services agreement with LA County in order to provide more options for proactive outreach and investigative work and to extend the term of the agreement. The Amended and Restated Agreement would include more explicit authority for the City to support cross training for LA County staff, define the conditions under which the City may compensate LA County staff for overtime work, and increase the fee for services. Staff also recommends extending the term of the agreement for an additional two years, plus three options to renew the term for additional two-year periods, to provide for a total 10-year term, in response to the effective work effort and cost efficiency of the services provided during the initial term of the agreement. The proposed Amended and Restated Agreement would assist City staff and LA County in ongoing efforts to ensure that Santa Monica businesses are aware of and comply with the City’s minimum wage law and Santa Monica employees receive benefits of the law. Santa Monica’s minimum wage will continue to increase annually until reaching $15 per hour in 2021 for all businesses. 2 of 5 Discussion In 2016, Council adopted the Minimum Wage Ordinance and authorized a Minimum Wage Enforcement Services Agreement with LA County. The agreement authorizes LA County to perform enforcement functions such as investigating wage violations, issuing enforcement orders and citations on the City’s behalf, and monitoring employers’ compliance. Additionally, the agreement provides for wage counseling services for Santa Monica businesses and employers. The current agreement is for an annual amount not to exceed $125,000 for the first year, with four one-year renewal options at a $90 per hour pay rate. Santa Monica has exercised two annual renewal options administratively per the agreement terms and there are two annual renewal options remaining. Staff in the City Attorney’s Office, Housing and Economic Development and Finance Departments have developed a strong working relationship with LA County that has led to positive results for Santa Monica workers. As staff reported in the July 19, 2018 Information Item (Attachment D), LA County, in collaboration with the City Attorney’s Office, has earned successful results for two cases with significant minimum wage violations. Since the report was released, LA County and CAO attorneys have successfully resolved two additional wage enforcement cases benefiting 23 employees and producing over $12,000 in restitution. Staff anticipates an ongoing and potentially increasing need for wage enforcement services as the wage level continues to increase and as employees become more aware of benefits they are eligible for under the law. In addition, as noted in the July 2018 Information Item, staff plans to shift from an education outreach effort to a stronger enforcement approach as the law commences its third year since adoption. City staff and LA County have identified various modifications to the Minimum Wage Enforcement Services Agreement needed to address evolving needs. The proposed changes provide for additional training to support increased proactive enforcement visits. The modifications also include a compensation increase to reflect changes in staffing composition and LA County cost-of-living increases since the law’s adoption, as 3 of 5 well as provisions to compensate for overtime pay in certain situations. Since the agreement began in 2016, the City has paid only $32,796 to LA County for enforcement services, therefore staff anticipates that the compensation increase will not require an increase to the contract authority. Training of LA County Staff Santa Monica has asked the County for ways to increase the personnel available for Santa Monica work, without requiring hiring additional staff. The County proposed offering cross-training on Santa Monica’s law for County enforcement staff outside the wage enforcement area. After training, these individuals would be equipped to conduct proactive enforcement: educational visits to Santa Monica businesses to explain wage law requirements and provide reference information. The amended agreement details the process for and in what circumstances the City will reimburse the County for such training. Overtime Along with providing additional staff resources for less technical work, City staff and LA County staff determined that an option for overtime pay could increase the number of staffing hours available to serve Santa Monica for both proactive outreach and in instances when a specific investigation requires significant workload in a short period of time. The agreement provides for overtime use with notice to the City for the following reasons:  Legal proceedings requiring LA County presence (no notice required)  Investigative work that must be completed in a limited time frame (with notice to the City)  Targeted proactive outreach (on mutual agreement and based on a proposal with estimated hours) Compensation The current agreement is based on a $90 per hour rate to compensate LA County staff for their services. This rate was based on an initial estimate of a blended, fully loaded 4 of 5 rate for LA County staff that would work on City cases. The proposed new rates of $146.05 per hour, and $219.08 per hour for overtime, reflects an updated staffing structure and cost-of-living increases that occurred after the initial June 2016 agreement date. Staff believes the compensation increase is reasonable and appropriate given the changes since entering into the initial agreement, in particular, the fact that LA County had no experience with providing the contracted services when the initial agreement was established. Past Council Actions Meeting Date Description 01/12/2016 (Attachment A) Introduction for First Reading on Ordinance Setting a Minimum Wage to be Effective in the City of Santa Monica 04/26/2016 (Attachment B) Modification to the Minimum Wage Ordinance First Reading 06/14/2016 (Attachment C) Original agreement for Minimum Wage Enforcement Services with Los Angeles County 07/31/2018 (Attachment D) Santa Monica Minimum Wage Update Financial Impacts and Budget Actions Approving modifications would not increase the yearly $125,000 budget allocation from the original agreement made with LA County. The extension of the term by up to an additional eight years would increase the total not-to-exceed amount to $1,250,000 for a total 10-year term. The City would cover the cost of all training services provided to LA County staff. Funds in the amount of $125,000 are included in the FY 2018-19 budget in the Finance Department account number 01300001.552010. 5 of 5 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) C. June 14, 2016 Staff Report (Web link) D. July 31, 2018 Information Item (Web link) REFERENCE: Modified Agreement No. 10773 (CCS)