To: Sonoma County Board of Supervisors
Department or Agency Name(s): County Administrator’s Office
Staff Name and Phone Number: Yvonne Shu 565-1739, Christel Querijero 565-7071
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Amendments to Living Wage Ordinance - First Read
End
Recommended Action:
Recommended action
Consider potential ordinance amendments and adopt a Resolution introducing, reading the title of, and waiving further reading of an ordinance to amend Sonoma County Code Chapter 2, Article XXVI, “Living Wage.” (First Read)
end
Executive Summary:
The Board of Supervisors provided consensus direction to staff on changes to the County’s Living Wage Ordinance (LWO) at two meetings, October 18, 2022 and June 12, 2023. The consensus direction for amending the LWO language includes to:
1. Continue to apply LWO wage rates to County employees, but otherwise removing them from LWO coverage;
2. Exempt emergency contracts;
3. Revise the formula and process for LWO wage rate adjustments;
4. Expand application to include certain lessees, licensees, concessionaires, and other users of County real property;
5. Add a requirement of 12 days paid time off;
6. Add a best-efforts requirement for offering work hours to existing part-time employees; and
7. Establish incentives for covered employers to retain existing employees during contract transitions.
Based on input received at the June meeting, two issues regarding the above amendment proposals were identified. They are:
1. Whether to categorically exclude all employees who are covered by any employee collective bargaining agreement (CBA); and
2. Whether to consider an additional threshold for application of the living wage, in consideration of the breadth of lessees and concessionaires and impact on small businesses
Staff recommendations regarding those issues are reflected in the draft ordinance included with this item. Based on your Board’s consideration of these proposals and any other potential amendments as to the LWO, it is recommended that a first read of an Ordinance to amend the LWO be introduced and completed today. Should that occur, the Ordinance will be returned to your Board later (likely, in October) for adoption.
Discussion:
Background
The County’s Living Wage Ordinance (LWO) went into effect on January 1, 2016. Whether to enact living wage requirements (typically, via local legislation) is a policy decision at the discretion of local jurisdictions for their communities; only some jurisdictions have a living wage ordinance. A living wage is different from a minimum wage, but they are often conflated, especially in a County such as Sonoma, where there are unincorporated areas (county) and incorporated cities.
Minimum wage is a general law regulating all employment in a covered jurisdiction and must be paid by all employers in a jurisdiction. It is the lowest allowable rate of pay per hour that can be paid to an employee. There may be different federal, state, county or city minimum wage rates. For example, the current California minimum wage is $15.50 per hour, and the City of Santa Rosa’s minimum wage is $17.06 per hour. With some exceptions, an employer must follow the rate that is most beneficial to the employee.
In contrast, living wage requirements most commonly only apply as a condition of a government contract and are different from minimum wage laws. The County implemented its LWO with the intent to promote a viable wage for local residents employed on County contracts, putting County funding toward the livelihood of local communities and employees who work on County initiatives. The County’s current living wage rate is $17.65 per hour.
Over the past year, the Living Wage Ad Hoc, comprised of Supervisors Hopkins and Rabbitt, considered different aspects of the LWO and discussed internal County living wage and procurement issues, supported by staff from the County Administrator’s Office, County Counsel, Human Resources, and Public Infrastructure. Staff also spoke with community-based organizations (non-profits) with active County contracts, surveyed the local business community about perceptions of the LWO, spoke with other counties about their LWO process and experience, and met with local labor advocates.
The full Board of Supervisors discussed potential changes to the ordinance and provided direction to staff at their 10/18/22 and 6/12/23 meetings. Today a revision of the ordinance, which incorporates these changes, is before the Board for consideration. A table summary of proposed changes and prior Board consensus can be viewed in Attachment 1. A red-lined version of the ordinance is in Attachment 2, and an ordinance with the amended version of the LWO incorporating the changes is in Attachment 3.
Additional Considerations
Direction provided at the 6/12/23 Board meeting furthered staff discussion on specific points that now need Board consideration.
