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Santa Monica Council Poised to Approve Minimum Wage Early Next Year

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By Niki Cervantes
Staff Writer

December 22, 2015 -- The Santa Monica City Council is poised to join the wave of local governments raising the minimum wage to $15 an hour by 2020 and also is deciding whether to take the advice of staff by hiking the minimum hourly wage for all hotel workers to $15.37 by 2017.

The proposed law – which is scheduled to go to the City Council January 12 – would exclude unionized workers and comes as the City of Los Angeles defends a similar law in federal court.

Some Council members anticipate passage of the Santa Monica law will spur a referendum by hotel owners, who successfully challenged a local wage law at the ballot box in 2002.

A December 16 report to the City Council examines the impact of a new minimum wage for all Santa Monica hotels. It also addresses such issues as ensuring employees get the income from “service charges” imposed to offset the higher minimum wage and guaranteeing workers more paid leave. In addition, it delves into how to legally enforce all of those changes.

The Council ordered a more in-depth look at hiking the minimum wage on September 29 after a marathon meeting of complaints from hoteliers, restaurant owners, representatives of the tourism industry and others.

The findings are the “result of months of public outreach and staff research,” according to a staff report from Finance Director Gigi Decavalles-Hughes and Andy Agle, director of Housing and Economic Development.

“The majority of community and stakeholder input was supportive of the minimum wage proposal, and reflected Santa Monica’s value for its employees and unique character as a city and destination,” the report said.

Recommending a higher minimum wage for hotel workers had been discussed, but the report to the Santa Monica City Council gives more detail, phasing it in to match its counterpart in Los Angeles.

In Los Angeles, the higher wage for hotel workers has already sparked litigation. Industry groups filed a lawsuit in federal court against the City last December, alleging that the wage law preempts federal labor law and that the City of Los Angeles cannot enforce the new wage.

Although the City won the initial court battle, the hotel representatives have appealed. Local governments throughout the country are watching the litigation closely. Still, some Santa Monica City Council members were not worried.

“Someone’s always suing someone,” said City Council Member Sue Himmelrich, the Council’s newest member and an attorney with the Western Center for Law and Poverty. “We are moving ahead. We like to be leaders.”

Specifically, the hotel minimum wage would be phased in over two years to reach $15.37 by July 1, 2017. The new law also would deal with any service charges imposed by employers to offset the higher wages of employees.

Included would be language to “ensure that service charge income goes to employees providing the service, including back of house staff” and a requirement that businesses provide clear information to consumers about service charges.

In addition, provisions would allow businesses to use other surcharges “as long as (they are) clearly described” and ensure service charge money is handed out to all employees – not just those primarily in management.

The proposed raise would provide an exception allowing employers to pay only 85 percent of the new minimum wage to workers in that job for the first time if they have no related experience for their first 480 hours or six months, whichever is sooner.

Paid leave is granted of five days for businesses with 25 or fewer employees, and nine days for larger businesses, staff said. Enforcement would be consistent with practices in San Francisco and Los Angeles, the report said.

Meanwhile, there is already talk of a referendum backed by hotel owners, possibly in November of 2016, to reverse the proposed law, Himmelrich said. It wouldn’t be the first time that happens in Santa Monica.

In fact, the tug-of-war over wages for low-paid workers in a city that is both extremely expensive and politically progressive dates back to the turn of the century. In 2000, a failed measure was placed in the ballot to stop the Council from voting on a living wage of $10.50 an hour for some employers.

The following year, the Council voted 5-to-1 to mandate that businesses in the Downtown Coastal zone grossing more than $5 million annually pay their workers as much as $12 an hour, a decision which grabbed national headlines.

After opponents of the ordinance gathered enough signatures to place a referendum bankrolled by local hotels on the November 2002 ballot, the law was narrowly defeated in what was a major blow to the union.

Council Member Kevin McKeown noted that Santa Monica already mandates a minimum wage of more than $15-an-hour for employees of contractors with the City and for employees of new hotels.

The City, he said, is “attracting attention from national anti-worker corporate operatives who are fearful that Santa Monica will become a reference city for workers’ rights.

“However, the tide is turning across the country, with many cities already requiring higher wages and more following every month,” McKeown said. “Santa Monica was ahead of the battle back in 2000, but now we are part of a worker wage movement that corporations just won’t be able to stop."

He called the lawsuit against Los Angeles City “regrettable” and one with “little premise.”

“In Santa Monica, as the recently released report shows, we have made extraordinary outreach efforts to make sure our increases are fair, just, and phased-in so as to minimize any possible disruption of businesses,” McKeown said.

“Further, we are following a regional model that will raise wages across L.A. County, adding increased worker spending power to our local economy and helping to relieve worker rent burdens.

“There’s really little justification for trying to convince voters in a referendum that Santa Monica's working poor don’t deserve better treatment, including just wages, the ability to organize, and sick days,” he said.

Unlike the Los Angeles ordinance, Santa Monica’s higher minimum wage would exclude unionized workers, who negotiate their own wage-and-benefits packages as part of the collective bargaining process.

In a statement, Unite Here Local 11, which represents about 1,000 hotel and hotel-related restaurant workers in Santa Monica, gave the City’s hotel-wage proposal qualified support. It said it applauded the City’s “outreach” to the warring factions in the debate, but that it had “a few concerns.”

Santa Monica’s higher wage for hotel workers “does not create parity with Los Angeles,” union officials said in a statement issued Monday.

“In Los Angeles, the largest hotels for that market will be paying the full $15.37 by July 1, 2016,” officials said. “Santa Monica should follow the Los Angeles model in a way that makes sense for our hotel market.”

According to union officials, the largest hotels range from approximately 100 to 300 rooms. As a result, hotels with more than 100 rooms should pay $15.37 on July 1, 2016, and hotels with 25 99 rooms would pay $15.37 on July 1, 2017, officials said.

Santa Monica’s tourism rate is healthy enough for such a law, union officials said, noting that a recent HVS Global Hospitality Services report on the city’s hotel market found it has grown for five years in a row. The Santa Monica/Marina delRey market outperforms those nearby, including downtown Los Angeles, LAX and the Westside, according to the report.

“Unite Here Local 11’s proposal for the hotel wage policy will create true parity with Los Angeles by putting Santa Monica’s hotel workers on the same footing as those in Los Angeles, and making sure that our smallest businesses have time to adjust to the new minimum wage policy,” the statement concluded.

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