SR 10-23-2018 3E
City Council
Report
City Council Meeting: October 23, 2018
Agenda Item: 3.E
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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.
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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
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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
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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.
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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)