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HomeMy WebLinkAboutStaff Report 3.K 08/05/2019DATE: August 5, 2019 Agenda Item #3.K TO: Honorable Mayor and Members of the City Council through City Manager,( ry FROM: Ingrid Alverde, Economic Development Manager Nancy Sands, Economic Development Specialist Eric Danly, City Attorney SUBJECT: Adoption of Ordinance (Second Reading) Establishing Minimum Wages to be Paid to Workers in Petaluma RECOMMENDATION It is recommended that the City Council adopt an Ordinance establishing minimum wages to be paid to workers in Petaluma (second reading). BACKGROUND On April 8, 2019, the City Council held a workshop to discuss a local minimum wage ordinance being proposed by North Bay Jobs with Justice (NBJJ), a local workers' rights and labor advocacy group. The primary components of the ordinance proposed by NBJJ would accelerate the state timelines (set by SB 3, Leno, codified in Labor Code section 1182.12) for reaching a $15.00 per hour minimum wage. The proposed ordinance would also establish a requirement for annual minimum wage increases based on the Consumer Price Index (CPI) for the San Francisco -Oakland -San Jose Consolidated Metropolitan Statistical Area. After receiving input from constituents representing both sides of the issue, Council directed staff to conduct additional research to address issues raised in the workshop and, after doing so, prepare an ordinance for consideration. Staff followed this direction and prepared two ordinances for consideration at the Council meeting on July 15, 2019. These ordinances included many, but not all, elements of a revised model ordinance sent to the City by NBJJ on June 25, 2019. The two ordinances presented to Council differed from the revised NBJJ model in three significant ways: 1) they included a credit of $1.50 per hour wage credit for employees receiving $1.50 per hour in medical benefits; 2) they started annual Cost of Living increases on a different timeline than the one proposed by NBJJ; and 3) they defined employer size based on number of Petaluma employees, rather than total employees in all locations. Before the Council meeting, NBJJ expressed concerns about the above changes. NBJJ did not express concerns about other differences between their revised model ordinance and the two staff -presented ordinances, such as the addition of recitals and language the City Attorney recommended including to protect the Council from litigation. DISCUSSION At the Council meeting on July 15, 2019, staff presented two ordinances, called "Proposed" and "Alternate." After discussion with staff and public input, the City Council unanimously approved introduction of the Alternate Ordinance with the following modifications: • Elimination of medical benefit credit; • Employer size (small vs. large) will be determined based on total number of employees, not just employees in Petaluma; • Addition of a three (3) year statute of limitations for any remedies sought by any party with standing; • The minimum wage for all employers will be $15.00 + Cost of Living Adjustment (COLA) per hour, effective January 1, 2021; • COLAs will be calculated in the year prior to when they go into effect, e.g., for a CPI adjustment that takes effect January 2021, the CPI adjustment will be based on calculations from 2020. The item is before the City Council for approval (second reading) of the ordinance. PUBLIC OUTREACH Input about the minimum wage proposal was solicited from the employer community in several ways. In advance of the April 2019 workshop, staff contacted local employers and business groups; included information about the workshop in the Economic Development Division's quarterly newsletter; and worked with the Downtown Association and the Chamber of Commerce to make sure their members were informed of the workshop and given an opportunity to share their opinions. In the months between the workshop and the first reading, staff again solicited input from local employers and promoted the first reading via local business groups. These leaders were encouraged to let constituents know about the workshop outcome and first reading date. Staff also contacted other jurisdictions to discuss their approach to regulating minimum wage on a local level. Following the Council meeting on July 15, 2019, staff have continued to inform employers and employees about the proposed ordinance. Calls have been made to individual employers and employer groups, and information about the proposed ordinance has been included in the Economic Development Division's newsletter. Staff have contacted the Small Business Development Center to discuss the possibility of holding a class for restaurants and retailers on how to absorb higher wage costs. Should the ordinance pass, staff will notify employers through mailings, advertisements and articles in local media/social media, and continued outreach via the I Chamber of Commerce, Downtown Association, Visitor Program, Tourism Business Improvement District and service clubs such as Rotary. FINANCIAL IMPACT Financial Impacts to the City as an Emplover Staff have analyzed the City's payroll data and determined that the City's payroll costs would increase approximately $13,000 during the first summer after the $15.00 per hour wage requirement goes into effect. Additional costs after the first year will be incurred when the COLA increases take effect. Most City employees are covered under the City's living wage ordinance (currently $18.12 per hour, with annual COLA increases). The exceptions are part- time, seasonal staff hired by the City's Parks & Recreation Division. The number of people hired to fill those job titles may vary from year-to-year but tend to be less than 12 per season. Financial Impacts to the Citv,for Implementation & Enforcement Staff recommend a $20,000 annual budget for minimum wage ordinance implementation and enforcement. This amount considers conversations with representative from other cities and compliance consultants who manage minimum wage enforcement. Staff can make necessary budget adjustments to cover these costs during the first quarter budget adjustment. ATTACHMENTS Attachment 1: Draft Ordinance CLEAN Attachment 2: Draft Ordinance REDLINE Attachment 1 Ordinance -N.C.S AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PETALUMA ESTABLISHING MINUMUM WAGES TO BE PAID BY EMPLOYERS IN THE CITY OF PETALUMA WHEREAS, the Fair Labor Standards Act of 1938, 29 U.S.C. Section 201 and following, ("FLSA") establishes a national minimum wage, which was last set effective July 25, 2009 at $7.25 per hour, which amount remains the federal minimum wage currently in effect pursuant to Section 206 of the FLSA; and WHEREAS, Section 218 of the FLSA expressly permits state and municipal governments to set