Mighty forces at work in flap over hotel workers’ pay

Times Staff Writer

The Los Angeles City Council is expected to give final approval as early as today to a new ordinance imposing a so-called living wage on workers at a dozen hotels near Los Angeles International Airport.

It would be the second time in four months that the council has passed such an ordinance. The hotels and business leaders collected signatures for a referendum on the first ordinance. Facing the prospect of a ballot fight, the City Council rescinded that ordinance and, along with the mayor, drafted a new one.

What is a living wage and how is it calculated?

The concept of a living wage is that anyone who works full time should earn enough to remain above the federal poverty level. In most cities, but not all, such laws apply to employees of businesses that have a contractual relationship with the government.


In Los Angeles, a living wage for workers whose employers provide health insurance is $9.39 per hour, a figure adjusted according to inflation. For workers who are not provided health insurance, there is an upward adjustment of $1.25 per hour, for a total of $10.64.

How does the council justify applying this living wage law to airport-area hotels, which are not city contractors?

The ordinance notes that the hotels “derive significant and unique business benefits from their close proximity to LAX, a major public and city asset that produces numerous patrons of these hotels on a daily basis.” Council members say the city should not be subsidizing poverty. The hotels maintain that they pay more than $45 million in city taxes, and do not derive any out-of-the-ordinary benefits from the city.

The airport-area hotels say the living wage could ruin them. Labor says it would help move workers into the middle class. Who’s right?

Both sides have grossly exaggerated the financial effects of the ordinance, which covers just 3,500 workers in a city of 4 million people. Of those workers, labor officials estimate that half earn the living wage. The hotels say the correct figure is closer to 90% -- counting the tips earned by hotel waiters and banquet servers whose salaries are usually set at the state minimum wage. Such tipped workers are covered by the living wage.

What’s the difference between the previous, rescinded ordinance and the new one being debated this week?

Both versions break precedent by applying the living wage law to private companies -- the hotels -- with no city business. But there are more restrictions on the living wage in the new ordinance than the previous one. The higher wage is delayed until July; it would have kicked in immediately under the earlier law.

Hotels could seek waivers from the requirement if they could prove that the living wage would force them to lay off more than 20% of their workers.


Perhaps most significant, the new law would establish an elaborate process for determining whether the living wage can be extended to other businesses in the city.

Businesses initially said this process would block future expansions, but labor representatives believe it would create a method for future living wage expansions.

The new ordinance also would create an Airport Hospitality Enhancement Zone through which the hotels would be offered a variety of public incentives. The hotels say they don’t amount to much. Harvey Englander, a spokesman for the hotels, has likened the incentives to “putting lipstick on a pig.”

So if relatively few workers would get raises, what’s the fight about?


Two words: union organizing. The hotels targeted by the new law, all of them nonunion, have been the focus of an organizing campaign for more than a year by Unite Here, the international hotel workers’ union.

The union, following a national labor organizing strategy, demands that the hotels agree to recognize Unite Here through a “card check” -- a majority of workers signing union cards. The hotels have demanded a federally supervised election, as provided for by law. Each side claims that the other seeks to intimidate workers.

Although labor leaders have downplayed any connection between organizing and the new law, their actions and the legislation itself make their intent clear. The living wage ordinance is designed to put public relations and financial pressure on the hotels to abandon their fight and accept unionization. The legislation specifically exempts workers covered by a union collective bargaining agreement from the living wage.

Business opposes the new ordinance. But wasn’t it produced by a deal with business leaders?


Sort of. The hotels negotiated with the mayor’s office on a deal to rescind the first ordinance and drafted the new one, but they left the negotiating table before a deal was done.

The two top leaders of the Los Angeles Area Chamber of Commerce stayed at the table, however, and participated in the announcement of the new legislation.

But the chamber’s board later balked at the deal its leaders had negotiated. This could cost the chamber credibility at City Hall. Upon hearing of the chamber’s reversal, one key council aide involved in the talks said: “The lesson is: There’s no point in trying to negotiate with the business community.”

Is this new ordinance headed to court?


Bet on it. George Kieffer, the power-brokering lawyer who has been retained by the hotels, sent council President Eric Garcetti a letter Feb. 9 outlining the legal challenge the city could face. If the people’s power of referendum is to have any meaning, the city cannot simply replace a law facing referendum with a similar one. To keep the new law from being thrown out, the city would have to show that the new ordinance is either “substantially dissimilar” or “essentially different” than the old one, legal experts say.

Richard McCracken, a bulldog San Francisco lawyer for Unite Here, insists that because Los Angeles is a charter city and the charter says nothing about such matters, the council can rescind and replace as it wishes. The Times, after talking to more than a dozen election law experts, is unable to find anyone with a law degree who agrees with McCracken.

Who’s going to win?

In one City Hall corridor, two well-known local Machiavellians were predicting that the council would win. They expect the council to pass the new law, placating labor, with the knowledge it probably will lose in court, meaning that the business community will feel no ill effects.


That may be a bit much, but the new legislation probably would spark new litigation and future council fights over the living wage. Such battles typically make winners of two groups: lawyers and lobbyists.