Voter Education

San Francisco Living Wage Laws and Other Issues Affecting Low-wage Workers.

  • 1. Raising the Minimum Compensation Ordinance to $15 per hour
    The Minimum Wage Ordinance requires that any employee who works at least two hours in a week for an employer within the boundaries of San Francisco be paid at least $13 per hour.

    The Living Wage laws (the Minimum Compensation Ordinance and Health Care Accountability Ordinance) require that businesses with a service contract with the City or property lease at the Airport pay workers at least $13.34 per hour, provide 12 paid days off per year and provide health care coverage. Businesses with other City-owned property leases must provide health care coverage as a condition of their lease. The MCO rate has historically been $1.75 to $2.00 higher than the minimum wage. The reasons are twofold. The City does not want to contract with employers that are paying poverty wages, which may lead their employees to rely on public benefits. And, higher-paid employees will provide better services to the City.

    While the wage rate of the Minimum Wage is set to increase to $14 per hour in 2017 and $15 per hour in 2018, the wage of the Minimum Compensation Ordinance will not rise as significantly. In fact, even though rates are adjusted each January 1 according to the rate of inflation, the Minimum Compensation Ordinance wage probably will be exceeded by the minimum wage in 2017, and definitely in 2018. Raising the wage rate in the Minimum Compensation Ordinance is therefore necessary in order that the MCO provision still governs. The City should expect that businesses that receive our tax dollars or use of airport property should pay a higher wage than the minimum wage. Since the Minimum Wage Ordinance does not apply to SFO airport, without a change to the MCO wage rate, by 2017, the minimum wage at the airport will be lower than the minimum wage in the City.

  • 2. Raising the wage rate in the Minimum Compensation Ordinance without a lower wage for tipped employees
    A lower wage for tipped employees should not be implemented because of its negative effects. It has been proven that the abolishment of the “tip credit” (a “subminimum wage” for workers who customarily and regularly receive tips) reduces the poverty rate among tipped workers. Furthermore, it is likely that it could benefit businesses not only by increasing productivity and cutting turnover, but also because workers who receive a higher wage have more money to spend in the local economy. A subminimum wage also encourages abuse and sexual harassment because tipped workers have to please clients since their livelihood depends on their tips. This is particularly important for women in the restaurant industry, who are disproportionately represented in occupations where tips make up a large share of earnings, namely table attendants and bartenders.
  • 3. Providing to city-funded non-profit workers and home care workers the same wage rate and cost-of-living increases as workers at for-profit city service contractors and fund non-profits in the City budget for the cost-of-living adjustment to the Minimum Compensation Ordinance rate
    Currently, the wage rate of the Minimum Compensation Ordinance for workers at for-profit city service contractors is at least $13.34 per hour whereas it is only $13 per hour for non-profit workers.

    The for-profit wage rate change is automatically increased each January 1 based on the rate of inflation, as determined by the Bay Area Consumer Price Index (CPI), in order to provide cost of living increases.

    The rate for non-profits is increased if the mayor puts in additional funding in his annual proposed budget. When submitting the annual proposed budget to the Board of Supervisors for any upcoming fiscal year in which there is a projected shortfall, the Mayor must issue a letter to the Board of Supervisors whether the proposed budget contains sufficient funding to increase the non-profit minimum rate and explaining why there was not sufficient funds projected to fund the increase. The Board then holds a public hearing before adoption of the budget to consider if alternative funding sources are available or if they can transfer money from elsewhere in the budget to pay for the wage increase. If the City does not pass-through the additional funding, the non-profit can defer the minimum rate increase until they get it.
    The last wage increase to the minimum rate for non-profit workers under the Minimum Compensation Ordinance was Fiscal Year 2006-2007. The minimum compensation for non-profit workers only was increased when the municipal minimum wage was increased.