minimum wages that are higher than the federal minimum wage; and WHEREAS, California has exercised the authority granted by Section 218 of the FLSA and adopted a state-wide minimum wage, currently set at $12 per hour for employers with 26 or more employees, and $11 per hour for employers with 25 or fewer employees, pursuant to Labor Code Section 1182.12; and WHEREAS, Labor Code Section 1182.12 provides that California minimum wages for employers with 26 or more employees will increase to $13 per hour on January 1, 2020, to $14 per hour on January 1, 2021, and to $15 per hour on January 2022, and that minimum wages for employers with 25 or fewer employees will increase to $12 per hour on January 1 2020, to $13 per hour on January 1, 2021; to $14 per hour on January 1, 2022, and to $15 per hour on January 1, 2023; and WHEREAS, Labor Code Section 1182.12 provides that beginning in August, 2023, and each August thereafter, the Director of Finance shall calculate an adjusted minimum wage increasing the minimum wage established in Section 1182.12 by 3.5 percent or the change in CPI as specified, whichever adjustment is less, rounded up to the nearest ten cents, to take effect the following January 1; except that, if the change in CPI is negative, the minimum wage is to remain unchanged the following January; and WHEREAS, Labor Code Section 1205(b) expressly permits local agencies to exercise their police power to establish local minimum wages that are higher than the state minimum wage; and WHEREAS, Labor Code Section 1197 provides that the minimum wage fixed by the Labor Commission or by any applicable state or local law is the minimum wage to be paid to employees, and the payment of a lower wage than the applicable minimum wage is unlawful; and Petaluma Minimum Wage Ordinance Ordinance N.C.S. 0 Attachment 1 WHEREAS, North Bay Jobs with Justice, the North Bay Central Labor Council, and the Napa-Solano Central Labor Council commissioned a 2018 report from the Center for Labor Research and Education, University of California, Berkeley, entitled "Estimated Impact of a Proposed Minimum Wage Law for the North Bay" ("Report") written by Ian Perry, Garret Strain and Ken Jacobs, to analyze the prospective impact of a proposed $15 per hour citywide minitnum wage by 2020 for the cities of Novato, Petaluma, Sonoma, Sebastopol and Santa Rosa ("Proposed Minimum Wage"); and WHEREAS, the Report finds that of the minimum wage workers that would be affected by the Proposed Minimum Wage, 6.4 percent would be teenagers; more than 50% would be thirty years old or older, 60 percent would be of black, Latinx, Asian, and other non-white ethnicity; 50 percent would have some college experience; 15 percent would hold a bachelor's or higher degree; and that the affected workers' median annual earnings are only half that of the overall North Bay workforce, and make up half of their family income; and WHEREAS, according to the Report, the industries employing most of the workers that would be affected by the Proposed Minimum Wage are the retail industry, employing 17.1 percent of the workers, food services, employing 12.9 percent of the workers, and health services, employing 8.4 percent of the workers; and WHEREAS, the Report notes that minimum wage laws have large, positive effects on workers' pay and their families' living standards, citing studies indicating that family income is a determinant of health, and that improving incomes results in positive effects on psychological wellbeing, children's birthweights and infant mortality, and that income affects access to safe housing, a healthy environment, healthy food, and healthcare services; and WHEREAS, the Report concludes that minimum wage increases within the range of the Proposed Minimum Wage lead to net gains in worker earnings, have no negative effect on employment and can reduce workplace turnover and increase job stability; and WHEREAS, the City Council in enacting this ordinance is exercising its police power as a California charter city pursuant to Article XI, sections 5 and 7 of the California Constitution, pursuant to the Petaluma City Charter, and the authority for local minimum wage regulations granted in 29 U.S.C. Section 218, and California Labor Code Sections 1197 and 1205(b); and WHEREAS, this ordinance is not a project which has the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment as defined in the California Environmental Quality Act, Public Resources Code Section 21000 and following ("CEQA"), pursuant to Section 15378 of the CEQA Guidelines, 14 CCR Section 15000 and following, because this ordinance merely enacts minimum wages that must be paid to employees in the City of Petaluma, and therefore the requirements of CEQA do not apply to this ordinance; and Petaluma Minimum Wage Ordinance Ordinance N.C.S. Attachment 1 WHEREAS, if this ordinance is nonetheless found to be a project as defined in CEQA, this ordinance is exempt from the requirements of CEQA pursuant to the common sense exception that CEQA only applies to projects which have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA, in accordance with Section 15061(b)(3) of the CEQA Guidelines, because this ordinance merely enacts minimum wages that must be paid to employees in the City of Petaluma; NOW, THEREFORE, be it ordained by the Council of the City of Petaluma as follows: Section 1. Recitals Made Findings. The above recitals are hereby declared to be true and correct and incorporated into this ordinance as findings of the City Council. Section 2. CEQA Does Not Apply or Ordinance is Exempt. This ordinance is either not a project subject to the requirements of CEQA in accordance with Section 1537 of the CEQA Guidelines, or, in the alternative, this ordinance is exempt from the requirements of CEQA in accordance with Section 15061(b)(3) of the CEQA Guidelines because this ordinance merely enacts minimum wages that must be paid to employees in the City of Petaluma. Section 3. New Chapter 8.35 Established. A new Chapter 8.35 entitled "Minimum Wage" is hereby added to the Petaluma Municipal Code, to read as follows: Section 8.35.010 Definitions. As used in this chapter, the following capitalized terms are defined as follows: "Employee" means any Person who A. In a particular week performs at least two (2) hours within the city for an Employer, and B. Qualifies as an employee entitled to payment of a minimum wage from any employer in accordance with Sections 1182.12 and 1197 of the California Labor Code and any successor statutes as in effect on and after the effective date of this chapter and as from time to time amended. "Employer" means any Person, including corporate officers or executives, who directly or indirectly (including through the services of a temporary service or staffing agency or