More than 20 communities
in the state have passed living wage ordinances, including some of the largest—
to ensure that a worker receives the amount of compensation necessary for him
or her to maintain a specified standard of living. Recently a
appeals court revived the debate about living wages when it upheld a
controversial law mandating that hotel workers around
paid a living wage.
Wage Ordinance Enacted,
Repealed
In November 2006, the
Los Angeles City Council adopted the Hotel Worker Living Wage Ordinance, which
set wage standards that exceeded the state’s minimum wage requirements for
certain hotel workers employed within the Gateway to Los Angeles Property Business
Improvement District (PBID), which abuts LAX. Under the wage ordinance, hotels
within the PBID with 50 or more guest rooms had to pay at least $9.39 per hour
to workers who received health benefits and at least $10.64 per hour to workers
who did not. The state minimum wage at the time was $6.75 per hour.
Several hotel operators
within the PBID, individual taxpayers, and other entities, including the Los
Angeles Chamber of Commerce, opposed the measure, arguing that although the
ordinance did not have a far-reaching scope, it most likely would lead to
legislation that would extend the living wage to other businesses. The city
clerk certified a referendum petition submitted by the wage ordinance’s
opponents, and the city council had to either repeal the ordinance or allow the
public to vote on it. Amid pressure from the hotel owners and community leaders
to overturn the wage ordinance, the city council repealed it in January 2007.
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Zone Ordinance Sets Wage
Requirements
The city council then
met with the wage ordinance’s opponents and other interested parties to create
a new measure that would resolve the opposition to such a law. Thereafter, in
February 2007, the council approved the Airport Hospitality Enhancement Zone
Ordinance, which restricted the ordinance to a dozen hotels and provided new
hotels with economic incentives, including $1 million for street improvements
and a $50,000 marketing budget the city would use to explore ways to attract new
businesses to the area. Further, under the zone ordinance, the city would
create a training program for hotel and restaurant workers, investigate ways to
cut business taxes, and study the possibility of building a convention center
and remote hotel check-in facilities.
The zone ordinance set
the same living wage requirements for hotel workers that the wage ordinance
did, and mandated that a phased implementation be completed by Jan. 1, 2008.
Hotels that could show that meeting the requirement would be significantly
burdensome or that their workers had agreed, through a collective bargaining
agreement, to waive the right to a living wage could avoid paying the living
wage.
The group that had
opposed the wage ordinance also contested the zone ordinance, asking a trial
court to block its implementation. In May 2007, a trial court ruled that the
zone ordinance was too similar to the wage ordinance that the council had
repealed and granted the opponents’ request to prevent enforcement of the zone
ordinance.
Appeals Court OKs ‘Essentially Different’ Zone Ordinance
In late December 2007, a
California appeals court reversed the trial court’s ruling.1 The appeals court considered
whether the city council properly approved the zone ordinance after repealing
the wage ordinance, analyzing whether the language of the two laws was essentially
different and whether the city council enacted the zone ordinance in bad faith
(with the intent to evade the referendum sought by the measure’s opponents).
The appeals court upheld
the zone ordinance, finding that it was “essentially different” from the wage ordinance
because its substantive provisions addressed the economic burdens of the wage
requirements and mitigated their direct impact by mandating their
implementation in phases. Further, and perhaps most important, the zone
ordinance’s provisions directly addressed the opponents’ objections to the wage
ordinance by giving “guaranteed tangible economic benefits to the hotels that
[reduced] the financial burden of the wage requirements,” the court wrote.
Los Angeles Mayor
Antonio R. Villaraigosa praised the appeals court’s decision: “I have always
supported the alternative ordinance, which the Court upheld … because it
balances the right of workers to receive a living wage with the concerns and
needs of business.”
Decision’s Impact
Even though an original
living wage ordinance may not pass muster, a municipality may get a second chance
if it can demonstrate, as Los Angeles did here, that a new measure, while
providing the same or similar living wage relief, is “essentially different”
from the original version. Therefore, communities that have failed to pass
living wage ordinances may be more likely to try again.
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1 Rubalcava v.
Court of Appeals (Dist. 2) No. B199993, 2007