On May 22, 2001, the Santa Monica City Council held first reading on an ordinance to establish a "living wage" of $10.50/hour applicable to certain employers in a defined geographical area of the city. This came after almost two years of community activity for and against such a measure, including a ballot initiative defeated in November 2000 that would have preempted Council action on the matter. In 2001 the council enacted the ordinance. The issue was subsequently placed on the November 2002 election ballot as a referendum item. The ordinance was narrowly defeated by a vote of 14,830 against and 13,860 in favor.
Theordinance was unique in that instead of applying to city contractors or companies that receive economic development money, it applied only to businesses with $5 million or more in revenues that were located in the city’s coastal and downtown tourist areas.
Backersof the ordinance said business in this area have benefitted from public improvement projects but have failed to share the wealth with their service workers. The initial hourly rate was set at $10.50. If health benefits are not provided, the employer must add $1.75 per hour to the wage in the first year, and $2.50 per hour in the second year. Thus, the total hourly wage in year one would be $12.25 and $13.00 in year two.
Once the living wage took effect, employers would have not been required to pay the new minimum compensation until July 1, 2002. The one-year lag period would have allowed time for administrative regulations to be developed and for affected businesses to make a hardship claim or carry out necessary financial planning.
Summary of SMART Living Wage Task Force’s Proposed Ordinance
Presented to the Santa Monica City Council
Who Would Be Covered
- City service contractors with contracts over $25,000, recipients of city financial assistance of $1 million or more in a one-year period, lessees or licensees on City property.
- Businesses within the defined Coastal Zone with annual receipts of $43 million or more; the Coastal Zone is defined as the area within the City specified in the California Coastal Act, but including both sides of 4th Street.
- Contractors or subcontractors of all covered businesses.
- Non-profit corporations under 501 (c)(3) of the Internal Revenue Code are exempt from coverage.
Wages and Benefits
- We propose that covered employers pay a wage of no less than the hourly rates set in the Ordinance; initial rates shall be $10.69 per hour with health benefits, $13.19 without health benefits. The wage should be adjusted annually to correspond with increases to the rate of the Consumer Price Index for All Urban Consumers, published by the U.S. Department of Labor, Bureau of Labor Statistics.
- We propose that employers provide at least fifteen compensated days off per year for sick leave, vacation, or other personal necessity leave.
- Health benefits required for an employer to pay the lower hourly wage should be $2.50 per hour toward the provision of health care benefits for employees and dependents. This rate reflects the cost of basic family benefit plans from insurance carriers in the Los Angeles metropolitan area.
- Employers should be required to inform their employees of their possible right to the federal Earned Income Tax Credit.
- We propose that the City establish a Living Wage Enforcement Section in the City Manager’s Office to oversee compliance with the Ordinance, including, but not limited to, maintaining records of employers required to comply with the Ordinance, taking and investigating complaints and issuing findings on those complaints, and receiving and processing applications for waivers for economic hardship.
- We also propose that the City Council appoint an Advisory Committee on Living Wage Enforcement to develop rules and regulations for implementation of this ordinance. Members of the Commission would include city staff and members of the public including at least one worker affected by the Ordinance. Rules and regulations would be approved and adopted by the City Council. The Commission would oversee implementation of the Ordinance, but would have no direct enforcement power.
Enforcement and Implementation
- All employers should be required to post forms in all work sites covered by the Ordinance which include information on the minimum wage, time off, EITC, and enforcement provisions of the Ordinance. The form, developed by the City, must be translated into Spanish and any other dominant language in the workplace.
- An employee claiming violation of the Ordinance would fill out a complaint form with the Living Wage Enforcement Section, which shall conduct an investigation. A finding by the Enforcement Section could be appealed to a hearing officer; hearings before a hearing officer must be held within 30 days of the request for hearing.
- If the City or a court finds an employer has violated the Ordinance, the City may disqualify the employer from receiving a city contract or financial assistance for up to two years and/or may disqualify the employer from participating in all Santa Monica Convention and Visitors Bureau advertising and activities for up to two years.
Specific Prohibitions – Retaliation and Harassment
- Retaliation would be specifically prohibited by the Ordinance for anyone who asserts any rights under the Ordinance, whether or not the complaint is actually covered by the Ordinance. Where an employer takes an adverse action against an employee within 60 days of the employee’s assertion of rights under this ordinance, the adverse action will be assumed to be retaliation.
- Harassment of employees by employers would be a separate prohibited violation of this Ordinance. Employers and their agents may not threaten, harass, intimidate or in any way impede employees who exercise their rights under this Ordinance; harassment includes confinement of employees by any form of duress without the employee’s consent where the duress or confinement is not a normal part of the employee’s employment.
Waivers for Economic Hardship
- The Commission on Living Wage Enforcement and Implementation shall develop criteria for granting waivers for Economic Hardship. Criteria may include, but not be limited to, the Applicant’s assets, liabilities, revenues and wages and benefits paid to employees and whether the waiver will further the interests of the City in enabling employees to advance into permanent living wage jobs.
- Employers who contend that compliance with this Ordinance would create an economic hardship may apply for a waiver from all or part of this Ordinance. Waiver applications must be filed with the Living Wage Enforcement Section and must set out the reasons for granting the waiver.
Supersession by Collective Agreement
- The parties to a collective bargaining agreement may, by that agreement supersede all or some of the provisions of this Ordinance. This is similar to provisions in most city and county Living Wage Ordinances and a provision in proposed Measure KK.