AN N O T AT E D AG E N D A S P E C I AL M E E T I N G O F T HE BERKELEY CITY COUNCIL TUESDAY, NOVEMBER 10, :00 P.M.

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1 AN N O T AT E D AG E N D A S P E C I AL M E E T I N G O F T HE BERKELEY CITY COUNCIL TUESDAY, NOVEMBER 10, :00 P.M. Longfellow Middle School Auditorium 1500 Derby Street, Berkeley, CA TOM BATES, MAYOR Councilmembers: DISTRICT 1 LINDA MAIO DISTRICT 2 DARRYL MOORE DISTRICT 3 MAX ANDERSON DISTRICT 4 JESSE ARREGUIN DISTRICT 5 LAURIE CAPITELLI DISTRICT 6 SUSAN WENGRAF DISTRICT 7 KRISS WORTHINGTON DISTRICT 8 LORI DROSTE Preliminary Matters Roll Call: 7:04 p.m. Present: Maio, Moore, Anderson, Arreguin, Capitelli, Wengraf, Worthington, Droste, Bates. Absent: None. Recess 7:38 p.m. 7:40 p.m. Public Comment - Limited to items on this agenda only - 98 speakers. 1. a. Revisions to Minimum Wage Ordinance B.M.C (Continued from September 15, 2015) From: Commission on Labor Recommendation: Adopt first reading of an Ordinance amending Berkeley Municipal Code Chapter that will ensure the Berkeley Minimum Wage Ordinance is successful in promoting and protecting the rights and the individual self-reliance of working people in Berkeley by raising the minimum wage to a living wage, adding an annual cost of living adjustment, and granting adequate paid sick leave to all workers. Financial Implications: None Contact: Delfina Geiken, Commission Secretary, Tuesday, November 10, 2015 ANNOTATED AGENDA Page 1

2 1. b. Proposed Amendments to the Minimum Wage Ordinance; Amending Berkeley Municipal Code Chapter (Continued from September 15, 2015) From: City Manager Recommendation: Review and consider information regarding the activities and costs associated with implementing and enforcing the Commission on Labor's proposed amendments to the Minimum Wage Ordinance (MWO), including the potential impact of the proposed amendments on the City's minimum wage employees, employers, non-profit organizations and community-based organizations, on-call workers and youth training program workers, and either: 1. Adopt first reading of an Ordinance amending Berkeley Municipal Code Chapter 13.99, which includes staff-recommended revisions to the Commission's proposed Ordinance; -OR- 2. Refer the MWO back to the City Manager for further analysis and revisions. Financial Implications: Staff time Contact: Kelly Wallace, Health, Housing and Community Services, c. Paid Sick Leave Ordinance; Adding Berkeley Municipal Code Chapter From: City Manager Recommendation: Review and consider the attached Paid Sick Leave Ordinance (PSLO), including the potential benefits and impacts of the ordinance on employees, employers, and the community and either: 1. Adopt first reading of an Ordinance adding Berkeley Municipal Code Chapter ; -OR- 2. Postpone adoption of the Ordinance until businesses have had a chance to assess the impact of the new state Paid Sick Leave law on business operations. Financial Implications: See report Contact: Kelly Wallace, Health, Housing and Community Services, Action: M/S/C (Bates/Maio) to accept supplemental material from Councilmembers Capitelli, Droste, Maio, and Moore on Item 1. Vote: All Ayes. Recess 8:53 p.m. 9:07 p.m. Action: 98 speakers. M/S/Failed (Worthington/Arreguin) to direct staff to return with two options for the increase, 1) the increase as proposed in the supplemental item, and 2) an increase for large business to $13 in 2016, and $15 in 2017; and an increase for small business to $13.25 in 2017, $14.00 in 2018, and $15.00 in Vote: Ayes Anderson, Arreguin, Worthington; Noes None; Abstain Maio, Moore, Capitelli, Wengraf, Droste, Bates. Action: M/S/C (Capitelli/Maio) to adopt the supplemental item as submitted (see below). Vote: Ayes Maio, Moore, Capitelli, Wengraf, Worthington, Droste, Bates; Noes Anderson, Arreguin. Tuesday, November 10, 2015 ANNOTATED AGENDA Page 2

