ECONOMIC DEVELOPMENT COMMITTEE COMMITTEE. Tuesday, May 26, 2015

Transcription

1 ECONOMIC DEVELOPMENT COMMITTEE COMMITTEE Tuesday, May 26, 2015 JOHN FERRARO COUNCIL CHAMBER, CITY HALL - ROOM 340-1:00 PM 200 NORTH SPRING STREET, LOS ANGELES, CA MEMBERS: COUNCILMEMBER CURREN D. PRICE, JR., CHAIR COUNCILMEMBER PAUL KREKORIAN COUNCILMEMBER JOSE HUIZAR COUNCILMEMBER GILBERT A. CEDILLO COUNCILMEMBER NURY MARTINEZ COUNCILMEMBER HERB J. WESSON, JR. COUNCILMEMBER PAUL KORETZ (Richard Williams - Legislative Assistant - (213) or Richard.Williams@lacity.org) Click here for agenda packets Note: For information regarding the Committee and its operations, please contact the Committee Legislative Assistant at the phone number and/or address listed above. The Legislative Assistant may answer questions and provide materials and notice of matters scheduled before the City Council. Sign Language Interpreters, Communication Access Real-Time Transcription (CART), Assistive Listening Devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting/event you wish to attend. Due to difficulties in securing Sign Language Interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Legislative Assistant listed above. ITEM NO. (1) City Attorney report and Ordinance relative to adding Article 7 to Chapter XVIII of the Los Angeles Municipal Code requiring a minimum wage for employees and amending the title of Chapter XVIII of the Los Angeles Municipal Code. (The Committee may recess to closed session pursuant to Government Code Section (d)(2) / (e)(5) in order to confer with legal counsel regarding significant exposure to litigation; threat of litigation.) Fiscal Impact Statement Submitted: No. Community Impact Statement: Yes. Downtown Los Angeles Neighborhood Council Historic Highland Park Neighborhood Council MacArthur Park Neighborhood Council Central San Pedro Neighborhood Council Pacoima Neighborhood Council Harbor Gateway North Neighborhood Council South Los Angeles Alliance of Neighborhood Councils Elysian Valley Riverside Neighborhood Council Silver Lake Neighborhood Council North Hollywood Northeast Neighborhood Council Tuesday - May 26, PAGE 1

2 Winnetka Neighborhood Council North Hills East Neighborhood Council Greater Cypress Park Neighborhood Council Mid-Town North Hollywood Neighborhood Council ITEM NO. (2) S1 City Attorney report and Ordinance relative to adding a new Article 8 to Chapter XVIII of the Los Angeles Municipal Code creating a Wage Enforcement Division, establishing penalties for wage violations occurring within the City of Los Angeles and amending Sections and of the Los Angeles Municipal Code to include wage theft violations for police permit denials, suspensions and revocations. This ordinance amends Los Angeles Administrative Code Section to include information on compliance with wage and labor laws as a stated purpose in the City's Contractor Responsibility Program. Fiscal Impact Statement Submitted: No. Community Impact Statement: Yes. Mid-Town North Hollywood Neighborhood Council ITEM NO. (3) S4 Motion (Price - Cedillo - Bonin - et al.) relative to amending Recommendation No. 1 of the Economic Development Committee Report of May 5, 2015 regarding the establishment of an Office of Labor Standards (Council file Nos S1 and ) to include the additional enforcement provision/category/mechanism: h. Anti Discrimination. (On May 19, 2015, Council referred this Motion to the Economic Development Committee for consideration.) Community Impact Statment: None submitted. COMMENTS FROM THE PUBLIC ON ITEMS OF PUBLIC INTEREST WITHIN THIS COMMITTEES SUBJECT MATTER JURISDICTION If you challenge this Committee's action(s) in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to the City Clerk at or prior to, the public hearing. Any written correspondence delivered to the City Clerk before the City Council's final action on a matter will become a part of the administrative record. Materials related to an item on this agenda submitted to the committee after distribution of the agenda packet are available for public inspection in the City Clerk's Office at 200 North Spring Street, Room 395, City Hall, Los Angeles, CA during normal business hours. Tuesday - May 26, PAGE 2

3 MICHAEL N. FEVER CITY ATTORNEY - - REPORT NO. ~ ~ ~ ~ ~ 3 g ~hay DRAFT ORDINANCES ADDING ARTICLES 7 AND 8 TO CHAPTER XVIII OF THE LOS ANGELES MUNICIPAL CODE TO ESTABLISH A CITYWIDE MINIMUM WAGE AND TO CREATE A WAGE ENFORCEMENT DIVISION; TO ESTABLISH PENALTIES AND ADMINISTRATIVE FINES FOR WAGE VIOLATIONS; TO AMEND SECTIONS AND OF THE LOS ANGELES MUNICIPAL CODE TO INCLUDE WAGE THEFT VIOLATIONS AS A BASIS FOR POLICE PERMIT DENIALS, SUSPENSIONS AND REVOCATIONS; AND TO AMEND SECTION TO INCLUDE WAGE AND LABOR LAW COMPLIANCE AS A STATED PURPOSE IN THE CITY'S CONTRACTOR RESPONSIBILITY PROGRAM The Honorable City Council of the City of Los Angeles Room 395, City Hall 200 North Spring Street Los Angeles, California Honorable Members: Council File Nos and S1 Pursuant to a motion adopted by the City Council on May 19, 2015, this Office has prepared and now transmits for your consideration the enclosed two draft ordinances, approved as to form and legality, adding Articles 7 and 8 to Chapter XVIII of the Los Angeles Municipal Code (LAMC) to establish a Citywide minimum wage for employees and to create a Wage Enforcement Division within the Bureau of Contract Administration of the Department of Public Works. The draft ordinances also establish penalties and fines for violations of the new Citywide minimum wage, amend LAMC Sections and to include wage theft violations as basis for police permit denials, suspensions and revocations, and amend Los Angeles Administrative Code G~ty Hall East 20o N. Main Street Room 80o Los Angeles, CA (2i3) 978-8ioo Fax (213) Tuesday - May 26, PAGE 3

