Our city has a living wage ordinance in effect. Our operations are outside the city limits, but part of our business involves providing services to city agencies. Even though those services represent only a portion of our business, the city wants us to pay the higher living wage rate to all our employees since we don’t track who does what job. Can that be right? — Bob W., HR Director in Oxnard
The HR Management & Compliance Report: How To Comply with California Wage & Hour Law, explains everything you need to know to stay in compliance with the state’s complex and ever-changing rules, laws, and regulations in this area. Coverage on bonuses, meal and rest breaks, overtime, alternative workweeks, final paychecks, and more.
Living wage ordinances require service contractors to pay a specified minimum wage to employees who work on certain city contracts, a wage that is higher than the minimum required by state and federal law. Currently, more than 120 cities and counties across the nation have living wage ordinances—including the California communities of Sacramento, Oakland, San Francisco, San Diego, Los Angeles, Santa Cruz, San Jose, Santa Clara, Oxnard, Ventura, West Hollywood, Hayward, and Marin.
A recent case out of Hayward helps clarify the living wage requirements. Cintas, a laundry company, as part of signing its contract with the city of Hayward, agreed to be bound by the city’s living wage ordinance that required hourly pay higher than the minimum wage. Cintas picked up soiled clothing in the city but processed it outside the city limits.
When faced with charges of violating the living wage ordinance, the company claimed the ordinance was too vague and the definition of laundry services was unclear, but the court wasn’t listening to any of that. When Cintas signed the contract with the city, the court said, it agreed to comply with the ordinance. It was Cintas’s job to clarify the meaning of the ordinance if the company thought it was unclear.
If Cintas had tracked which employees worked on the city’s laundry, it could have limited the number of employees subject to the living wage law, but the company did not track who worked on city jobs. Because of that failure, all of the workers in the plant were subject to the living wage ordinance. The upshot is that Cintas will pay 219 workers more than $1.4 million for the local living wage ordinance violations.
In your case, it would seem that you need a clear tracking system if you want to avoid paying all workers the higher rate. You should check with Oxnard city officials to see what type of tracking would satisfy their requirements.
For employers in general, to avoid getting into a million-dollar pickle like this one, take some time to evaluate your status with respect to local laws. If your organization is subject to living wage or other local ordinances, now would be a good time to sort out any confusion and be sure you are in compliance.
—CELA Editors