3 RECOMMENDATION Approve in concept and direct the City Manager to return with ordinance language amending Berkeley Municipal Code Chapter to raise the minimum wage to keep pace with the cost of living and median wage. As it is currently written, the current version of the Minimum Wage Ordinance lacks a long-term solution to the fundamental problem of working people living in poverty due to stagnant wages. This proposal would continue increases to the minimum wage after the currently scheduled rate increases through This proposal increases the minimum wage to $15/hour by 2018 and offers a slightly slower phase-in for small businesses. SUMMARY Increase the Minimum Wage Table 1: Proposed Minimum Wage Revisions for the City of Berkeley Year Current Berkeley wage schedule Small business wage schedule Yearly increase Large business wage schedule Yearly increase 2015 $11.00 $11.00 $ $12.53 $ % $ % 2017 $12.53 $ % $ % 2018 $12.53 $ % $ % 2019 $12.53 $ % + local CPI 2020 $12.53 $ % + local CPI In Designing Thoughtful Minimum Wage Policy at the State and Local Levels, economist Arindrajit Dube s recommends using median wage, local costs of living, and regional coordination as instruments to set an appropriate level of the minimum wage. (Dube, 2014). By raising Berkeley s minimum wage to an amount that takes into account regional wage schedules, the potential negative impacts cross-jurisdictional competition and business relocations are reduced significantly (Dube, 2014). This proposal mirrors approaches from Emeryville, Los Angeles, and Seattle in that we have recommended a tiered approach. The rationale for such an approach is to address concerns surrounding the livelihood of small businesses which make up over half of our businesses. We also request that staff returns to City Council in 2019 to present recommendations to merge the smaller business minimum wage with the large business minimum wage. 1 Berkeley s existing and proposed wages are incorporated in the month of October. 2 After 2020, we recommend an automatic cost of living adjustment based on the Bay Area CPI. Tuesday, November 10, 2015 ANNOTATED AGENDA Page 3

4 Incorporate a Cost of Living Adjustment The Minimum Wage Ordinance went into effect on October 1, 2014 and provides a minimum pay requirement for all employees working at least two hours per week within the geographic limits of Berkeley. As of October 1, 2015, the minimum wage increased to $ The Minimum Wage Ordinance stipulates an increase to $12.53 on October 1, 2016, but does not provide changes after that date. The Minimum Wage Ordinance provides a floor wage, not a ceiling, for compensation and currently does not increase annually with the Consumer Price Index (CPI). We recommend adding an automatic Cost of Living Adjustment based on the local Consumer Price Index after the specified minimum wage floors are reached. Define Small Business Size For the purpose of the minimum wage schedule, we propose expanding the small business definition to 55 Full Time Equivalent (FTE) who work for compensation. We also don t want to define small businesses according to establishment size because many large multinational firms have several small establishments. Therefore, we recommend using firm size as the major determinant. In determining firm size, franchises must be counted at the national or multinational firm size. 3 Notwithstanding the above, nonprofits shall be subject to the small business wage schedule. Direct Service Charges to Workers This proposal also recommends that service charges should be directed to workers in hospitality (food services, hotels, etc.) businesses. Some businesses charge customers a service fee. In many instances, this fee is presented by the employer or perceived by the customer as replacing the optional gratuity. While California labor law precludes distributing tips to anyone except the service provider (typically the server), there are no such limits on service charges. We recommend staff create a policy to ensure that service charges are directed to the employee either in the form of cash or some other benefit, so long as it directly benefits the employee. The service fees should not be used in substitute of an appropriate minimum wage. Furthermore, for employers who charge a service fee, there shall be no reduction in wages or existing benefits. Special Cases In order to address small business concerns, we recommend a ramp up period for smaller businesses under 55 employees. Additionally, we want to ensure that our youth (21 and under) have access to job training as well. Training wages should be no less than 80% of the minimum wage. Youth-in-training programs shall be clarified to specify its application only to temporary job-training positions. Temporary is defined as no more than 1,040 working hours in any 365-day period. Maintain existing job-training exemption provided that there is a set duration not to exceed one year, stated learning objectives and skills training, and close supervision and guidance. Individuals younger than 21 cannot do the same work while getting paid less. 3 Jacobs et al, Contra Costa s Proposed Minimum Wage Law: A Prospective Impact Study Tuesday, November 10, 2015 ANNOTATED AGENDA Page 4