4 The Honorable City Council of the City of Los Angeles Page 2 (LAAC) Section to include information on compliance with wage and labor laws in the City's Contractor Responsibility Program. Draft Ordinance Establishing a Minimum Wage for Employees As requested by the City Council, the draft ordinance requires employers to pay employees working within the City a minimum wage of $10.50 starting on July 1, 2016, increasing each year until July 1, 2020, when the minimum wage will be $ The draft ordinance delays the start of the obligation by one year for employers with 25 or fewer employees. Non-profit employers with more than 25 employees and who meet certain criteria may apply for the one-year delay in the start of the wage obligation. Afso, "Learners," as defined in California Labor Code Section 1192, between 14 and 17 years of age will be paid no less than 85% of the minimum wage during their first 160 hours of employment. The Designated Administrative Agency (DAA) will be the Bureau of Contract Administration (BCA), which, starting in 2022, will announce each January the wage rate adjusted by the applicable Consumer Price Index to be effective the first of each July. The draft ordinance prohibits retaliatory action by employers. Every three years after July 2016, the Chief Legislative Analyst and City Administrative Officer will commission a study to review the City's economy and the impacts of the minimum wage law. In its action this past Tuesday, the City Council did not include direction on how to define employee. We drafted the ordinance to define employee as a person who works within the City's limits at least two hours per week. This is the same definition used by every California city with a minimum wage law (San Francisco, San Jose, Berkeley, Richmond, Sunnyvale, Oakland and Mountain View). San Diego has a proposed minimum wage law also using this definition. Because the definition is a policy decision, the City Council may determine whether to adopt this widely used definition of employee or a different definition. Draft Ordinance Creating the Wage Enforcement Division As also requested by the City Council, we drafted the wage enforcement division ordinance by modeling it on the similar program in San Francisco. The draft ordinance creates the new Wage Enforcement Division (WED) within BCA to administer and enforce the new minimum wage law. WED will investigate wage complaints, enforce violations of wage theft, collect penalties and administrative fines as authorized by the ordinance and issue orders to employers to reinstate employees and pay back wages. The City's draft ordinance grants WED the authority to promulgate rules and regulations consistent with the Code provisions as deemed necessary to administer and enforce the minimum wage law. The draft ordinance also grants authority to the Police Commission to deny, suspend or revoke police permits when an employer has committed wage theft. Tuesday - May 26, PAGE 4

5 The Honorable City Council of the City of Los Angeles Page 3 Where a violation has been found, the draft ordinance authorizes WED to conduct investigations against the employer and order the employer to reinstate an employee discharged in violation of City law, pay the employee back wages unlawfully withheld and pay a penalty of $100 per day of violation to the employee whose rights were violated. In addition, WED may order the employer to pay the City administrative fines in varying amounts for violations of the City law, with a multiplier of 50% for repeat violations within three years. The draft ordinance caps the administrative fines that may be imposed annually at $5,000 per employee, or $10,000 per employee for retaliation violations. An aggrieved employee also may bring a civil action in court against the employer, and, if the employee prevails, he or she will be entitled to payment of back wages, a $100 penalty per day for violations, reinstatement of employment and reasonable attorney's fees and costs. uncil Rule 38 Referral Copies of the draft ordinances were sent, pursuant to Council Rule 38, to the Department of Public Works, the City Administrative Officer, the Chief Legislative Analyst and the Los Angeles Police Commission, asking that they make any comments they may have directly to the City Council when you consider this matter. If you have any questions regarding this matter, please contact Senior Assistant City Attorney Valerie Flores or Chief Assistant City Attorney David Michaelson. They or another member of this Office will be present when you consider this matter to answer any questions you may have. Very truly yours, MICHAEL N. FEUER, City Attorney DM:pj Transmittals ~f~david MICHAELSON Chief Assistant City Attorney Tuesday - May 26, PAGE 5

6 ORDINANCE NO. An ordinance adding Article 7 to Chapter XVIII of the Los Angeles Municipal Code requiring a minimum wage for employees and amending the title of Chapter XVIII of the Los Angeles Municipal Code. THE PEOPLE OF THE CITY OF LOS ANGELES DO ORDAIN AS FOLLOWS: Section 1. Anew Article 7 is added to Chapter XVI I I of the Los Angeles Municipal Code to read as follows: SEC PURPOSE. ARTICLE 7 LOS ANGELES MINIMUM WAGE ORDINANCE According to consultants retained by the City and studies submitted to the City for its consideration, Los Angeles is a low-wage city with a high cost of living. Without action to raise the wage floor, the problems caused by incomes that are inadequate to sustain working families will become more acute. The cost of living is continuing to rise in Los Angeles and labor market projections by the California Employment Development Department show that the number of low-wage jobs will grow faster than the number of mid- and high-wage jobs. Inaction will mean that the share of the labor force that does not receive sustaining pay will grow and the gap between stagnating low wages and the cost of a basic standard of living in Los Angeles will continue to widen. Contrary to popular perception, the large majority of affected workers are adults, with a median age of 33 (only three percent are teens). The proposed minimum wage increase will greatly benefit workers of color, who represent over 80% of affected workers. Workers of all education levels will benefit from the proposed law, with less educated workers benefitting the most. Los Angeles also ranks highest in California in child poverty rates. In short, although the City is experiencing strong economic growth which has spurred employment, poverty and inequality remain high and wages continue to stagnate. Affected workers disproportionately live in low-income families; on average, affected workers bring home more than half of their family's income. Affected workers live disproportionately in the lower-income areas of the City. These areas will experience greater earnings gains than the City as a whole due to a higher minimum wage. The research literature suggests that downstream benefits will result from the proposed wage increase, such as improved health outcomes for both workers and their children, and increases in children's academic achievements and cognitive and behavioral outcomes. Tuesday - May 26, PAGE 6