similar entity), employs or exercises control over the wages, hours, or working conditions of any Employee. Petaluma Minimum Wage Ordinance Ordinance N.C.S. 31 Attachment 1 "Learners" means Employees who are at least fourteen (14) years of age but not more than seventeen (17) years of age during their first one -hundred -and -sixty (160 ) hours of employment in occupations in which they have no previous similar or related experience. "Person" means an individual, corporation, partnership, limited partnership, limited liability partnership, limited liability company, business trust, estate, trust, association, joint venture, agency, instrumentality, or any other legal or commercial entity, whether domestic or foreign. "Person" includes the City. Section 8.35.020 Covered Employee Hours. Employees will be entitled to receive the minimum wages specified in this chapter for hours of work within the city, excluding time spent in the city solely for the purposes of travelling through the city from a point of origin outside the city to a destination outside the city with no employment-related stops in the city other than for refueling, or for an Employee's personal meals or errands. Section 8.35.030 Minimum Wages. A. Effective January 1, 2020, Employers who employ twenty-six (26) or more Employees shall pay Employees not less than $15.00 per hour. B. Effective January 1, 2020, Employers who employ twenty-five (25) or fewer Employees shall pay Employees not less than $14.00 per hour. C. Effective January 1, 2021, Employers who employ twenty-five (25) or fewer Employees shall pay Employees not less than $15.00 per hour. D. Beginning January 1, 2020, and annually thereafter, the minimum wage all Employers must pay to Employees (except as otherwise provided in this section), regardless of the number of Employees each Employer employs, will be adjusted based on the Consumer Price Index for Urban Wage Earners and Clerical Workers ("CPIW") for the San Francisco -Oakland -San Jose Consolidated Metropolitan Statistical Area (or its successor index), which is published by the U.S. Department of Labor. Beginning January 1, 2020, sometime in October of each year, the City will publicize the CPIW or successor index for that year and the adjusted minimum wage that will apply for all Employers pursuant to this section beginning January 1 of the following year. E. Learners shall be paid not less than eighty-five (85) percent of the minimum wage required in accordance with this section rounded to the nearest $.05. F. In calculating the number of Employees an Employer employs for purposes of determining the applicable minimum wage pursuant to this section, the number of Petaluma Minimum Wage Ordinance Ordinance N.C.S. 7 Attachment 1 Employees shall include Employees employed by an Employer, including all Employees working for the Employer on a full-time, part-time, or temporary basis. G. Employers may not deduct any amount from wages due Employees pursuant to this section based on any tip or gratuity, or credit any amount of any tip or gratuity against or as any part of the minimum wages due Employees pursuant to this section. Section 8.35.040 Collective Bargaining Agreement Waivers. Bona fide collective bargaining agreements may waive all or any portion of the requirements of this chapter, but only if the waiver is explicitly set forth in the agreement in clear and unambiguous terms. Unilateral implementation of the terms and conditions of employment by either party to a collective bargaining agreement may not operate as a waiver of any requirements of this chapter. Section 8.35.050 No Other Waivers of This Chapter. Except for waivers in accordance with section 8.35.040, waiver of any requirement of this chapter by any Employee shall be deemed contrary to public policy, void and unenforceable. Any attempt by an Employer to cause Employees to waive any of their rights under this chapter shall constitute a violation of this chapter subject to enforcement in accordance with section 8.35.070. Section 8.35.060 Retaliatory Actions Prohibited. Any of following actions taken by an Employer concerning an Employee may be deemed retaliatory and a violation of this chapter subject enforcement in accordance with section 8.35.070: A. Discharging, reducing the compensation of, taking adverse action against or otherwise discriminating against any Employee for opposing any practice proscribed by this chapter, for participating in proceedings related to this chapter, for seeking to enforce his or her rights under this chapter by any lawful means, or for otherwise asserting rights under this chapter. B. Funding minimum wages required by this chapter by reducing wages paid to any Employee or by increasing charges to Employees for parking, meals, uniforms or other items. An Employer's taking adverse action against an Employee within one -hundred -twenty days of the Employee's exercise of rights under this chapter shall raise a rebuttable presumption that the adverse action is retaliatory and in violation of this chapter. To rebut the presumption, Employers must establish that the adverse action occurred for legitimate business reasons. Petaluma Minimum Wage Ordinance Ordinance N.C.S. 0 Attachment 1 Section 8.35.070 Remedies and Enforcement. A. Statute of Limitations. The city and any person aggrieved by a violation of this chapter (or the aggrieved person's representative) may seek remedies pursuant to this section for a period of three (3) years prior to the date the claim is filed with the city or the court. B. Private Right of Action. The city and any Person aggrieved by a violation of this chapter (or the aggrieved Person's representative), may bring a civil action against any Employer for violation(s) of this chapter in a court of competent jurisdiction to enforce the provisions of this chapter. Successful plaintiffs in actions pursuant to this paragraph shall be entitled to such remedies specified in paragraph E of this section as the court may order to enforce this chapter, and to an award of reasonable attorney's fees, witness fees and costs of litigation. C. Administrative Enforcement. Reporting Violations. An Employee, an Employee's representative, or any other Person may report any suspected violation of this chapter to the city. The city will keep the identity of the Person reporting the violation confidential to the extent pennitted by law, except as necessary to enforce or permit enforcement of this chapter or other applicable law. 2. Informal Resolution. The city may in the city's sole discretion seek informal resolution of complaints of violations of this chapter. 3. Violations a Nuisance. Violations of this chapter are hereby declared to be public nuisances in accordance with Chapter 1.10 of this code, and subject to enforcement in accordance with Chapter 1. 