  • 4. Expanding the Minimum Compensation Ordinance to include workers on other City property besides the Airport, without a lower wage for tipped employees
    Currently, the Minimum Compensation Ordinance does not include workers on other City property besides the Airport, such as the Port, Fisherman’s Wharf, Pier 39, AT&T Park, Moscone Convention Center, Bill Graham Auditorium, Golden Gate Park, Park and Recreation lands, city-owned gold courses and city-owned buildings. Nevertheless, most of those City properties are prime locations. For example, the Fisherman’s Wharf is the first visitor destination in San Francisco, which means that the companies make a greater profit due to the large number of tourists during the year. However, the workers do not benefit from this situation because they are not eligible for the Minimum Compensation Ordinance wage rate. Therefore, for them, it is more difficult to be self-sufficient in a City where the cost-of-living is higher than ever.

    In order to give an opportunity to these workers to be treated like similarly situated workers on City property at the airport, the Minimum Compensation Ordinance should be expanded to all workers on the City properties mentioned above.

  • 5. Requiring that the Minimum Compensation Ordinance cover anyone who works on a city service contract rather than the current requirement of four hours per week working on a city service contract inside the City or 10 hours per week working on a city service contract outside of the City

    As it stands, the Minimum Compensation Ordinance covers employees who work on a city service contract a minimum of four hours per week in San Francisco or 10 hours per week outside the city limits. Because of this loophole, unscrupulous employers are spreading the city work among enough workers in order to be exempt from the MCO. Since they are not required to report such workers, employers can evade the law and pay them lower than MCO wages. Since the hour threshold is in the definitions part of the ordinance, companies do not even have to request a waiver or exemption from the Office of Labor Standards Enforcement. OLSE does not know how many companies are not paying the MCO wage by claiming their employees work less than the hour threshold under the ordinance.

    Thus, in order to prevent the contractors from depriving the workers of their rights, it would be more efficient if the MCO states that it covers anyone who works on a city service contract at all for any length of time. If a worker is doing any work on a city service contract, that worker should be paid a living wage. The impact of the MCO would be expanded to more people in need and would improve the quality of life for these workers.

  • 6. Funding the CJP to provide community service jobs to 600 CalWORKS recipients and 250 County Adult Assistance Program participants
    Since the Community Jobs Initiative had been transformed to the Community Jobs Program in FY 2002, a substantial decrease in the program’s funding has taken place. In fact, the effective budget today is only 46 percent of what it was in 2002.

    Despite this, since 2002 the number of participants in the CJP has been relatively steady. The stark outlier to this trend was FY 2010 when CalWORKS participants were five times as many as the previous year, more than 500 participants. The reason for this radical expansion was the passage of the American Recovery and Reinvestment Act (ARRA) in 2009, which provided a one-year increase to TANF benefits throughout the country. The Act provided $5 billion for payment into the TANF Emergency Contingency Fund, which counties could then use for subsidized employment programs. Participation numbers then waned in FY 2011 when ARRA funds were no longer available. But it showed that a lot of welfare recipients are interested in this program when they have the opportunity to be a part of it. Funding is available but it is a matter of making this program effective and then prioritizing it in funding over programs that are less effective. That is why we are calling for improving…and expanding the Community Jobs Program.

    Increasing the number of CJP entrants is needed. A total of 850 participants would give the program the figure to accurately measure the true effectiveness of the program, as well as giving opportunities for welfare recipients to transition into self-sufficiency. The 850 participants would be made up of 600 CalWORKs beneficiaries, and 250 CAAP participants.

  • 7. Extending the time limit in the CJP from six months to one year so that participants meet the minimum requirements of related experience for many entry-level City jobs
    Currently, the time limit of six months in the CJP is not enough to give welfare-to-work program participants the work experience and the training required to compete for a civil service job. Many entry-level city jobs require one-year of related experience. The goal of the program should be that participants would meet the “minimum qualifications,” the requirements, of entry-level civil service positions. As it stands, CJP participants are completing the program with less than half of the necessary experience they need for qualifying for entry-level city jobs.

    Extending the time limit in the CJP to one year would better help participants achieve unsubsidized employment. Extending the time limit to one year is necessary to improve the chances of a successful transition to long-term employment. A person cannot learn all the needed skills in a mere six months. A longer period of time also helps stabilize the financial situation of the participants so that they have some constancy in their daily life, and are in a more relaxed and confident mental and emotional state in the hiring process seeking long-term employment.