7 Studies show that minimum wage increases reduce worker turnover. Turnover creates financial costs for employers. Reduced worker turnover means that workers will have more tenure with the same employer, which creates incentives for both employers and workers to increase training and worker productivity. The City has recognized that income inequality is one of the most pressing economic and social issues facing Los Angeles. Workers, who must live paycheck to paycheck, are frequently forced to work two or three jobs to provide food and shelter for their families. These workers often rely on the public sector as a provider of social support services and, therefore, the City has an interest in promoting an employment environment that protects government resources. Therefore, by paying a higher than state-mandated minimum wage, the City seeks to promote the health, safety and welfare of thousands of workers by ensuring they receive a decent wage for the work they perform. SEC DEFINITIONS. The following definitions shall apply to this article: A. "City" means the City of Los Angeles. B. "Designated Administrative Agency (DAA)" means the Department of Public Works, Bureau of Contract Administration, which shall bear administrative responsibilities under this article. C. "Employee" means any individual who: 1. In a particular week performs at least two hours of work within the geographic boundaries of the City for an Employer; and 2. Qualifies as an Employee entitled to payment of a minimum wage from any Employer under the California minimum wage law, as provided under Section 1197 of the California Labor Code and wage orders published by the California Industrial Welfare Commission. D. "Employer" means any person, as defined in Section 18 of the California Labor Code, including a corporate officer or executive, wha directly or indirectly or through an agent or any other person, including through the services of a temporary service or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any employee. E. "Non-Profit Corporation" means anon-profit corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and, if a foreign corporation, in good standing under the laws of the State of California, which corporation has established and maintains valid non-profit status under Section 5Q1(c)(3) of the United States Internal Revenue ~a Tuesday - May 26, PAGE 7

8 Code of 1986, as amended, and all rules and regulations promulgated thereunder. F. "Person" means any person, association, organization, partnership, business trust, limited liability company or corporation. SEC PAYMENT OF MINIMUM WAGE TO EMPLOYEES. A. An Employer shall pay an Employee a wage of no less than the hourly rates set under the authority of this article. B. Employers with 26 or more Employees shall pay a wage of no less than the hourly rates set forth: 1. On July 1, 2016, the hourly wage shall be $ On July 1, 2017, the hourly wage shall be $ On July 1, 2018, the hourly wage shall be $ On July 1, 2019, the hourly wage shall be $ On July 1, 2020, the hourly wage shall be $ C. Employers with 25 or fewer Employees shall pay a wage of no less than the hourly rates set forth: 1. On July 1, 2017, the hourly wage shall be $ On July 1, 2018, the hourly wage shall be $ On July 1, 2019, the hourly wage shall be $ On July 1, 2020, the hourly wage shall be $ On July 1, 2021, the hourly wage shall be $ D. On July 1, 2022, and annually thereafter, the minimum wage will increase based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the Los Angeles metropolitan area (Los Angeles-Riverside-Orange County, CA), which is published by the Bureau of Labor Sfiafistics. The DAA sha[i announce the adjusted rates an Jan ~ary 1St and publish a bulletin announcing the adjusted rates, which shall take effect on July 1 of each year. E. Employees, who are "Learners" as defined in Labor Code Section 1192 and consistent with wage orders published by the California Industrial Welfare 3 Tuesday - May 26, PAGE 8

9 Commission and are years of age, shall be paid not less than 85% of the minimum wage rounded to the nearest nickel during their first 160 hours of employment. After more than 160 hours of employment, Learners shall be paid the applicable minimum wage pursuant to this section. F. For purposes of this article, the size of an Employer's business or Non- Profit Corporation shall be determined by the average number of Employees employed during the previous calendar year. SEC DEFERRAL APPLICATION FOR CERTAIN NON-PROFIT EMPLOYERS. The DAA shall establish a procedure to allow an Employer that is anan-profit Corporation with 26 or more Employees to qualify for the deferral rate schedule specified in Section C. ANon-Profit Employer seeking the deferral must establish by compelling evidence that: A. The chief executive officer earns a salary which, when calculated on an hourly basis, is less than five times the lowest wage paid by the corporation; or B. It is a Transitional Employer as defined in Section (h) of the Los Angeles Administrative Code; or C. It serves as a child care provider; or D. It is funded primarily by City, County, State or Federal grants or reimbursements. SEC NOTIFYING EMPLOYEES OF THEIR POTENTIAL RIGHT TO THE FEDERAL EARNED INCOME CREDIT. Employers shall inform Employees of their possible right to the federal Earned Income Credit (EIC) under Section 32 of the Internal Revenue Code of 1954, 26 U.S.C. Section 32. SEC RETALIATORY ACTION PROHIBITED. No Employer shall discharge, reduce in compensation or otherwise discriminate against any Employee for opposing any practice proscribed by this article, for participating in proceedings related to this article, for seeking to enforce his or her rights under this article by any lawful means, or for otherwise asserting rights under this article. D Tuesday - May 26, PAGE 9

10 SEC IMPLEMENTATION. The DAA may promulgate guidelines and rules consistent with this article for the implementation of the provisions of this article. Any guidelines or rules shall have the force and effect of law, and may be relied upon by Employers, Employees and other parties to determine their rights and responsibilities under this article. SEC NO WAIVER OF RIGHTS. Any waiver by an Employee of any or all of the provisions of this article shall be deemed contrary to public policy and shall be void and unenforceable. SEC COEXISTENCE WITH OTHER AVAILABLE RELIEF FOR SPECIFIC DEPRIVATIONS OF PROTECTED RIGHTS. The provisions of this article shall not be construed as limiting any Employee's right to obtain relief to which he or she may be entitled at law or in equity. SEC CONFLICTS. Nothing in this article shall be interpreted or applied so as to create any power or duty in conflict with any federal or State law. SEC REPORTS. Every three years after July 1, 2016, the Chief Legislative Analyst (CLA) with the assistance of the City Administrative Officer (CAO) shall commission a study to review the state of the City's economy; minimum wage impacts; textile and appare6 manufacturing impacts; temporary workers, guards and janitors impacts; home health care services impacts; residential care and nursing facilities impacts; child day care services impacts; restaurants and bars impacts; personal and repair services impacts; transitional jobs programs impacts; service charges, commissions and guaranteed gratuities impacts; and wage theft enforcement. On an annual basis, the CLA and CAO shall collect economic data, including jabs, earnings and sales tax. SEC SEVERABILITY. If any subsection, sentence, clause or phrase of this article is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have adopted this section, and each and every subsection, sentence, clause and phrase thereof not declared invalid or unconstitutional, without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. 5 Tuesday - May 26, PAGE 10