10, Code Enforcement Generally, Chapter 1. 13, Violations Enforced by Civil Action, Chapter 1.14 , Administrative Enforcement, and Chapter 1. 16, Administrative Citations, of this code. 4. Business License Revocation. The city business licenses of Employers in violation of this chapter are subject to suspension or revocation in accordance with section 6.01.350 of this code. D. Remedies for Violations. In addition to the remedies listed above in this section, remedies available for violations of this chapter include, but are not limited to, the following: Award of any back wages unlawfully withheld, and payment of an additional sum as a civil penalty in the amount of fifty dollars ($50.00) for each Employee whose rights under this chapter were violated for each day or portion thereof that the violation occurred or continued. Petaluma Minimum Wage Ordinance Ordinance N.C.S. E Attachment 1 2. Award of interest on all due and unpaid wages at the legal rate of interest of ten (10) percent per annum; or, if award of interest at the rate of ten (10) percent per annum is not legally permitted, award of interest at the maximum legally- pennitted rate up to but not exceeding ten (10) percent per annum. Interest shall accrue from the date that the wages were due and payable as provided in Part 1 of Division 2 of the California Labor Code (commencing with Section 200) up to and including the date immediately before the date when the wages were paid in full. Injunctive relief that is within the jurisdiction of the adjudicatory authority presiding over the proceedings. 4. For Employees aggrieved by tennination, demotion other adverse action in retaliation for exercise of Employees' rights pursuant to this chapter in violation of section 8.35.060, in addition to the remedies above, reinstatement and return of the Employee to the status quo ante, and an award of treble the wages lost due to the violation. E. No Cause of Action Against the City. To the maximum extent pennitted by law, nothing in this chapter may be construed to create a cause of action against the city, or a basis for seeking an award of attorney's fees against the city pursuant to the private attorney general's statute in California Code of Civil Procedure Section 1021.5 or on any other basis arising from or related to an Employer's alleged violation of the requirements of this chapter, and/or based on or related to the city's prosecution or enforcement or alleged failure to prosecute or enforce such alleged violation, and/or based on or related to the city's implementation or alleged failure to implement the requirements of this chapter. Section 8.35.080 Notice and Records Retention. A. Initial Notice of Employee Rights. Within one (1) week of this chapter taking effect, each Employer shall give written notice to each Employee of Employees' rights pursuant to this chapter. Each Employer shall give the same notice to each new Employee within one (1) week of the start of each new Employee's employment. The notice pursuant to this paragraph shall be in each language spoken by more than ten (10) percent of an Employer's Employees and shall be posted in a conspicuous place at each workplace or job site where any Employee of that Employer works. The city may provide Employers sample notices pursuant to this paragraph and Employers' use of such sample notices in accordance with this paragraph will satisfy the requirements of this paragraph. Petaluma Minimum Wage Ordinance Ordinance N.C.S. IN Attachment 1 B. Annual Notice of Employee Rights. Prior to January 1 of each year, the city may publish and make available to Employers a notice suitable for posting in the workplace informing Employees of the applicable minimum wage rates in effect pursuant to this chapter beginning January 1 of that year and of Employees' rights pursuant to this chapter. Any notice pursuant to this paragraph will be in English, Spanish and such other languages as provided in any administrative regulations promulgated pursuant to section 8.35.130 of this chapter. Each Employer shall post any notice pursuant to this paragraph in a conspicuous place at each workplace or job site where any Employee of that Employer works. C. Initial and Annual Notice Regarding Employee Inquiries. Each Employer shall provide each Employee, upon hiring and annually, written notice including the Employer's legal name, address, telephone number, and the name and contact information for an Employer representative responsible for inquiries concerning compliance with this chapter. D. Employer Records Retention. Each Employer shall maintain a record of each Employee's name, his or her hours worked, and pay rate. Such records shall be retained for at least a three-year period. Each Employer shall provide to each Employee or each Employee's representative a copy of the records required to be maintained concerning that Employee pursuant to this paragraph upon request during normal business hours. Failure of an Employer to maintain and provide records in accordance with this paragraphs shall raise a rebuttable presumption that an Employee's account of how much he or she was paid in any proceeding to enforce the provisions of this Chapter is accurate, which presumption may be rebutted by competent evidence to the contrary. E. Remedy for Violations of this Section. Employers that violate the requirements of this section shall be subject to administrative citation in accordance with section 8.35.070, paragraph (b)(3) of this chapter, and chapter 1.16 of this code. F. City Failure to Give Notice. Failure by the City to provide notice as permitted pursuant to this section shall not create a basis of liability of the City for any reason or purpose, and shall not be a defense to any Employer's alleged failure to pay minimum wages or to otherwise fully comply with the requirements of this chapter. Section 8.35.090 No City Duty Created. The purpose of this chapter is to establish minimum wages Employers must pay Employees for hours Employees work in the city, and to establish remedies that Employees and their representatives and the city may seek for alleged Employer violations of this chapter. This chapter is not intended to create, and may not be construed so as to create, any city duty to implement or enforce the requirements of this chapter. Petaluma Minimum Wage Ordinance Ordinance N.C.S. M Attachment 1 Section 8.35.100 No Limit on Employees' Other Employment Relief. The provisions of this chapter shall not be construed so as to limit an Employee's rights to obtain any other relief to which he or she may be entitled at law or in equity concerning that Employee's employment. Section 8.35.110 No Derogation of Other Wage or Employment Rights, Including Rights under the City's Living Wage Chapter. The