Santa Monica's minimum wage proposal will go before City Council on Sept. 29.
The proposed rules closely mirror rules established by the City of Los Angeles, however staff said there are a few Santa Monica specific issues to be debated Tuesday night.
"The draft Santa Monica ordinance matches the Los Angeles wage levels and schedule, and its exceptions for small businesses, nonprofit organizations, and youth learners," said the staff report. "It differs from the Los Angeles ordinance in areas where Los Angeles has not yet come to a decision, and where Council has provided specific direction: union supersession, service charges, and transitional jobs programs."
According to the staff report, matching the Los Angeles policy at a broad level will promote fairness, provide regional wage equality, decrease market distortions and facilitate implementation/compliance.
Santa Monica's proposal would phase in wage increases starting at $10.50 per hour on July 1, 2016 and reaching $15 per hour by July 1, 2020 for most businesses.
There are exemptions to the ordinance, similar to those in Los Angeles.
"Staff recommends providing for union supersession, which is consistent with the City's living wage and provides flexibility for employers of employees represented by a valid collective bargaining agreement," said the report.
While unions want their collective bargaining agreements exempt from the rules, other business owners have said such an exemption would put non-union businesses at a competitive disadvantage.
The council is also expected to discuss rules for service charges. Specifically, the City would require service charges be limited to covering employee costs, thereby prohibiting a service fee compensating for the minimum wage increase.
"In response to Council direction given on June 9, 2015, staff recommends language that requires service charges to be spent on employees providing the service," said the report.
Business would be free to raise prices but the rules limit the potential uses of the additional fees.
Staff said members of the local business community have asked for exemptions for seasonal workers, specifically youth. State laws already have some exemptions for young workers who are considered to be "in-training" but the local proposal may exempt workers by delaying implementation of the minimum wage for up to the first six months of employment.
While no group has formally opposed the minimum wage, local business organizations have voiced concern. According to the report, businesses that participated in several workshops on the issue acknowledged the need for a coordinated regional approach to the minimum wage, but expressed concern about treatment of tipped workers, timing and the magnitude of the increase.
"Other concerns included the ability to stay in business, concern for independent or smaller restaurants, and student seasonal workers," the report said.
Staff is also recommending returning to Council with further direction on paid leave and enforcement, pending more research and information.
An analysis of the Los Angeles proposal said many low-wage workers will benefit, business operating costs will not change significantly, economic growth will not be strongly affected, some industries will have a harder adjustment, small firms will be most impacted and nonprofit organizations will have specific challenges.
An evaluation of the Santa Monica rules concluded the impacts would be less severe in Santa Monica; tourism would be unlikely to suffer but local non-profits would be subject to the same concerns.
Santa Monica's proposal comes as several nearby cities are considering a minimum wage increase. Los Angeles County is expected to adopt its version of the wage increase soon. According to the report, 14 of the nearby 21 cities, including Beverly Hills, West Hollywood, Long Beach and Pasadena are considering similar increases.
If the first reading is approved by council on September 29, the ordinance will likely be formally adopted in October and take effect in 2016.
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