Proposed Minimum Wage Ordinance. Dept. of Health, Housing & Community Services

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1 Proposed Minimum Wage Ordinance Dept. of Health, Housing & Community Services

2 Summary of minimum wage proposal Starting June 30, 2014 Starting June 30, 2015 Starting June 30, 2016 Small business (<50) and nonprofit minimum wage $10.74 $11.29 $11.84 Large business (50+) minimum wage Living Wage ($ CPI) Living Wage ($ years of CPI) Living Wage ($ years of CPI) Medical benefit Not required $2.22 $2.22

3 Issues in the staff report Tasks and costs of implementation and enforcement $180,000 for first 6 months $205,000 annually thereafter Financial impact on workforce development programs, such as YouthWorks Other policy implications Comparison with LWO exemptions

4 Phase 1: Develop the program Position/ Activity Senior Management Analyst Applications Programmer Analyst Management Oversight Outreach to City Businesses Total estimated cost FTE n/a Responsibilities Research and understand the program, develop the policy and procedure, create forms for all steps of the process Collaborate with Senior Management Analyst in setting up the website Meet with Senior Management Analyst and Attorney s on an on- going basis to develop and monitor progress of program Mailing informational flyers with Business License Renewals, education materials, advertising and translation costs Six Month Cost $80,000 $40,000 $50,000 $10,000 $180,000

5 Phase 2: Monitor and enforce Position FTE Responsibilities Annual Cost Program support and supervision.20 Program support and oversight $40,000 Senior Management Analyst and related support 1.0 Take complaints, review guidelines, investigate complaints, negotiate informal resolution, issue citations, answer questions, coordinate/track citations, report noncompliance to business license staff $160,000 Ongoing Outreach Materials n/a Include in business license renewal mailings $5,000 Approximate Annual Cost $205,000

6 Workforce development programs: YouthWorks FY 2015: Increase wage from $9/hour to $13.34/hour Employ 207 youth (157 less) FY 2016: Increase wage to $13.34 plus CPI plus $2.22/hour for health care ($15.56) Employ 187 youth (approx 177 less)

7 Other workforce development programs Community agency programs Rubicon ($8/hour landscaping training) Youth Spirit Artworks (stipend) Berkeley Youth Alternatives ($9/hour garden program) CiviCorps

8 UPDATE: Youth and Training Programs Commission on Labor has proposed adding an exemption for: A participant in a temporary job-training or youth up to age 25 participating in and employed by non-profit or governmental entities for after-school or summer employment or as on-the-job training for a period not longer than 120 days.

9 Other policy implications Business Licenses: Refusing to collect a tax is not an enforcement tool. ERISA: Need to resolve conflict with federal law. Volunteers and interns: Included after 2 hours of work per week. UPDATE: In Home Support Services (IHSS) would be unaffected City cannot regulate State/County program

10 UPDATE: Health benefits Commission on Labor has proposed new language about health benefits intended to address conflicts with ERISA. Language needs legal review. Commission on Labor supplemental report also proposed adding paid sick leave.

11 Categories of workers exempt from LWO An employee participating in a temporary job-training program An employee under 18 years of age, employed by a non-profit entity for after school or summer employment or as a trainee for a period not longer than 120 days. An employee working for the employer for a period not exceeding 6 months in aggregate during any 12- month period. Volunteers. Employees of contractors on City public works projects subject to the requirements of Division 2, Part 7, of the California Labor Code, when said code requires compensation greater than that required by this chapter.

12 Categories exempt from LWO cont. Employees who are standing by or on-call according to the criteria established by the Fair Labor Standards Act, 29 U.S.C. Section 201. This exemption shall apply only during the time when the employee is actually standing by or on-call. An employee for whom application of the requirements of this chapter is prohibited by state or federal law. An employee subject to a bona fide collective bargaining agreement where the waiver of the provisions of this chapter are set forth in clear and unambiguous terms in such an agreement. Employees of goods suppliers such as office supplies etc.

13 UPDATE: Categories exempted Commission on Labor has proposed adding exemptions for: A participant in a temporary job-training or youth up to age 25 participating in and employed by non-profit or governmental entities for after-school or summer employment or as on-the-job training for a period not longer than 120 days. Employees who are standing by or on-call according to the criteria established by the Fair Labor Standards Act, 29 U.S.C. Section 201. This exemption shall apply only during the time when the employee is actually standing by or oncall.

14 Minimum Wage in Regional Context San Jose: $10.15 (2014) San Francisco: $10.74 (2014) Oakland: $12.25 (at start, proposed) Richmond: $12.30 (by 2017, proposed) All increase at CPI after initial increase

15 Questions & Discussion

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17 How many employees would be affected? 8,400 employees Most impacted sectors: Retail trade Accommodation and food services

18 Comparison with San Francisco and San Jose San Francisco San Jose Berkeley Total population 825, , ,403 Number of businesses covered 53,000 70,000 *4,748 Minimum wage $10.74 $10.15 Complaints per year 75 Est. 32 (based on 16 in the first 6 months) FTE assigned to MWO 5.5 FTE 2.5 FTE Ratio of businesses to FTE 9,636: 1 28,000: 1 $3,400 for Business and community $195,000 translation and outreach first 5 years posters only Inquiries Funds recovered through enforcement Not available $6.5M in wages $393K in fines since per month initially Not available Proposed $10.74/ $13.34

19 Existing and Proposed Min. Wages Regional Minimum Wages and Proposed Wages Forecast , Based on CPI assumptions Adopted San Jose San Francisco * Richmond * Berkeley small biz * Proposed * Berkeley large biz * Oakland * SF large biz (SEIU) change 11% 12% 43% 26% 12% 12% 40%

20 Existing and Proposed Min. Wages Existing and Proposed* Regional Minimum Wages San Francisco San Jose * Berkeley small biz * Berkeley large biz * Oakland * Richmond * SF large biz (SEIU)