minimum wage requirements of this chapter are not intended to preempt and may not be construed to preempt any additional or more generous wage or other employment requirements that apply by regulation, contract or otherwise to Employees working in the city. In particular, this chapter does not amend or otherwise affect the city's living wage requirements codified in Chapter 8.36 of this code. Employers that are subject to this chapter and that are also subject Chapter 8.36 must to the fullest possible extent comply with all applicable requirements in both Chapters 8.35 and 8.36 of this code. Nothing in this chapter excuses Employers' full compliance with all applicable requirements of the city's living wage requirements in Chapter 8.36 of this code, and nothing in Chapter 8.36 excuses full compliance with all applicable minimum wage requirements of this chapter. To the extent wages Employers owe Employees under this chapter and under Chapter 8.36 of this code differ, Employers must pay Employees the higher applicable wage. Section 8.35.120 Savings. This chapter shall be construed and applied so as to harmonize to the maximum, legally permissible extent with all applicable federal, state and local law. To the maximum, legally permissible extent, nothing in this chapter shall be construed or applied so as to create a prohibited conflict with any federal, state or local laws or regulations. Section 8.35.130 Administrative Regulations. The city manager is hereby authorized to promulgate regulations consistent with the provisions of this chapter for the implementation and enforcement of this chapter, and any regulations so promulgated by the city manager hereunder shall have the force and effect of law. Employers and Employees and other parties may rely on such regulations to determine their rights and responsibilities under this chapter. Section 4. Severability. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this ordinance are severable. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more Petaluma Minimum Wage Ordinance Ordinance N.C.S. Attachment 1 sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases may be held unconstitutional, invalid, or unenforceable. Section 5. Effective Date/Referendum Period. This ordinance shall become effective thirty (30) days after the date of its adoption by the Petaluma City Council. Section 6. Posting/Publishing of Notice. The City Clerk is hereby directed to post and/or publish this ordinance or a synopsis of it for the period and in the manner required by the City Charter. The City Clerk is also hereby directed to file a Notice of Exemption concerning this ordinance with the Office of the Sonoma County Clerk in accordance with Section 15062 of the CEQA Guidelines INTRODUCED and ordered posted/published this day of , 2019. ADOPTED this day of , 2019 by the following vote: Petaluma Minimum Wage Ordinance Ordinance N.C.S. 13 Attachment 2 Ordinance -N.C.S AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PETALUMA ESTABLISHING MINUMUM WAGES TO BE PAID BY EMPLOYERS IN THE CITY OF PETALUMA WHEREAS, the Fair Labor Standards Act of 1938, 29 U.S.C. Section 201 and following, ("FLSA") establishes a national minimum wage, which was last set effective July 25, 2009 at $7.25 per hour, which amount remains the federal minimum wage currently in effect pursuant to Section 206 of the FLSA; and WHEREAS, Section 218 of the FLSA expressly permits state and municipal governments to set minimum wages that are higher than the federal minimum wage; and WHEREAS, California has exercised the authority granted by Section 218 of the FLSA and adopted a state-wide minimum wage, currently set at $12 per hour for employers with 26 or more employees, and $11 per hour for employers with 25 or fewer employees, pursuant to Labor Code Section 1182.12; and WHEREAS, Labor Code Section 1182.12 provides that California minimum wages for employers with 26 or more employees will increase to $13 per hour on January 1, 2020, to $14 per hour on January 1, 2021, and to $15 per hour on January 2022, and that minimum wages for employers with 25 or fewer employees will increase to $12 per hour on January 12020, to $13 per hour on January 1, 2021; to $14 per hour on January 1, 2022, and to $15 per hour on January 1, 2023; and WHEREAS, Labor Code Section 1182.12 provides that beginning in August, 2023, and each August thereafter, the Director of Finance shall calculate an adjusted minimum wage increasing the minimum wage established in Section 1182.12 by 3.5 percent or the change in CPI as specified, whichever adjustment is less, rounded up to the nearest ten cents, to take effect the following January 1; except that, if the change in CPI is negative, the minimum wage is to remain unchanged the following January; and WHEREAS, Labor Code Section 1205(b) expressly permits local agencies to exercise their police power to establish local minimum wages that are higher than the state minimum wage; and WHEREAS, Labor Code Section 1197 provides that the minimum wage fixed by the Labor Commission or by any applicable state or local law is the minimum wage to be paid to employees, and the payment of a lower wage than the applicable minimum wage is unlawful; and Petaluma Minimum Wage Ordinance Ordinance N.C.S. 14 Attachment 2 WHEREAS, North Bay Jobs with Justice, the North Bay Central Labor Council, and the Napa-Solano Central Labor Council commissioned a 2018 report from the Center for Labor Research and Education, University of California, Berkeley, entitled "Estimated Impact of a Proposed Minimum Wage Law for the North Bay" ("Report") written by Ian Perry, Garret Strain and Ken Jacobs, to analyze the prospective impact of a proposed $15 per hour citywide minimum wage by 2020 for the cities of Novato, Petaluma, Sonoma, Sebastopol and Santa Rosa ("Proposed Minimum Wage"); and WHEREAS, the Report finds that of the minimum wage workers that would be affected by the Proposed Minimum Wage, 6.4 percent would be teenagers; more than 50% would be thirty years old or older, 60 percent would be of black, Latinx, Asian, and other non-white ethnicity; 50 percent would have some college experience; 15 percent would hold a bachelor's or higher degree; and that the affected workers' median annual earnings are only half that of the overall North Bay workforce, and make up half of their family income; and WHEREAS, according to the Report, the industries employing most of the workers that would be affected by the Proposed Minimum Wage are the retail industry, employing 17.1 percent of the workers, food services, employing 12.9 percent of the workers, and health services, employing 8.4 percent of the workers; and WHEREAS, the Report notes that minimum wage laws have large, positive effects on workers' pay and their families' living