11 Sec. 2. CHAPTER XVIII of the Municipal Code is retitled EMPLOYEE WAGES AND PROTECTIONS. Tuesday - May 26, PAGE 11

12 Sec. 3. The City Clerk shall certify to the passage of this ordinance and have it published in accordance with Council policy, either in a daily newspaper circulated in the City of Los Angeles or by posting for ten days in three public places in the City of Los Angeles: one copy on the bulletin board located at the Main Street entrance to the Los Angeles City Hall; one copy on the bulletin board located at the Main Street entrance to the Los Angeles City Hall East; and one copy on the bulletin board located at the Temple Street entrance to the Los Angeles County Hall of Records. hereby certify that this ordinance was passed by the Council of the City of Los Angeles, at its meeting of HOLLY L. WOLCOTT, City Clerk Deputy Approved Mayor Approved as to Form and Legality MICHAEL N. FEUER, City Attorney By ~.~'~ BA p JANKOWSKI De y~ty City Attorney Date ~~'r~r~ a ~~ File No. m:~muni counsel\david michaelson\ordinances\draft la minimum wage ordinance (final).docx 7 Tuesday - May 26, PAGE 12

13 MICHAEL N. FEVER CITY ATTORNEY - - REPORT NO. ~ ~ ~ ~ ~ 3 g ~hay DRAFT ORDINANCES ADDING ARTICLES 7 AND 8 TO CHAPTER XVIII OF THE LOS ANGELES MUNICIPAL CODE TO ESTABLISH A CITYWIDE MINIMUM WAGE AND TO CREATE A WAGE ENFORCEMENT DIVISION; TO ESTABLISH PENALTIES AND ADMINISTRATIVE FINES FOR WAGE VIOLATIONS; TO AMEND SECTIONS AND OF THE LOS ANGELES MUNICIPAL CODE TO INCLUDE WAGE THEFT VIOLATIONS AS A BASIS FOR POLICE PERMIT DENIALS, SUSPENSIONS AND REVOCATIONS; AND TO AMEND SECTION TO INCLUDE WAGE AND LABOR LAW COMPLIANCE AS A STATED PURPOSE IN THE CITY'S CONTRACTOR RESPONSIBILITY PROGRAM The Honorable City Council of the City of Los Angeles Room 395, City Hall 200 North Spring Street Los Angeles, California Honorable Members: Council File Nos and S1 Pursuant to a motion adopted by the City Council on May 19, 2015, this Office has prepared and now transmits for your consideration the enclosed two draft ordinances, approved as to form and legality, adding Articles 7 and 8 to Chapter XVIII of the Los Angeles Municipal Code (LAMC) to establish a Citywide minimum wage for employees and to create a Wage Enforcement Division within the Bureau of Contract Administration of the Department of Public Works. The draft ordinances also establish penalties and fines for violations of the new Citywide minimum wage, amend LAMC Sections and to include wage theft violations as basis for police permit denials, suspensions and revocations, and amend Los Angeles Administrative Code G~ty Hall East 20o N. Main Street Room 80o Los Angeles, CA (2i3) 978-8ioo Fax (213) Tuesday - May 26, PAGE 13

14 The Honorable City Council of the City of Los Angeles Page 2 (LAAC) Section to include information on compliance with wage and labor laws in the City's Contractor Responsibility Program. Draft Ordinance Establishing a Minimum Wage for Employees As requested by the City Council, the draft ordinance requires employers to pay employees working within the City a minimum wage of $10.50 starting on July 1, 2016, increasing each year until July 1, 2020, when the minimum wage will be $ The draft ordinance delays the start of the obligation by one year for employers with 25 or fewer employees. Non-profit employers with more than 25 employees and who meet certain criteria may apply for the one-year delay in the start of the wage obligation. Afso, "Learners," as defined in California Labor Code Section 1192, between 14 and 17 years of age will be paid no less than 85% of the minimum wage during their first 160 hours of employment. The Designated Administrative Agency (DAA) will be the Bureau of Contract Administration (BCA), which, starting in 2022, will announce each January the wage rate adjusted by the applicable Consumer Price Index to be effective the first of each July. The draft ordinance prohibits retaliatory action by employers. Every three years after July 2016, the Chief Legislative Analyst and City Administrative Officer will commission a study to review the City's economy and the impacts of the minimum wage law. In its action this past Tuesday, the City Council did not include direction on how to define employee. We drafted the ordinance to define employee as a person who works within the City's limits at least two hours per week. This is the same definition used by every California city with a minimum wage law (San Francisco, San Jose, Berkeley, Richmond, Sunnyvale, Oakland and Mountain View). San Diego has a proposed minimum wage law also using this definition. Because the definition is a policy decision, the City Council may determine whether to adopt this widely used definition of employee or a different definition. Draft Ordinance Creating the Wage Enforcement Division As also requested by the City Council, we drafted the wage enforcement division ordinance by modeling it on the similar program in San Francisco. The draft ordinance creates the new Wage Enforcement Division (WED) within BCA to administer and enforce the new minimum wage law. WED will investigate wage complaints, enforce violations of wage theft, collect penalties and administrative fines as authorized by the ordinance and issue orders to employers to reinstate employees and pay back wages. The City's draft ordinance grants WED the authority to promulgate rules and regulations consistent with the Code provisions as deemed necessary to administer and enforce the minimum wage law. The draft ordinance also grants authority to the Police Commission to deny, suspend or revoke police permits when an employer has committed wage theft. Tuesday - May 26, PAGE 14