  • 8. Having the Department of Human Resources treat the CJP as a training ground for its own hiring pool, including matching the job descriptions of jobs in the CJP to the minimum qualifications for entry-level City jobs and fast tracking CJP graduates into available entry-level City jobs, with agreement of appropriate unions
    Historically, many welfare-to-work program participants performed municipal work, but have been denied the opportunity to qualify for available entry-level civil service jobs, even when those jobs are analogous to the work that they did. The CJP was originally intended as an on-the-job training program in order to meet requirements for entry-level city jobs, but no effective effort was made to match job descriptions on the program placements and the minimum related experience required for City jobs. The intended original goal of the program giving welfare recipients the work experience and training needed to compete for city jobs, as well as non-public-sector jobs, cannot be achieved because there is not a recognized connection between the program training and targeted city jobs.

    The Department of Human Resources needs to work with the Human Service Agency to match the experience in non-public-sector community-service jobs with the minimum qualifications of entry-level city jobs, so that the CJP would be a pipeline to available city jobs. Tailoring the CJP jobs to the minimum qualifications for civil service employment obviously would not guarantee any CJP participant a city job, but it would make CJP participants eligible to apply for city jobs and thus open up opportunities for living wage employment that have previously been unavailable to most welfare recipients.

  • 9. Extending health benefits under the Health Care Accountability Ordinance to dependents, spouses and domestic partners of employees, and providing funding to non-profit service contractors to provide family health care coverage
    Currently, the Health Care Accountability Ordinance applies to City contractors and subcontractors and tenants and subtenants on City property, such as those at the San Francisco International Airport and the Port of San Francisco. It requires employers to offer health plan benefits to their covered employees, to make payments to the City for use by the Department of Public Health, or, under limited circumstances, to make payments directly to their covered employees. Under the minimum standards for insurance coverage under the ordinance, workers don’t have to pay a monthly premium. However, the ordinance does not take into account the health care needs of the employee’s family, which tend to squeeze even more from their income.

    Thus, in order that workers are self-sufficient and able to sustain their family, the Health Care Accountability Ordinance should be extended to dependents, spouses and domestic partners of employees. Moreover, this extension has to be done in a way that it does not change the current standard that a worker does not pay a monthly premium for individual coverage.

    For-profit businesses contracting with the City are able to afford the additional health care costs from the lucrative profits they are making from the City’s tax dollars. However, non-profit service contractors need more funding in order to provide family health care coverage. Once again, workers in non-profit organizations should benefit at the same level as the workers at for-profit service contractors from the Health Care Accountability Ordinance. Therefore, the City should fund a pass-through of increased costs to non-profits.

  • 10. Providing a dedicated source of funding, such as from the annual business registration fee, to adequately fund the Office of Labor Standards Enforcement
    Currently, the Office of Labor Standards Enforcement is budgeted for 22.25 full time staff positions, of which 16 are filled. In comparison, the Health Department has 58 health inspectors for all covered employers, and is budgeted for 76. OLSE compliance officers say budget constraints limit them to investigating businesses only when their workers file claims, whereas they should be verifying if all businesses respect San Francisco’s wage and benefit laws. Moreover, because of understaffing, the compliance officers of the Minimum Wage Ordinance and Sick Leave Ordinance are only completing 68 cases per year. Thus, the OLSE needs more funding in order to improve its efficiency especially by expanding its staff. According to a former employee, the total staff would be ideally 26 supervisors, 55 compliance officers, 13 clerical and an analyst. Adequate staffing for the office would require around $16.6 million, whereas the office’s current budget is $3.52 million, a decrease from $3.7 million in 2014/2015.

    An increase in the annual business registration fee could be a dedicated source of funding for OLSE. The annual business registration fee is from $25 to $500 depending on the size of the business. The increased fees could be scaled to be negligible for small businesses and weighted more heavily on large businesses that can more easily afford it. OLSE having a dedicated source of funding would free up money in the City’s General Fund.


Voter Guide on San Francisco Living Wage Laws and Other Issues Affecting Low-wage Workers.