1 - Perception of “backdoor” employee benefits
Direction from the Board was to have County employee benefits be represented through employees’ respective collective bargaining agreements (CBA), not through LWO provisions. However, some County service contractors, including those at the County central landfill, who are subject to collectively bargained agreements, are also subject to the LWO provisions unless their collective bargaining agreement waives the LWO in “clear and unambiguous terms.” Staff is not aware of any collective bargaining agreement that waives the County’s LWO. As a result, covered employers must provide the benefits that were negotiated in their CBA’s and what is required by the LWO. This duplicative arrangement creates concerns over disincentivizing CBA’s and creating employer administrative challenges over employees who may receive different benefits and wage protections, depending on which contract they are working.
Staff proposes amending the exemption language in Sec. 2-376 (c) (12) to cover all instances of CBA’s, as follows:
|
Current exemption language |
An employee subject to a bona fide collective bargaining agreement where the waiver of the provisions of this article are set forth in clear and unambiguous terms in such agreement. |
|
Proposed exemption language |
An employee subject to a bona fide collective bargaining agreement. |
The proposed exemption language can be viewed in Sec. 2-376(c)(12) of Attachments 2 and 3.
2 - Additional threshold for lessees and concessionaires
One of the basic premises of the LWO is that payment of a living wage is part of a “comprehensive strategy to address poverty in Sonoma County.” Employee and worker protections also serve to ensure better delivery of services and operations at County venues, and benefits like paid sick leave serve to protect workers and the public given the challenges of illness in general and in situations such as the recent Covid-19 pandemic. Accordingly, to best ensure reliable and quality services and safe, functional events and operations using County properties, the most recent Board direction has been to apply the LWO to lessees and concessionaires, including at the fair.
Many of the concessionaires who secure a booth at the fair are small businesses, with a mix of local and non-local. Users of county property range from families hosting quinceañeras, farmers markets, tennis organizations, utilities with communication towers, veterans organizations, weekend festivals such as the Emerald Cup, and nonprofits.
The Board previously directed to apply a threshold of “over $350,000 in gross receipts from all sources and over 25 employees in company size” as the entry point for which the County’s LWO would be applicable to lessees, concessionaires, and other users of County real property.
In consideration of the breadth of uses of County property and the small, local businesses for which the LWO would be especially burdensome, the Ad Hoc recommended consideration of an additional threshold, to be based on the number of cumulative days on County property annually by that user. To ease administrative and logistical burdens and to keep the multitude of short-term uses exempt, staff proposes a 60-day annual, cumulative threshold.
This additional threshold would work to exclude, for example, weekly users of veterans buildings, weekly farmers markets, and fair-time concessionaires. Only users of County property of over 60 days per year (and who also meet the other proposed LWO criteria) would now have LWO applied to them, such as year-round lessees.
The proposed language can be viewed in Sec. 2-376.1(a)(1) of Attachments 2 and 3.
Board consensus direction today on one or more of the options can be incorporated into today’s First Read.
Implementation Considerations
At the 6/12/23 meeting, your Board directed staff to identify potential implementation considerations and to understand if any significant challenges could be identified.
1 - Administrative
While the Board has agreed that the threshold for lessees, licensees, concessionaires, and other users of County real property should be $350,000 in annual gross revenues and more than 25 employees, confirming and maintaining accurate profiles on all those entities will be a challenge. Other than self-certifications and general duty to comply, any proactive assessment or confirmation of employment and revenue data will take staff time and potentially certain expertise. This will especially be the case in situations of complex, multi-tiered subleasing and concessionaire operational arrangements, to capture any “outsourced” services and employees. Should employee or revenue profiles change over time, then tools and procedures will be needed for ensuring up-to-date information. Depending on the timing of contract formation, data on gross revenue may not be readily ascertainable or reliably audited. Also, for employers who year-to-year are on the cusp of the LWO threshold for employee and revenue criteria, yearly fluctuations will cause employment and budgeting burdens. Further, as outlined below, neither the Fair, Airport, nor the County has dedicated staff to pursue LWO issues.
To the extent that any lessees or concessionaires attempt to avoid LWO requirements by utilizing single-purpose corporations, controlled subsidiaries, or other complex corporate arrangements, staff may be challenged to understand those structures and the risks they present with regard to LWO, which may, for example, burden procurement processes in general, and specifically burden evaluation and ranking of concessionaires and other users.