15 The Honorable City Council of the City of Los Angeles Page 3 Where a violation has been found, the draft ordinance authorizes WED to conduct investigations against the employer and order the employer to reinstate an employee discharged in violation of City law, pay the employee back wages unlawfully withheld and pay a penalty of $100 per day of violation to the employee whose rights were violated. In addition, WED may order the employer to pay the City administrative fines in varying amounts for violations of the City law, with a multiplier of 50% for repeat violations within three years. The draft ordinance caps the administrative fines that may be imposed annually at $5,000 per employee, or $10,000 per employee for retaliation violations. An aggrieved employee also may bring a civil action in court against the employer, and, if the employee prevails, he or she will be entitled to payment of back wages, a $100 penalty per day for violations, reinstatement of employment and reasonable attorney's fees and costs. uncil Rule 38 Referral Copies of the draft ordinances were sent, pursuant to Council Rule 38, to the Department of Public Works, the City Administrative Officer, the Chief Legislative Analyst and the Los Angeles Police Commission, asking that they make any comments they may have directly to the City Council when you consider this matter. If you have any questions regarding this matter, please contact Senior Assistant City Attorney Valerie Flores or Chief Assistant City Attorney David Michaelson. They or another member of this Office will be present when you consider this matter to answer any questions you may have. Very truly yours, MICHAEL N. FEUER, City Attorney DM:pj Transmittals ~f~david MICHAELSON Chief Assistant City Attorney Tuesday - May 26, PAGE 15

16 An ordinance adding a new Article 8 to Chapter XVII( of the Los Angeles Municipal Code creating a Wage Enforcement Division, establishing penalties for wage violations occurring within the City of Los Angeles and amending Sections and of the Los Angeles Municipal Code to include wage theft violations for police permit denials, suspensions and revocations. This ordinance amends Los Angeles Administrative Code Section to include information on compliance with wage and labor laws as a stated purpose in the City's Contractor Responsibility Program. THE PEOPLE OF THE CITY OF LOS ANGELES DO ORDAIN AS FOLLOWS: Section 1. Anew Article 8 is added to Chapter XVIII of the Los Angeles Municipal Code to read as follows: ARTICLE 8 LOS ANGELES WAGE ENFORCEMENT DIVISION ORDINANCE SEC TITLE AND PURPOSE. This article shall be known as the "Los Angeles Wage Enforcement Division Ordinance." Wage theft occurs when employees are not paid the wages they are owed by their employers. Studies have concluded that employees in Los Angeles are disproportionately affected by the crime of wage theft in the State of California. This ordinance creates a new Wage Enforcement Division within the Bureau of Contract Administration of the Department of Public Works, to enforce violations of wage theft in Los Angeles, establish penalties and grant authority to the City of Los Angeles Police Commission to deny, revoke or suspend a police permit issued or requested by an employer found to have committed wage theft. By investigating complaints and holding employers accountable for the wages they owe, and by revoking, suspending or denying a police permit to any noncompliant employer, the City will communicate to employers that wage theft will not be tolerated in Los Angeles. Holding employers accountable further serves as a deterrent to future actions by employers who otherwise would violate California wage and labor provisions within the City's boundaries. SEC AUTHORITY. This article is adopted pursuant to the powers vested in the City of Los Angeles under the laws and Constitution of the State of California and the City Charter, including but not limited to, the police powers vested in the City pursuant to Article XI, Section 7 of the California Constitution and Section 1205(b) of the California Labor Law to ensure compliance with the Los Angeles Minimum Wage law, Los Angeles Municipal Code Section , et seq. Tuesday - May 26, PAGE 16

17 SEC DEFINITIONS. As used in this article, the following capitalized terms shall have the following meanings: "Division" shall mean the Los Angeles Wage Enforcement Division of the Bureau of Contract Administration within the Department of Public Works or such other City division or department as the City Council shall by resolution designate. "City of Los Angeles Police Commission" is defined in Los Angeles Municipal Code Section "City" shall mean the City of Los Angeles. "Employee" is defined in Los Angeles Municipal Code Section C. "Employer" shall mean any person, as defined in the California Labor Code, including corporate officers or executives, who directly or indirectly or through an agent or any other person, including through the services of a temporary services or staffing agency or similar entity, employs or exercises control over the wages, hours or working conditions of any Employee. "Los Angeles Minimum Wage" means a minimum wage adopted by the Los Angeles City Council or by initiative that is higher than the State of California minimum wage law pursuant to Los Angeles Municipal Code Section , et seq. "Police Permit" means any permit identified in Los Angeles Municipal Code Section SEC POSTINGS AND PAYROLL RECORDS. A. Every Employer shall post in a conspicuous place at any workplace or job site where any Employee works, the notice published each year by the Division informing Employees of the current minimum wage rate and of their rights under this article. Every Employer shall post notices in English, Spanish, Chinese (Cantonese and Mandarin), Hindi, Vietnamese, Tagalog, Korean, Japanese, Thai, Armenian, Russian and Farsi, and any other language spoken by at least five percent of the Employees at the workplace or job site. Every Employer also shall provide each Employee at the time of hire, the Employer's name, address, and telephone number in writing. B. Every Employer shall retain payroll records pertaining to Employees for a period of four years, and shall allow the Division access to such records, with appropriate notice and during business hours, to monitor compliance with the requirements of this article. 2 Tuesday - May 26, PAGE 17