5 The exemption for on-call workers should be removed in its entirety. Additionally, staff should clarify the exemption for collective-bargaining agreements to properly reference federal law. OBJECTIVES AND RATIONALE In regions such as the Bay Area, where the cost of living is extraordinarily higher than the national average, municipalities like Berkeley have adopted local minimum wage standards that are significantly higher than both the federal and state minimum wage requirements. Although Berkeley has already taken a progressive step forward, we can do more. In devising a thoughtful minimum wage policy, we have analyzed the benefits and impacts to both workers and businesses and have consulted with dozens of concerned stakeholders, leading economists, union organizers, affected workers, and local business owners. The Councilmembers who have written this proposal represent a wide cross-section of our community we have worked minimum wage jobs, owned small businesses, joined unions, and share the desire to raise wages while valuing our community s economic diversity. The policy objectives of the revisions are as follows: 1. Expand the wage schedule in order to make the minimum wage keep pace with the cost of living and the median wage. 2. Include an automatic cost of living adjustment based on the local Consumer Price Index in order to keep the policy in step with the regional economy. 3. Establish clear rules and regulations around service charges in order to provide clear guidelines for local business owners and to ensure workers benefit. 4. Recommend and pursue regional coordination. We recommend that Berkeley City Council writes letters to State Senator Loni Hancock, State Assemblymember Tony Thurmond, and the City Council and mayors of Alameda, Albany, Lafayette, Oakland, Orinda, Piedmont, and Richmond urging a regional approach and asking them to match our commitment to raising the minimum wage to $15. We also want to urge local elected officials to convene a meeting to address minimum wage. In September of 2015, UC s Institute for Research on Labor and Employment released a prospective impact study on Contra Costa s proposed minimum wage increase to $15 in This study is applicable to Berkeley for several reasons. First, the median annual earnings for workers in Contra Costa County and Berkeley are comparable. Secondly, the self-sufficiency hourly wage is almost identical. This research, like most minimum wage research, indicates that raising the minimum wage in an appropriate manner has a positive net benefit on all workers, particularly women and people of color. Additionally, minimum wage increases tend to affect those ages thirty and older and not teenagers (Cooper, 2013). Previous economic research has found little measurable effect on employment or hours from minimum wage policies. Most of the costs can be absorbed through reduced worker 4 Ibid. Tuesday, November 10, 2015 ANNOTATED AGENDA Page 5

6 turnover, improved worker performance, and incremental increases to prices. Operational costs and restaurant prices would increase slightly (Reich, Jacobs, Bernhardt, & Perry, 2014). Prices would also likely increase in industries that typically employ low-wage workers (Dube, 2014). Action: M/S/C (Bates/Capitelli) to table Item 1.c. Paid Sick Leave Ordinance to January Vote: Ayes Moore, Capitelli, Wengraf, Droste, Bates; Noes Arreguin, Worthington; Abstain Anderson; Absent Maio. Councilmember Maio absent 10:15 p.m. 10:22 p.m. 2. Berkeley Fair Elections Public Campaign Financing Ballot Measure (Continued from September 15, 2015) From: Fair Campaign Practices Commission Recommendation: Consider the public funding proposal from MapLight and the League of Women Voters (dated January 5, 2015) for possible further consideration for the November 2016 ballot. Financial Implications: None Contact: Savith Iyengar, Commission Secretary, Action: M/S/C (Bates/Maio) to suspend the rules and extend the meeting to 11:15pm Vote: Ayes Maio, Anderson, Arreguin, Capitelli, Worthington, Droste, Bates; Noes None; Abstain Wengraf; Absent Moore. Councilmember Moore absent 10:47 p.m. 10:50 p.m. Action: 17 speakers. M/S/C (Bates/Moore) to refer to the Fair Campaign Practices Commission to merge the amendments submitted by the Berkeley Fair Elections Coalition regarding limiting the offices covered, allowing contributions from outside Berkeley with certain restrictions, a built in review of the program with the original draft of the proposed measure, and an increase to the matching cap for Mayor to $120,000 and return to Council with a new draft in February Vote: All Ayes. Adjournment Action: M/S/C (Bates/Capitelli) to adjourn the meeting. Vote: All Ayes Adjourned at 11:12 p.m. Communications Item 1a: Revisions to Minimum Wage Ordinance B.M.C Item 1b: Proposed Amendments to the Minimum Wage Ordinance; Amending Berkeley Municipal Code Chapter Tuesday, November 10, 2015 ANNOTATED AGENDA Page 6