standards, citing studies indicating that family income is a determinant of health, and that improving incomes results in positive effects on psychological wellbeing, children's birthweights and infant mortality, and that income affects access to safe housing, a healthy environment, healthy food, and healthcare services; and WHEREAS, the Report concludes that minimum wage increases within the range of the Proposed Minimum Wage lead to net gains in worker earnings, have no negative effect on employment and can reduce workplace turnover and increase job stability; and WHEREAS, the City Council in enacting this ordinance is exercising its police power as a California charter city pursuant to Article XI, sections 5 and 7 of the California Constitution, pursuant to the Petaluma City Charter, and the authority for local minimum wage regulations granted in 29 U.S:C. Section 218, and California Labor Code Sections 1197 and 1205(b); and WHEREAS, this ordinance is not a project which has the potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment as defined in the California Environmental Quality Act, Public Resources Code Section 21000 and following ("CEQA"), pursuant to Section 15378 of the CEQA Guidelines, 14 CCR Section 15000 and following, because this ordinance merely enacts minimum wages that must be paid to employees in the City of Petaluma, and therefore the requirements of CEQA do not apply to this ordinance; and Petaluma Minimum Wage Ordinance Ordinance N.C.S. 15 Attachment 2 WHEREAS, if this ordinance is nonetheless found to be a project as defined in CEQA, this ordinance is exempt from the requirements of CEQA pursuant to the common sense exception that CEQA only applies to projects which have the potential for causing a significant effect on the environment, and where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA, in accordance with Section 15061(b)(3) of the CEQA Guidelines, because this ordinance merely enacts minimum wages that must be paid to employees in the City of Petaluma; NOW, THEREFORE, be it ordained by the Council of the City of Petaluma as follows: Section 1. Recitals Made Findings. The above recitals are hereby declared to be true and correct and incorporated into this ordinance as findings of the City Council. Section 2. CEQA Does Not Apply or Ordinance is Exempt. This ordinance is either not a project subject to the requirements of CEQA in accordance with Section 1537 of the CEQA Guidelines, or, in the alternative, this ordinance is exempt from the requirements of CEQA in accordance with Section 15061(b)(3) of the CEQA Guidelines because this ordinance merely enacts minimum wages that must be paid to employees in the City of Petaluma. Section 3. New Chapter 8.35 Established. A new Chapter 8.35 entitled "Minimum Wage" is hereby added to the Petaluma Municipal Code, to read as follows: Section 8.35.010 Definitions. As used in this chapter, the following capitalized terms are defined as follows: "Employee" means any Person who A. In a particular week performs at least two (2) hours within the city for an Employer, and B. Qualifies as an employee entitled to payment of a minimum wage from any employer in accordance with Sections 1182.12 and 1197 of the California Labor Code and any successor statutes as in effect on and after the effective date of this chapter and as from time to time amended. "Employer" means any Person, including corporate officers or executives, who directly or indirectly (including through the services of a temporary service or staffing agency or similar entity), employs or exercises control over the wages, hours, or working conditions of any Employee. Petaluma Minimum Wage Ordinance Ordinance N.C.S. 16 Attachment 2 "Learners" means Employees who are at least fourteen (14) years of age but not more than seventeen (17) years of age during their first one -hundred -and -sixty (160 ) hours of employment in occupations in which they have no previous similar or related experience. "Person" means an individual, corporation, partnership, limited partnership, limited liability partnership, limited liability company, business trust, estate, trust, association, joint venture, agency, instrumentality, or any other legal or commercial entity, whether domestic or foreign. "Person" includes the City. Section 8.35.020 Covered Employee Hours. Employees will be entitled to receive the minimum wages specified in this chapter for hours of work within the city, excluding time spent in the city solely for the purposes of travelling through the city from a point of origin outside the city to a destination outside the city with no employment-related stops in the city other than for refueling, or for an Employee's personal meals or errands. Section 8.35.030 Minimum Wages. A. Effective January 1, 2020, Employers who employ twenty-six (26) or more Employees shall pay Employees not less than $15.00 per hour. B. Effective January 1, 2020, Employers who employ twenty-five (25) or fewer Employees shall pay Employees not less than $14.00 per hour. C. Effective January 1, 2021, Employers who employ twenty-five (25) or fewer Employees shall pay Employees not less than $15.00 per hour. D. Beginning January 1, 20204-, and annually thereafter, the minimum wage all Employers must pay to Employees (except as otherwise provided in this section), regardless of the number of Employees each Employer employs, will be adjusted based on the Consumer Price Index for Urban Wage Earners and Clerical Workers ("CPIW") for the San Francisco -Oakland -San Jose Consolidated Metropolitan Statistical Area (or its successor index), which is published by the U.S. Department of Labor. Beginning January 1, 20204-, sometime in October of each year, the City will publicize the CPIW or successor index for that year and the adjusted minimum wage that will apply for all Employers pursuant to this section beginning January 1 of the following year. E. Learners shall be paid not less than eighty-five (85) percent of the minimum wage required in accordance with this section rounded to the nearest $.05. F. Em- l>l yei:s that r at least $1.50 ,. r hatir- tow ,,d crz Employee medieal benefits p! whia'.1 allows Ernploy2es to r e Emp o<rcr eon zpens e fior.Y lieense Petaluma Minimum Wage Ordinance Ordinance N.C.S. 17 OWN= 1"IMIM physician shall pay Eraployccs nat-leus than the, applicable mini-amm-wage specillwd ift-this-welivn less 1.501�e� lir (1, F,.' - In calculating the number of Employees an Employer employs for purposes of determining the applicable minimum wage pursuant to this section, the number of Employees shall include Employees employed by an Employer it the c"Ity, including all Employees working for the Employer on a full-time, part-time, or temporary basis. 1--T.