18 C. The head of the Division or his or her designee shall have access to all places of labor subject to this ordinance during business hours to inspect books and records, interview employees and investigate such matters necessary or appropriate to determine whether an Employer has violated any provisions of this article. SEC RETALIATION PROHIBITED. It shall be unlawful for an Employer or any other party to discriminate in any manner or take adverse action against any Employee in retaliation for exercising rights protected under this article. Rights protected under this article include, but are not limited to: the right to file a complaint or inform any person about any party"s alleged noncompliance with this article; and the right to inform any person of his or her potential rights under this article and to assist him or her in asserting such rights. Protections of this article shall apply to any Employee who mistakenly, but in good faith, alleges noncompliance with this article. Taking adverse action against an Employee within 90 days of the Employee's exercise of rights protected under this article shall raise a rebuttable presumption of having done so in retaliation for the exercise of such rights. SEC ENFORCEMENT. A. Reporting Violations. An Employee or any other person may report to the Division in writing any suspected violation of this article. The Division shall encourage reporting pursuant to this article by keeping confidential, to the maximum extent permitted by applicable laws, the name and other identifying information of the Employee or person reporting the violation. With the authorization of the Employee or person reporting a violation, the Division may disclose his or her name and identifying information as necessary to enforce this article or for other appropriate purposes. B. Investigation. The Division shall be responsible for investigating any possibce violations of this article by an Employer or other person. The Employer shall cooperate fully in any investigation by the Division. The Division shall have the authority to inspect workplaces, interview persons and request the Board of Public Works to issue a subpoena for books, papers, records, or other items relevant to the enforcement of this article. The Employer is required to provide to the Division its legal name, address, and telephone number in writing. SEC NOTICE OF DETERMINATION. A. Issuance of Notice of Determination. After an investigation, if the Division makes a determination that an Employer has violated this article, the Division shall issue a written Notice of Determination to the Employer. B. Service of Notice. Service of a Notice of Determination shall be accomplished as follows: 3 Tuesday - May 26, PAGE 18

19 1. The Division or its designee may obtain the signature of the Employer to establish personal service of the Notice of Determination; or 2. The Division or its designee may accomplish substitute service by: (a) follows: Mailing the Notice of Determination by first class mail as (1) The Notice of Determination shall be mailed to the Employer by first class mail, postage prepaid, with a declaration of service under penalty of perjury; and (2) A declaration of service shall be made by the person mailing the Notice of Determination showing the date and manner of service by mail and reciting the name and address of the~person to whom the Notice of Determination is issued; and (3) Service of the Notice of Determination by mail in the manner described above shall be effective on the date of mailing; and (b) Affixing the Notice of Determination to a surface on the property in a conspicuous place as specified in Section D. C. Contents of Notice of Determination. The Notice of Determination shall require the Employer to take corrective action within no later than ten days and shall include all the following: A description of the violation(s); 2. The date and location of the violation(s); 3. A citation to the provisions of law violated; 4. A description of corrective action required; 5. A statement explaining that each day of a continuing violation may constitute a new and separate violation; 6. The amount of wages due and the amount of penalties and administrative fines imposed for the violation(s); 7. A statement informing the Employer that the administrative fines shall be paid to the City of Los Angeles within 30 days from the date on the Notice of Determination, the procedure for payment, and the consequences of failure to pay; C! Tuesday - May 26, PAGE 19

20 8. A description of the process for appealing the Notice of Determination, including the deadline for filing such an appeal; and 9. The name and signature of the head of the Division or his or her designee. D. Posting of Notice of Determination. Employer must, within 24 hours after receipt of a Notice of Determination, post the Notice of Determination by affixing the notice to a surface in a conspicuous place on property that is: (1) the Employer's principal place of business in the City; (2) if the Employer's principal place of business is outside the City, the fixed location within the City from or at which the Employer conducts business in the City; or (3) if the Employer does not regularly conduct business from a fixed location in the City, one of the following: (i) the location where the Employer maintains payroll records if the Notice of Determination is for violation of Section B; or (ii) the jobsite or other primary location where the Employees perform services in the City. SEC EMPLOYEE REMEDIES FOR VIOLATIONS. A. Restitution and Penalties. Every Employer who violates this article, or any portion thereof, shall be liable to the Employee whose rights were violated for any and all relief, including but not limited to the payment to each Employee of back wages unlawfully withheld and an additional penalty of $100 for each day that the violation occurred or continued. A violation for unlawfully withholding wages shall be deemed to continue from the date immediately following the date that the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2 of the California Labor Code, to the date immediately preceding the date the wages are paid in full. For retaliatory action by the Employer, the Employee shall be entitled to reinstatement and a trebling of all back wages and penalties. B. Interest. In any administrative or civil action brought for the nonpayment of wages under this article, the Division or court, as the case may be, shall award interest on all due and unpaid wages and penalties at the rate of interest specified in Subdivision (b) of Section 3289 of the California Civil Code, which shall accrue from the date the wages were due and payable as provided in Part 1 (commencing with Section 200) of Division 2 of the California Labor Code, to the date immediately preceding the date the wages are paid in full. C. Civil Enforcement. Any Employee aggrieved by a violation of this article or any other person or entity acting on behalf of the public as provided for under applicable state law, may bring a civil action in a court of competent jurisdiction against the Employer violating this article and, upon prevailing, shall be entitled to such legal or equitable relief as may be appropriate to remedy the violation including, without limitation, the payment of any back wages unlawfully withheld, the payment of penalties in the amount of $100 to each Employee whose rights under this article were violated for each day that the violation occurred or continued, reinstatement in employment Tuesday - May 26, PAGE 20

