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L.A. minimum wage plan moves forward without union exemption

L.A. minimum wage plan takes another step forward -- but many complex and divisive questions remain unanswered

A landmark plan to boost the Los Angeles minimum wage took another step forward Friday, as a panel of city lawmakers vetted a draft ordinance putting the pay hikes into law.

But a host of complex and divisive questions about the plan will likely remain unanswered even after the law is passed -- including whether unionized companies will ultimately be able to opt out of the wage requirements if their workers agree.

"This is an ongoing process," City Councilman Curren Price, who heads the Economic Development Committee, said Friday. "There’s still a lot of things to be resolved."

When it takes up the proposed law next Wednesday, the full council is widely expected to pass the ordinance, which would gradually increase the citywide minimum to $15 hourly rate by July 2020. But because the pay hikes do not start until the middle of next year, officials could make changes to the law before the increases begin.

With new questions arising late in the process, a batch of proposed additions to the plan have been referred to city staffers, who are now tasked with analyzing them and reporting back.

Among the ideas still being scrutinized is requiring employers to provide a minimum number of sick days for L.A. workers. Mayor Eric Garcetti said that idea needed deeper analysis before it could move forward. Labor activists said they had long pushed for workers to be guaranteed more sick days, but business groups said it could impose added costs that weren't analyzed by the city.

Labor leaders also pressed to include some controversial wording that could exempt unionized companies from the wage requirements if management negotiates a waiver with workers. Business groups have attacked that idea as a gambit to prod more companies to unionize.

Rusty Hicks, who heads the county labor federation, said that would provide union workers the flexibility to trade off pay for other benefits that might be more important to them.

"This isn't a secretive way to incentivize workers to organize, or about paying union workers less than they deserve," Hicks told reporters before the hearing. "This is about staying consistent with previous provisions and crafting something that will withstand legal scrutiny."

Hicks said many cities had adopted such language to avoid potential lawsuits over whether federally governed union agreements supercede local ordinances, something he said the Supreme Court had left unclear decades ago.

But the Los Angeles Area Chamber of Commerce and other major business groups criticized the proposed exemption as defying the stated goals of the minimum wage ordinance. They pointed out that labor activists had previously opposed a number of suggested exemptions for other kinds of businesses, saying no one should have a "subminimum wage."

If the exemption is approved, "it will replace the mantra of helping the working poor with hollow rhetoric that enables organizers to sign up more dues-paying members," Chamber President Gary Toebben wrote in a letter to Price this week.

Even some labor allies said they were skeptical of moving forward with the proposed exemption without deeper analysis. Although cities such as San Francisco and Chicago included similar wording in recent minimum wage hikes, Seattle and Washington D.C. did not.

The L.A. council committee decided Friday to seek a report from city officials on the issue, leaving it out of the proposed ordinance for now. At the hearing, Council President Herb Wesson pointedly fired back at criticisms that the council was being driven by labor demands.

When L.A. leaders decided to pursue a wage increase, Wesson said, "it was not because this council or this committee was carrying labor’s water. It was not because members of this committee wanted to jam the business community."

Instead, he said, "we wanted to do our part in taking almost 1 million Los Angelenos from poverty to an opportunity to have a middle-class life."

Lawmakers also asked for staff reports on whether the wage plan would undermine or conflict with earlier ordinances that set wage requirements for big hotels and city contractors, and more details on how workers who pass through L.A. would be covered by the wage rules -- something that several council members mentioned as a concern.

At the Friday hearing, city lawyers said the rules would cover anyone who does at least two hours of work weekly in the city of Los Angeles, even if their employer is based outside city limits. If a worker splits their time inside and outside the city, the wage requirement would apply only to hours worked in L.A., according to lawyers working for City Atty. Mike Feuer.

City officials are also still weighing whether to restrict mandatory “service charges” -- an option being considered by some restaurant owners to help cover the increased costs -- as well as whether to exempt nonprofits that help disadvantaged people get into the workforce.

Under the proposed L.A. ordinance, small businesses -- those with 25 employees or fewer -- would get an additional year to phase in the wage hikes. Some nonprofits would also be eligible for the added time. Beginning in July 2022, future increases would be automatically pegged to the annual change in the consumer price index for the L.A. metropolitan area.

Many labor activists have raised concerns about how L.A. will ensure that the new wage rules are enforced. City officials pressed forward Friday with a plan to create a new city division to crack down on employers who pay less than the minimum wage.

Under the proposed ordinance, employers who short their workers on wages will be required to repay the money, plus at least a $100 penalty for each day the violation occurred.

They could also face added penalties for other violations such as retaliating against employees who report wage theft. Much as with the wage hikes, city officials are studying several possible additions to the plan, including how the office could combat discrimination and the potential use of liens against employers who violate the law.

Next budget year, the new division will be staffed with five people at a cost of about $500,000 -- a much smaller staff than a UC Berkeley study suggested. Several city lawmakers have said they want to expand the office in the future.

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