-G. Employers may not deduct any amount from wages due Employees pursuant to this section based on any tip or gratuity, or credit any amount of any tip or gratuity against or as any part of the minimum wages due Employees pursuant to this section. Bona fide collective bargaining agreements may waive all or any portion of the requirements of this chapter, but only if the waiver is explicitly set forth in the agreement in clear and unambiguous terms. Unilateral implementation of the terms and conditions of employment by either party to a collective bargaining agreement may not operate as a waiver of any requirements of this chapter. Except for waivers in accordance with section 8.35.040, waiver of any requirement of this chapter by any Employee shall be deemed contrary to public policy, void and unenforceable. Any attempt by an Employer to cause Employees to waive any of their rights under this chapter shall constitute a violation of this chapter subject to enforcement in accordance with section 8.35.070. Section 8.35.060 Retaliatory Actions Prohibited. Any of following actions taken by an Employer concerning an Employee may be deemed retaliatory and a violation of this chapter subject enforcement in accordance with section 8.35.070: A. Discharging, reducing the compensation of, taking adverse action against or otherwise discriminating against any Employee for opposing any practice proscribed by this chapter, for participating in proceedings related to this chapter, for seeking to enforce his or her rights under this chapter by any lawful means, or for otherwise asserting rights under this chapter. B. Funding minimum wages required by this chapter by reducing wages paid to any Employee or by increasing charges to Employees for parking, meals, uniforms or other items. Petaluma Minimum Wage Ordinance Ordinance N.C.S. N Attachment 2 An Employer's taking adverse action against an Employee within one -hundred -twenty days of the Employee's exercise of rights under this chapter shall raise a rebuttable presumption that the adverse action is retaliatory and in violation of this chapter. To rebut the presumption, Employers must establish that the adverse action occurred for legitimate business reasons. A. Statute of Limitations. The city and any person avaieved by a violation of this chapter (or the a2p-rieved verson's representative) may seek remedies pursuant to this section for a period of three (33) years from the date the claim is filed with the city or the court. ,k.R,,-- Private Right of Action. The city and any Person aggrieved by a violation of this chapter (or the aggrieved Person's representative), may bring a civil action against any Employer for violation(s) of this chapter in a court of competent jurisdiction to enforce the provisions of this chapter. Successful plaintiffs in actions pursuant to this paragraph shall be entitled to such remedies specified in paragraph E of this section as the court may order to enforce this chapter, and to an award of reasonable attorney's fees, witness fees and costs of litigation. &C. --.-Administrative Enforcement. Reporting Violations. An Employee, an Employee's representative, or any other Person may report any suspected violation of this chapter to the city. The city will keep the identity of the Person reporting the violation confidential to the extent permitted by law, except as necessary to enforce or permit enforcement of this chapter or other applicable law. 2. Informal Resolution. The city may in the city's sole discretion seek informal resolution of complaints of violations of this chapter. Violations a Nuisance. Violations of this chapter are hereby declared to be public nuisances in accordance with Chapter 1.10 of this code, and subject to enforcement in accordance with Chapter 1. 10, Code Enforcement Generally, Chapter 1. 13, Violations Enforced by Civil Action, Chapter 1.14 , Administrative Enforcement, and Chapter 1. 16, Administrative Citations, of this code. 4. Business License Revocation. The city business licenses of Employers in violation of this chapter are subject to suspension or revocation in accordance with section 6.01.350 of this code. Petaluma Minimum Wage Ordinance Ordinance N.C.S. 19 1). Remedies for Violations. In addition to the remedies listed above in this section, remedies available for violations of this chapter include, but are not limited to, the following: 1. Award of any back wages unlawfully withheld, and payment of an additional sum as a civil penalty in the amount of fifty dollars ($50.00) for each Employee whose rights under this chapter were violated for each day or portion thereof that the violation occurred or continued. 2. Award of interest on all due and unpaid wages at the legal rate of interest of ten (10) percent per annum; or, if award of interest at the rate of ten (10) percent per annum is not legally permitted, award of interest at the maximum legally - permitted rate up to but not exceeding ten (10) percent per annum. Interest shall accrue from the date that the wages were due and payable as provided in Part I of Division 2 of the California Labor Code (commencing with Section 200) up to and including the date immediately before the date when the wages were paid in full. 3. Injunctive relief that is within the jurisdiction of the adjudicatory authority presiding over the proceedings. 4. For Employees aggrieved by termination, demotion other adverse action in retaliation for exercise of Employees' rights pursuant to this chapter in violation of section 8.35.060, in addition to the remedies above, reinstatement and return of the Employee to the status quo ante, and an award of treble the wages lost due to the violation. H. No Cause of Action Against the City. To the maximum extent permitted by law, nothing in this chapter may be construed to create a cause of action against the city, or a basis for seeking. an award of attorney's fees against the city pursuant to the private attorney general's statute in California Code of Civil Procedure Section 1021.5 or on any other basis arising from or related to an Employer's alleged violation of the requirements of this chapter, and/or based on or related to the city's prosecution or enforcement or alleged failure to prosecute or enforce such alleged violation, and/or based on or related to the city's implementation or alleged failure to implement the requirements of this chapter. A. Initial Notice of Employee Rights. Within one (1) week of this chapter taking effect, each Employer shall give written notice to each Employee of Employees' rights pursuant to this chapter. Each Employer shall give the same notice to each new Employee within one (1) week of the start of each new Employee's employment. Petaluma Minimum Wage Ordinance Ordinance N.C.S. W11 Attachment 2 The notice pursuant to this paragraph shall be