21 and/or injunctive relief, and shall be awarded reasonable attorneys' fees and costs. Any person or entity enforcing this article on behalf of the public as provided for under applicable state law, upon prevailing, shall be entitled only to equitable, injunctive or restitutionary relief, and reasonable attorneys' fees and costs. Nothing in this article shall be interpreted as restricting, precluding, or otherwise limiting a separate or concurrent criminal prosecution under the Municipal Code or state law. Jeopardy shalt not attach as a result of any administrative or civil enforcement action taken pursuant to this article. SEC ADMINISTRATIVE FINES FOR VIOLATIONS. A. Administrative Fines. An administrative fine payable to the City may be assessed for a violation of any provision of this article as specified below. The administrative fine may be assessed by means of a Notice of Determination issued to the Employer by the Division. VIOLATION AND FINE AMOUNT Failure to post notice of the Los Angeles Minimum Wage rate Municipal Code Section A. $500 Failure to allow access to a roll records Munici al Code Section $500 Failure to maintain payroll records or to retain payroll records for four years ~ Municipal Code Section X500 Failure to allow access for inspection of books and records or to interview em to ees Munici al Code Section C. $500 Retaliation for exercising rights under this article Municipal Code Section The Penalt for retaliation is $1,000 er emplo ee. X1000 Failure to provide employer's name, address, and telephone number in writin Munici al Code Sections A or $500 Failure to cooperate with the Division's investigation Municipal Code Section B. $500 Failure to post Notice of Determination to employees Municipal Code Section D. $500 ~ B. Calculation of Administrative Fines. Each and every day that a violation exists constitutes a separate and distinct violation. Any administrative fine shall be increased cumulatively by 50 percent for each subsequent violation of the same provision by the same Employer within athree-year period. The maximum administrative fine that may be imposed by a Notice of Determination in a calendar year for each type of violation listed above shall be $5,000 per Employee per year, with the exception of a retaliation violation, in which case the maximum penalty shall be $10,000 per Employee per year. C. Payments to City; Due Date; Late Payment Penalty. Administrative fines shall be payable to the City of Los Angeles and due within 30 days from the date Tuesday - May 26, PAGE 21

22 of the Notice of Determination. The failure of any Employer to pay an administrative fine within 30 days shall result in the assessment of an additional late fee. The amount of the additional late fee shall be ten percent of the total amount of the administrative fine assessed for each month the amounts are unpaid, compounded to include already accrued late administrative fines that remain unpaid. D. Collection of Amounts Due. The failure of any Employer to pay amounts due to the City under this article when due shall constitute a debt to the City. The City may file a civil action or, to the extent feasible under state law, create and impose a lien against any property owned or operated by an Employer or other person who fails to pay an administrative fine assessed by the Division, or pursue any other legal remedy to collect such money. SEC ADDITIONAL REMEDIES. The remedies, penalties and procedures provided under this article are cumulative and are not intended to be exclusive of any other available remedies, penalties and procedures. The City shall study and review the feasibility of enacting additional measures consistent with state law to enhance the Division's enforcement tools, including but not limited to, pursuing a memorandum of understanding or referral process to the Chief of Division of Labor Standards Enforcement for the recordation of a certificate of lien on behalf of an Employee, pursuant to California Labor Code Section 98.2(g), for amounts due under this article. SEC ADMINISTRATIVE APPEAL. A. Deadline for Appeal. An Employer who receives a Notice of Determination may file with the Division a notice of appeal within 15 days from the date the Notice of Determination is served. In order to be considered timely, the appeal must be postmarked on or actually received by the Division by the 15t" day following the service of the Notice of Determination. The appeal must be in writing and must indicate a return address. The appeal must be filed with the Division and must specify in detail the basis for the appeal. B. Hearing Date. As soon as practicable after receiving the written notice of appeal, the head of the Division or his or her designee shall promptly select a hearing officer to hear and decide the administrative appeal. The hearing officer shall fix a date, time and place for the hearing on the appeal. Written notice of the time and place for the hearing shall be served by first class mail, at the return address indicated on the written appeal. Service of the notice of hearing on the Employer must be made at least ten days prior to the date of the hearing. The hearing shall be held no later than 30 days after service of the notice of hearing, unless that time is extended by mutual agreement. C. Notice of Hearing. Except as otherwise provided by law, the failure of the Employer or any other person affected by the Notice of Determination to receive a Tuesday - May 26, PAGE 22

23 properly addressed notice of the hearing shall not affect the validity of any proceedings under this article. Service by first class mail, postage prepaid, shall be effective on the date of mailing. D. Stay of Enforcement. If administrative fines are the subject of administrative appeal or judicial review, then accrual of such administrative fines shall be stayed until the determination of such appeal or review is final. The payment of the contested amount of wages and penalties owed during the pendency of any appeal shall be stayed but shall continue to accrue until a determination of such appeal or review is final. E. Failure to Appeal. Failure of an Employer to file an appeal in accordance with the provisions of this section or to appear at the hearing shall constitute a failure to exhaust administrative remedies. F. Submittals for the Hearing. No later than five days prior to the hearing, the Employer and the Division shall submit to the hearing officer, with simultaneous service by First Class mail on the opposing party, written information including, but not limited to, the following: the statement of issues to be determined by the hearing officer and a statement of the evidence to be offered and the witnesses to be presented at the hearing. G. Conduct of Hearing. The hearing officer shall conduct all appeal hearings under this article. The Division shall have the burden of proof by a preponderance of the evidence in each hearing. The hearing officer may accept evidence on which persons would commonly rely in the conduct of their business affairs, including but not limited to the following: 1. A Notice of Determination shall be prima facie evidence of the violations) specified therein, and those continuing through the date of the hearing; 2. The hearing officer may accept evidence and oral and written testimony under penalty of perjury relating to the violations) and the appropriate means of correcting the violation(s); The hearing shall be open to the public and shall be tape-recorded. Any party to the hearing may, at his or her own expense, cause the hearing to be recorded and transcribed by a certified court reporter. The hearing officer may continue the hearing and request additional information from the Division, Employer or Employee prior to issuing a written decision. H. Hearing Officer's Findings and Determinations. Within 15 days after the conclusion of the hearing, the hearing officer shall make findings based on the record of the hearing. The hearing officer may uphold or reject the violations) referenced in the Notice of Determination, in whole or in part. The hearing officer also Tuesday - May 26, PAGE 23

