PERSPECTIVES ON CITY CONTRACTORS : . . . but Forced Hiring Is the Road to Ruin : Vendors base bids on the cost of the work force they need. They shouldn’t be forced to inherit one they don’t know.

The Los Angeles City Council has just passed one of the most destructive pieces of anti-business legislation imaginable, and the city attorney and our business-friendly mayor have let it pass without so much as a raised eyebrow.

The new ordinance is a job-protection law that forces most businesses that win contracts with the city to hire all the existing service employees on the payroll of the outgoing businesses they replace. No matter that the incoming business might have a better way to do the job at less cost or the best work force in the country. Under the new ordinance, every one of the existing workers on a particular job must be hired by the incoming business. This “featherbed ordinance” becomes effective Jan. 13 unless the City Council comes to its senses and repeals it before then.

The law applies to all service businesses and subcontractors awarded new city contracts for more than $5,000. It also applies to any individual, company or association that receives more than $25,000 from the city for “economic development or job growth” or “housing services.” This includes all financial aid granted by the city in the form of planning assistance, tax levies, tax credits and bond financing, including tax-increment financing set up by the Community Redevelopment Agency.

In passing the new ordinance, the city grudgingly admits that the incoming contractor might have different managerial skills and technology that could result in lower costs, but also says that the attempt to replace existing workers “decreases efficiency and results in a disservice to city projects.” The city doesn’t say how the new contractor is supposed to lower costs if he is forced to keep exactly the same work force as the contractor being replaced. The rationalization for this is that city contracting decisions should not result in “creating unemployment and the consequential need for social services.” Its final show of brilliance is that there won’t be any union problems if all the existing workers are hired by the incoming contractor.

So the law will work like this: First the city awards a job to the lowest bidder, who has no way of knowing the amount of wages or benefits the existing contractor is paying or how many employees or “ghosts” are on the payroll. Next, the city gives a notice of termination to the existing contractor who has 10 days to provide a list of all employees who have been on the job at least eight months. This is long after the new contract has been awarded, and is information that all bidders should have received from the city prior to preparing their bids.

In the case of many small businesses, the list is likely to contain the names of all the outgoing contractor’s friends, relatives and even illegal residents who are eager to jump on the perpetuity bandwagon and go along for a lifetime ride. After the first 90 days on the new contractor’s payroll, employees must receive written evaluations. If they are retained, it must be under the same terms and conditions established by the former contractor. This could mean automatic union affiliation, pension payments, medical and dental benefits, month-long vacations and other “perks” not known by the new contractor when the job was bid--a swift road to financial ruin for the new contractor.

The new ordinance will create lifetime employment for anyone now working on a contract city job. If the idea is to discourage legitimate service contractors from trying to get the job done cheaper, then the ordinance will serve its purpose. But it is a ridiculous waste of time. Why put out for bid if the new contractor has to use the same workers as the existing contractor?

A simpler way would be to extend all existing contracts for the next 100 years or so. Then the Purchasing Department could be dissolved and the treasurer could just send the same checks, plus cost-of-living allowances, to the same contractors every month until the city finally goes out of business. Residents who care whether that happens should contact their council representatives and demand that this law be repealed.