in each language spoken by more than ten (10) percent of an Employer's Employees and shall be posted in a conspicuous place at each workplace or job site where any Employee of that Employer works. The city may provide Employers sample notices pursuant to this paragraph and Employers' use of such sample notices in accordance with this paragraph will satisfy the requirements of this paragraph. B. Annual Notice of Employee Rights. Prior to January 1 of each year, the city may publish and make available to Employers a notice suitable for posting in the workplace informing Employees of the applicable minimum wage rates in effect pursuant to this chapter beginning January 1 of that year and of Employees' rights pursuant to this chapter. Any notice pursuant to this paragraph will be in English, Spanish and such other languages as provided in any administrative regulations promulgated pursuant to section 8.35.130 of this chapter. Each Employer shall post any notice pursuant to this paragraph in a conspicuous place at each workplace or job site where any Employee of that Employer works. C. Initial and Annual Notice Regarding Employee Inquiries. Each Employer shall provide each Employee, upon hiring and annually, written notice including the Employer's legal name, address, telephone number, and the name and contact information for an Employer representative responsible for inquiries concerning compliance with this chapter. D. Employer Records Retention. Each Employer shall maintain a record of each Employee's name, his or her hours worked, and pay rate. Such records shall be retained for at least a three-year period. Each Employer shall provide to each Employee or each Employee's representative a copy of the records required to be maintained concerning that Employee pursuant to this paragraph upon request during normal business hours. Failure of an Employer to maintain and provide records in accordance with this paragraphs shall raise a rebuttable presumption that an Employee's account of how much he or she was paid in any proceeding to enforce the provisions of this Chapter is accurate, which presumption may be rebutted by competent evidence to the contrary. E. Remedy for Violations of this Section. Employers that violate the requirements of this section shall be subject to administrative citation in accordance with section 8.35.070, paragraph (b)(3) of this chapter, and chapter 1.16 of this code. F. City Failure to Give Notice. Failure by the City to provide notice as permitted pursuant to this section shall not create a basis of liability of the City for any reason or purpose, and shall not be a defense to any Employer's alleged failure to pay minimum wages or to otherwise fully comply with the requirements of this chapter. Section 8.35.090 No City Duty Created. Petaluma Minimum Wage Ordinance Ordinance N.C.S. 21 Attachment 2 The purpose of this chapter is to establish minimum wages Employers must pay Employees for hours Employees work in the city, and to establish remedies that Employees and their representatives and the city may seek for alleged Employer violations of this chapter. This chapter is not intended to create, and may not be construed so as to create, any city duty to implement or enforce the requirements of this chapter. Section 8.35.100 No Limit on Employees' Other Employment Relief. The provisions of this chapter shall not be construed so as to limit an Employee's rights to obtain any other relief to which he or she may be entitled at law or in equity concerning that Employee's employment. Section 8.35.110 No Derogation of Other Wage or Employment Rights, Including Rights under the City's Living Wage Chapter. The minimum wage requirements of this chapter are not intended to preempt and may not be construed to preempt any additional or more generous wage or other employment requirements that apply by regulation, contract or otherwise to Employees working in the city. In particular, this chapter does not amend or otherwise affect the city's living wage requirements codified in Chapter 8.36 of this code. Employers that are subject to this chapter and that are also subject Chapter 8.36 must to the fullest possible extent comply with all applicable requirements in both Chapters 8.35 and 8.36 of this code. Nothing in this chapter excuses Employers' full compliance with all applicable requirements of the city's living wage requirements in Chapter 8.36 of this code, and nothing in Chapter 8.36 excuses full compliance with all applicable minimum wage requirements of this chapter. To the extent wages Employers owe Employees under this chapter and under Chapter 8.36 of this code differ, Employers must pay Employees the higher applicable wage. Section 8.35.120 Savings. This chapter shall be construed and applied so as to harmonize to the maximum, legally permissible extent with all applicable federal, state and local law. To the maximum, legally permissible extent, nothing in this chapter shall be construed or applied so as to create a prohibited conflict with any federal, state or local laws or regulations. Section 8.35.130 Administrative Regulations. The city manager is hereby authorized to promulgate regulations consistent with the provisions of this chapter for the implementation and enforcement of this chapter, and any regulations so promulgated by the city manager hereunder shall have the force and effect of law. Employers and Employees and other parties may rely on such regulations to determine their rights and responsibilities under this chapter. Petaluma Minimum Wage Ordinance Ordinance N.C.S. 22 Attachment 2 Section 4. Severability. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance, including the application of such part or provision to other persons or circumstances shall not be affected thereby and shall continue in full force and effect. To this end, provisions of this ordinance are severable. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause, or phrase hereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, or phrases may be held unconstitutional, invalid, or unenforceable. Section 5. Effective Date/Referendum Period. This ordinance shall become effective thirty (3 0) days after the date of its adoption by the Petaluma City Council. Section 6. Posting/Publishing of Notice. The City Clerk is hereby directed to post and/or publish this ordinance or a synopsis of it for the period and in the manner required by the City Charter. The City Clerk is also hereby directed to file a Notice of Exemption concerning this ordinance with the Office of the Sonoma County Clerk in accordance with Section 15062 of the CEQA Guidelines INTRODUCED and ordered posted/published this day of , 2019. ADOPTED this day of , 2019 by the following vote: Petaluma Minimum Wage Ordinance Ordinance N.C.S. 23