24 may uphold the Notice of Determination but reduce, waive or conditionally reduce or waive the administrative fines stated therein if mitigating circumstances are shown and the hearing officer finds specific grounds for reduction or waiver in the evidence presented at the hearing. The hearing officer may impose conditions and deadlines for the correction of violations or the payment of outstanding wages, penalties and administrative fines. I. Wage Enforcement Order. The hearing officer's findings pursuant to Section H, or in the absence of an appeal, the Notice of Determination shall constitute the Wage Enforcement Order, which shall be issued by the hearing officer concurrently with the issuance of findings pursuant to Section H. The Wage Enforcement Order shall specify the amount of wages, penalties and administrative fines, if any, owed by the Employer. The Wage Enforcement Order shall be final. The Wage Enforcement Order shall be subject to judicial review pursuant to Section The hearing officer's decision shall be served on the Employer, Employee and Division by certified mail. SEC JUDICIAL REVIEW. A. Procedures. After receipt of the Wage Enforcement Order from the hearing officer under Section , the Employer or Employee may file an appeal with the superior court pursuant to California Government Code Section or any successor statute. The appeal shall be filed within 20 days of the date of mailing of the hearing officer's decision, with the applicable filing fee. The appeal shall state the reasons that the appellant objects to the findings or decision. B. Review. The superior court shall conduct a de novo hearing, except that the contents of the Division's file (excluding attorney client communications and other privileged or confidential documents and materials that are not discoverable or may be excluded from evidence in judicial proceedings under the Evidence Code, Civil Code, Code of Civil Procedure or other applicable law) shall be received into evidence. SEC OTHER REMEDIES NOT AFFECTED. The administrative citation procedures established in this article shall be in addition to any other criminal, civil or other remedy established by law which may be pursued to address violations of this article. An administrative citation issued pursuant to this article shall not prejudice or adversely affect any other action, civil or criminal, that may be brought to prosecute or abate a violation or to seek compensation for damages suffered. SEC OUTREACH. The Division shall establish acommunity-based outreach program to conduct education and outreach to Employers and Employees. In partnership with organizations Tuesday - May 26, PAGE 24

25 involved in the community-based outreach program, the Division shat( create outreach materials that are designed for Employers and Employees in particular industries. SEC REGULATIONS. The Division may promulgate and enforce rules and regulations, and issue determinations and interpretations relating to this article. Any rules and regulations promulgated by the Division shall have the force and effect of law and may be relied upon by Employers, Employees and other parties to determine their rights and responsibilities under this article. SEC REPORTS. The Division shall provide annual reports to the City Council on the implementation of the Los Angeles Wage Enforcement Division Ordinance. SEC SEVERABILITY. If any subsection, sentence, clause or phrase of this article is for any reason held to be invalid or unconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council hereby declares that it would have adopted this section, and each and every subsection, sentence, clause and phrase thereof not declared invalid or unconstitutional, without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. Sec. 2. Subdivisions 9 and 10 are amended and a new Subdivision 11 is added to Subsection (a) of Section of the Los Angeles Municipal Code to read as follows: 9. The applicant has within five years immediately preceding the date of the filing of the application been found to have violated any faw involving deceptive trade practices or other illegal business practices reasonably and narrowly related to the nature of conduct of the business for which the application is made; 10. The business for which the permit is sought has failed to comply with all City business tax and Parking Occupancy Tax laws; or 11. The applicant has within five years immediately preceding the date of filing of the application been found to have violated any law involving wages or labor as a violation of the California Labor Code or the Los Angeles Minimum Wage Ordinance, Las Angeles Municipal Code, Article 7, of Chapter XVIII or the Los Angeles Municipal Code, Article 8 of Chapter XVIII. 10 Tuesday - May 26, PAGE 25

26 Sec. 3. Subsection {k) is amended and a new Subsection (I} is added to Section of the Los Angeles Municipal Cade to read as follows: (k) Demonstrated that he is unfit to be trusted with the privileges granted by such permit; or (I) Been found to have violated any law involving wages or labor as a violation of the California Labor Code or the Los Angeles Minimum Wage Ordinance, Los Angeles Municipal Code, Article 7, of Chapter XVIII or the Los Angeles Municipal Code, Article 8 of Chapter XVIII. Sec. 4. Section of the Los Angeles Administrative Code is amended to insert a new third sentence into the paragraph as follows: This includes, but is not limited to, contractors who demonstrate responsibility with respect to Employees by following all federal, state and City wage and labor laws, including but not limited to the Los Angeles Minimum Wage Ordinance, Los Angeles Municipal Code, Article 7, of Chapter XVIII or the Los Angeles Municipal Code, Article 8 of Chapter XVIII. Tuesday - May 26, PAGE 26

27 Sec. 5. The City Clerk shall certify to the passage of this ordinance and have it published in accordance with Council policy, either in a daily newspaper circulated in the City of Los Angeles or by posting for ten days in three public places in the City of Los Angeles: one copy on the bulletin board located at the Main Street entrance to the Los Angeles City Hall; one copy on the bulletin board located at the Main Street entrance to the Los Angeles City Hall East; and one copy on the bulletin board located at the Temple Street entrance to the Los Angeles County Hall of Records. hereby certify that this ordinance was passed by the Council of the City of Los Angeles, at its meeting of HOLLY L. WOLCOTT, City Clerk Approved Deputy Approved as to Form and Legality MICHAEL N. FEVER, City Attorney ~-~ ~, Mayor VALERIE I`LO`RES Senior Assistant City Attorney Date ~ ~~ - File No. m:\muni counsel\david michaelson\ordinances\draft wage division ordinance (final).docx 12 Tuesday - May 26, PAGE 27

28 ITEM No. 4 _c_, MOTION I MOVE that the matter of the Economic Development Committee Report relative to establishment of an Office of Labor Standards to enforce any future citywide minimum wage ordinance, including wage theft enforcement, Item No. 4(b) on today's Council Agenda, (CF's , ), BE AMENDED to include the following additional enforcement provision I category I mechanism: h. Anti Discrimination ~ PRESENTED BY: Councilman, 9th District,. May 19, 2015 ak Tuesday - May 26, PAGE 28