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Home My Public Portal About2020-03-10 Item 13CITY COUNCILAGENDA REPORTTc^•&^d;ps'^'^/FOKSCITY OF MILLBRAE621 Magnolia AvenueMillbrae, CA 94030SUBJECT: Discussion of Minimum Wage OrdinanceATTACHMENTS:1) San Mateo County Cities with Minimum WageOrdinancesReport No. ^^3^For Agenda of: March 10, 2020Department: Community DevelopmentDepartmentOriginator: Elisa Tierney, Econom^^^Development an^jlq^ng Project M<Budget ActionYes:No: XFinance ReviREPORT TYPE: ACTIONITEM TYPE: CONSENT PUBLIC HEARINGEVFORMATIONAL XEXISTING BUSINESSNEW BUSINESS XRECOMMENDATION:Staff recommends that the City Council consider the key policy issues related to implementation of aMinimum Wage and Wage Theft Ordinance, and provide guidance to staff on these policy issues as wellas a proposed process and timeline for ordinance adoption.BACKGROUND:The State of California has enacted a Minimum Wage law, the hourly wage of which has beenincreasing in increments of one dollar each year until it reaches a maximum of $15.00 per hour in2022/2023 (see table, below). This is considerably higher than the current Federal Minimum Wage of$7.25 per hour.Date EffectiveJan 1,202025 or less Employees$ 12.00/hour26 or more Employees$ 13.00/hourJan 1,2021$ 13.00/hour$ 14.00/hourJan 1,2022$14.00/hour$ 15.00/hourJan 1,2023$ 15.00/hour$ 15.00/hourHowever, due to the high cost of living, many cities in the San Francisco Bay Area, particularly here inSan Mateo County, have enacted even more rigorous standards. As indicated in Attachment 1, manycities in San Mateo County have implemented ordinances establishing minimum wages that are alreadyat or above $15.00 per hour. Some of these ordinances also include escalators that cause them tocontinue increasing at a rate faster than the state law.Page 1 of 316353188.1 Currently, in the absence of its own ordinance, the City defaults to State law. This means that currently,employers with 25 or fewer employees must pay $12.00 per hour, and employers with 26 or moreemployees must pay $13.00 per hour. IfMillbrae wishes to remain competitive with other north Countyjurisdictions, it may wish to adopt an ordinance with wage levels at higher levels than those of the State,and more consistent with neighboring jurisdictions.DISCUSSION:Staff seeks guidance on the following policy considerations:Minimum Wage Rate, and Consumer Price Index Escalator: Staff seeks guidance on the rate ofescalation of the minimum wage. After reaching $15 in January 2023, the state minimum wage willincrease annually based on a consumer price index (CPI) for urban clerical workers, with a cap at 3.5%annually. Staff recommends a wage rate of $15.00 per hour commencing on January 1, 2021.) Staff alsoproposes annual increases in the hourly wage based on the anunual escalation in the San Francisco-Oakland-Hayward CPI. This would likely result in the minimum wage increasing faster than the State'sminimum wage, but would align the future increases more closely with the actual increased cost ofliving in the region and be consistent with other Bay Area cities which also use this local inflationescalator.Wage Theft and Remedies: The City may want to implement certain protections to prevent wage theft.Wage theft is a violation in the payment of wages to workers. Some examples of wage theft includepaying employees less than the minimum wage, failing to provide overtime pay, and not giving workersthe proper meal and rest breaks. As required under the California Wage Theft Protection Act, employersmust provide each employee with a written notice at time of hire addressing wage information. Thisnotice must be in the language the employer normally uses to communicate employment-relatedinformation to the employee. Should the City consider additional protections to curb wage theft?With respect to remedies, staff recommends requiring employers to pay the unpaid wages and a penaltyto the employee of $50 per day per employee from the date the wage was due and not paid until the dayit is paid. Staff also suggests Council consider including a provision suspending City licenses andpermits for any business which fails to comply. An employer found to be in violation of the law mayalso be required to pay the costs and attorneys' fees of the City or the employee bringing the action.Classes of Employers: Unlike the State law, none of the local ordinances staff reviewed differentiatedbetween large and small employers. Staff recommends just one class of employers, regardless of size,for ease of implementation. While this approach would result in a larger increase in wage rate for smallemployers with 25 or less employees, it would make enforcement easier and be more consistent withpeer cities.Exemptions: State allows certain employees to be exempt from minimum wage. These include outsidesalespersons, individuals who are the parent, spouse, or child of the employer, and apprentices regularlyindentured under the State Division of Apprenticeship Standards. The State also has a provision for"Learners," regardless of age, who may be paid not less than 85% of the minimum wage during theirfirst 160 hours of employment working in occupations in which they have no previous similar or relatedexperience.Page 2 of 316353188.1 Employer Obligations: Staff recommends requiring all Millbrae employers to post notices in theirrespective workplaces regarding the wage requirements. Each employer must keep records for fouryears, and produce them upon City request.City Obligations and Enforcement Discretion: Staff seeks Council input on how a minimum wageordinance might be implemented and enforced. Staff recommends that the City annually publish thenew minimum wage on its website, and provide a notice to employers in conjunction with the mailing ofbusiness license renewal forms. Regarding enforcement, staff proposes making the City's enforcementdiscretionary, where the City may, but is not obligated to, investigate complaints. Employees whobelieve their employer has violated the minimum wage ordinance may file their own lawsuits in court.Prohibition on Retaliation: It is likely that employees may be reluctant or unwilling to come forward dueto concerns about possible retaliation. Staff will research what mechanisms other cities implement toprotect employees from retaliation, and return to Council with recommendations regarding appropriatemechanisms to implement. Staff also suggests including cases of retaliation against employees forinaccurate claims made in good faith.FISCAL IMPACT:None.COUNCIL ACTION:Staff recommends that the City Council review the report and provide guidance to staff.Page 3 of 316353188.1 Attachment 1San Mateo County Cities with Minimum Wage Ordinance as of 1/1/2020CityMinimum Wage per HourEnforcement and PenaltiesNoticing and PostingSan Mateo$15.38 (not including tips)Employees may file a civil lawsuit against theiremployers for any violation of the MinimumWage Ordinance or may file a complaint with thiCity of San Mateo.The employer must post the Official Noticeprominently in the areas at the work site whereit will be seen by all employees.Redwood City$15.38 (not including tips)Up to $50 fine paid each day to the employee(s)whom the violation occurred or the City mayissue an administrative compliance order.Employer shall post in the workplace orjob siteinforming employees of the current minimumwage rates and their rights under this Chapter.Daly City$13.75 (not including tips)Payback of wages unlawfully withheld, andpayment of an additional sum as a civil penalty irthe amount of $40 to each Employee whose•ights under this chapter were violated.By October of each year, the City shall publishind make available to Employers a bulletininnouncingthe adjusted Minimum Wage rate,:o take into effect January 1 of the following'ear.Belmont15.00 (not including tips)'he City may require an Employer to pay a civilienaltyof$50tothe City for each Employee orlerson whose rights under this Chapter wereiolated for each day a violation occurred.!y October of each year, the City shall publishind make available to Employers a bulletininnouncing the adjusted Minimum Wage rate,o take into effect January 1 of the following'ear.South San Francisco15.00 (not including tipsr gratuities)teinstatement, payback of wages unlawfullywithheld, and payment of an additional sum as aivil penalty in the amount of $40 to eachemployee whose rights under this chapter wereiolated.employer shall post in the workplace or job siterforming employees of the current minimum/age rates and their rights under this Chapter.Burtingame1/A1/A/ASan Bruno/A/A/A