Additionally, a comprehensive communication plan and resources for County departments, contractors, leaseholders, concessionaires will need to be developed and undertaken, with unknown resources applied to this effort.
2 - Enforcement
The County recognizes that there are opportunities for improvement, efficiency, and modernization in its procurement process and systems and that there is no staffing for specific LWO monitoring or other procurement processes. The recommendations from the broader procurement assessment, currently underway, may impact LWO processes, including compliance, staffing, and systems. Recommendations from the procurement assessment for Board consideration is scheduled for late September 2023.
The near-term LWO enforcement solutions approved by the Board, i.e., establish an enforcement/complaint hotline and a process for spot check audits, will be pursued after a revised ordinance is in effect and after resources have been identified.
Anticipated Next Steps
If a First Read of proposed amendments is undertaken today, a Second Read will be scheduled for next month.
Adoption of a revised ordinance will launch a series of immediate next steps, including:
• Coordination with Purchasing and County Counsel to update relevant forms, identify processes that include LWO and update as needed
• Development of communication plan and resources for County departments, contractors, leaseholders, concessionaires
• Revision of the LWO questionnaire
• Enhancing the model language template to include key ordinance provisions
Strategic Plan:
N/A
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
Yes
The racial equity analysis was included as an attachment to the 6/12/23 Board item <https://sonoma-county.legistar.com/LegislationDetail.aspx?ID=6252505&GUID=CF365D21-E62C-4178-8F19-52260A73F1D0&Options=&Search=>. Staff used the Government Alliance on Race and Equity’s (GARE) Equity Toolkit to provide a general equity analysis of the existing LWO. The County does not have an accurate way to collect the data needed for the detailed level of analysis required to understand local impact of the LWO on an individual or neighborhood basis, or as to how LWO impacts persons conducting business with the County. However, anecdotal feedback gathered from community-based organizations (CBO) and departments indicates that the County can simplify and clarify LWO and other procurement processes, which would help to lower transactional costs and burdens associated with contracting with or obtaining assistance from the County. This could potentially expand the pool and diversity of local organizations that would consider working with the County.
Prior Board Actions:
§ 6/12/23 Provided direction to staff on Cost of Living Adjustment parameters, whether lessees and concessionaires should be covered under the LWO and how; and whether to add a paid time off requirement or other provision. Established periodic LWO rate review. Confirmed initial draft of proposed amendments.
§ 4/18/23 Adopted an uncodified ordinance to allow for a supplemental increase of 2.26% to the living wage hourly rate, for the required living wage rate to be $17.65 per hour, effective July 1, 2023. (Second Read)
§ 3/21/23 Adopted a resolution introducing, reading the title of, and waiving further reading of an uncodified ordinance to except certain requirements under the County’s existing Living Wage Ordinance and to allow for an increase to the living wage hourly rate by 2.26%, for the required living wage rate to be $17.65 per hour, effective July 1, 2023. (First Read). Authorized Human Resources staff to offer to meet and confer with affected labor organizations, if necessary to implement the proposed increase.
§ 12/6/22 Adopted resolution to increase the living wage hourly rate by 2.74% to $17.25
§ 10/18/22 Received recommendations from the Living Wage Ad Hoc on proposed changes to the Living Wage Ordinance
§ 12/14/21 Adopted resolution to increase the living wage hourly rate to $16.75 and approved Living Wage Ordinance work plan
§ 9/21/21 Directed staff on areas of further analysis and evaluation for the Living Wage Ordinance
Fiscal Summary
Narrative Explanation of Fiscal Impacts:
None
Narrative Explanation of Staffing Impacts (If Required):
N/A
Attachments:
Attachment 1 - Summary of Board consensus and ordinance sections reflecting Board consensus amendments
Attachment 2 - Red-lined version of the Living Wage Ordinance
Attachment 3 - Amended (clean) version of revised Living Wage Ordinance
Attachment 4 - Resolution
Presentation
Related Items “On File” with the Clerk of the Board:
N/A