7 Item 1c: Paid Sick Leave Ordinance; Adding Berkeley Municipal Code Chapter Jess McCarter 2. Judy Grether 3. Suzan Steinberg Supplemental Communications and Reports 1 Item 1a: Revisions to Minimum Wage Ordinance B.M.C Item 1b: Proposed Amendments to the Minimum Wage Ordinance; Amending Berkeley Municipal Code Chapter Item 1c: Paid Sick Leave Ordinance; Adding Berkeley Municipal Code Chapter Aman Mahal 5. Maureen O Neil Garcia 6. Bette Kroening 7. Rob Wrenn 8. Steve Gilbert 9. Alex Popov Item 2: Berkeley Fair Elections Public Campaign Financing Ballot Measure 10. Peggy Love 11. Leila Pedersen, on behalf of California Common Cause Supplemental Communications and Reports 2 Item 1a: Revisions to Minimum Wage Ordinance B.M.C Item 1b: Proposed Amendments to the Minimum Wage Ordinance; Amending Berkeley Municipal Code Chapter Item 1c: Paid Sick Leave Ordinance; Adding Berkeley Municipal Code Chapter Berkeley Chamber of Commerce 13. Tree Fitzpatrick 14. Susan Lubeck 15. James McFadden 16. Shang-Mei Lee 17. Kevin Omi 18. Susan Medak 19. Amy Thomas 20. Matthew Lewis Item 2: Berkeley Fair Elections Public Campaign Financing Ballot Measure 21. L. Darlene Pratt 22. Linda Franklin, on behalf of the Berkeley Citizens Action Steering Committee 23. Linda Franklin 24. Eleanor Walden 25. Daniel Newman, on behalf of MapLight 26. Bret Hendry 27. Nancy Bickel, on behalf of the League of Women Voters Berkeley, Albany, Emeryville 28. Ashleigh McEvoy 29. Jeff Cohen 30. Woody Little 31. Matthew Lewis Tuesday, November 10, 2015 ANNOTATED AGENDA Page 7

8 Supplemental Communications and Reports 3 Item 1a: Revisions to Minimum Wage Ordinance B.M.C Item 1b: Proposed Amendments to the Minimum Wage Ordinance; Amending Berkeley Municipal Code Chapter Item 1c: Paid Sick Leave Ordinance; Adding Berkeley Municipal Code Chapter Presentations, submitted by Health, Housing & Community Services 33. Supplemental communications, submitted by Councilmembers Capitelli, Droste, Maio and Moore 34. Sierra Club Northern Alameda County Group 35. Jess McCarter 36. Morton McDonald 37. Tree Fitzpatrick (4) 38. Unknown Item 2: Berkeley Fair Elections Public Campaign Financing Ballot Measure 39. Sierra Club Northern Alameda County Group 40. Valerie Herr 41. Daniel Newman, on behalf of Berkeley Fair Elections Coalition 42. Audrey Ichinose 43. Wellstone Democratic Renewal Club 44. DeAnna Dalton Tuesday, November 10, 2015 ANNOTATED AGENDA Page 8