The document provides information for a City Council study session on a proposed minimum wage and paid sick leave ordinance in Emeryville, California. It includes: an overview of existing wage policies; background on the draft ordinance; a summary of public comments; recommendations from an Economic Development Advisory Committee; additional analysis of issues like small business definitions, tipped employees, and medical benefit credits; potential exemptions or phased implementation; and details on paid sick leave requirements. The draft ordinance would set the initial minimum wage rate at the current living wage rate of $14.42 per hour effective July 1, 2015.

1. CITY OF EMERYVILLE
DRAFT MINIMUM WAGE
AND PAID SICK LEAVE
ORDINANCE
City of Emeryville City Council
Study Session
April 7, 2015
1

2. Purpose
• Consider written and verbal comment on a
proposed draft ordinance establishing a citywide
minimum wage and paid sick leave requirements
• Consider additional analysis on elements of the
draft ordinance
• Provide direction on the implementation timeline
and final draft ordinance.
2

3. Overview
• Background
• Summary of written
public comment
• Recommendation from
Economic Development
Advisory Committee
• Additional Analysis
• Small business definition
• Tipped Employees
• Medical benefit credit
• Living Wage Ordnance and
Measure C
• “Regionally comparable”
wage rate
• Hospitality Service Charge
• Exemptions/Phasing
• Paid sick leave
• Fiscal Impact
• Questions/Direction
3

4. Existing Wage Policies in Emeryville
Measure C Living Wage
Passed November 2005 2006
Key Elements Hotel employees only:
Compensation
Workload
Protections in event of
management change
FT City Employees
City contractors
Financial assistance
recipients
Lessees/licensees/
concessionaires/
franchisees
Minimum Hourly Rate (Inclusive of Health Benefit)
Initial $9.00/hr $11.00/hr
CPI Adjustment March 1 July 1
Current $11.39/hr (3/1/15) $14.03/hr
4

5. Background
• Comprehensive wage policy (2006)
• Measure C & Living Wage
• Citywide minimum wage
• Defer consideration until Measure C and Living Wage in place
• August 2014 Update
• Administration of Measure C & Living Wage
• Recent activity in other jurisdictions
5

6. Background: January 2015
• Development of Draft Ordinance
• Staff recommendation
• $12.25 initial hourly wage (match Oakland), annual CPI increases
• Community outreach
• January 1, 2016 effective date
• Council Direction
• Based on Oakland initiative
• Initial minimum hourly wage rate same as Living Wage effective
July 1, 2015 (est. $14.42/hr.)
• July 1, 2015 effective date
• Separate community meetings/impact analysis not needed prior to
development of draft ordinance due to recent prior studies
6

7. Background: February 17, 2015
• Review of Draft Ordinance - Council Direction
• Phase-in for small businesses and 501(c)(3) organizations
• Paid sick leave parameters similar to Oakland
• No maximum use limit
• Expanded definition for use of sick leave, incl. designee
• Additional research on tip credit and small business definition
• Study session on April 7, 2015
• Draft ordinance revised and distributed
• Full draft ordinance mailed to all current business license
holders
• Posted on City website
• Info flyer mailed to all city addresses
7

8. Summary of Written Public Comment
• Comparable to minimum wage rates of adjacent
cities
• Include employer-paid health care benefits in
calculation of minimum wage
• Wage increases should be gradual and phased
in over time for business plan adjustment period
8

9. Summary of Written Public Comment
• Citywide minimum wage creates additional burdens
on small businesses
• Time and resources dedicated to compliance
• Increased costs also include payroll taxes and workers
compensation
• Reduced staffing levels or cut staff
• Raises the cost of doing business in Emeryville
• Service businesses can access the Emeryville market area
from both Oakland and Berkeley
• More difficult to attract/retain businesses
• Manufacturing businesses compete nationally and
internationally, and can’t increase prices without becoming
uncompetitive
9

10. Summary of Written Public Comment
• Exemptions
• Should not provide an exemption for collective
bargaining agreements, exemptions should only be at
the discretion of the City Council
• Categories for exemption
• Internships/training programs are short-term in nature but
provide important entry opportunities and should be maximized
• Youth, who might otherwise have to compete with adults,
reducing opportunities for youth employment
• All 501(c) organizations, specifically to cover homeowner’s
associations
10

11. Summary of Written Public Comment
• The California Restaurant Association submitted a
proposed ordinance
• Does not specify a minimum wage rate, but does propose an
escalation through 2017
• Exempts “higher wage earners,” as that term is defined in their
proposal
• The City Council is seeking approval of the Property-
Based Business Improvement District (PBID), which funds
the Emery Go-Round, this summer and consideration of
the minimum wage ordinance at the same time may
negatively affect one or both proposals
• No citywide minimum wage should be adopted; instead
the state minimum wage should continue to apply to
Emeryville businesses
11

12. Economic Development Advisory
Committee Recommendations
• March 4, 2015 reviewed the draft ordinance and considered
comments from members of the public in attendance.
• After deliberation, the EDAC unanimously passed a motion:
• “It is important to raise the minimum wage in an expeditious manner,
but the City Council should consider creating more opportunities for
public comment even if it may delay the effective date beyond the
proposed start of July 1, 2015, make the wage step increases
regionally equivalent, and include consideration for health care and
defining the size of small businesses.”
• Other recommendations
• Exception for youth internships administered by a government agency
• All 501(c) organizations, not just 501(c)(3), should be allowed to
phase-in implementation on the same schedule as small businesses
12

13. Small Business Definition
• Draft ordinance defines small businesses as those with 10 or fewer
employees, for allowing a phase-in period and setting a lower cap for
paid sick leave accumulation
• No accepted standard for defining a small business, either on a
national or local scale
13
Minimum Wage Ordinance
Berkeley (proposed)/
Oakland/San Francisco(2004)
≤10 employees
Seattle <500 employees in US
Small Business Assistance
SBA ≤$7m in gross revenues
(retail & restaurant)
San Francisco ≤100 employees
Seattle <50 or <$10m in gross revenues
Formula Retail - Fair Scheduling
San Francisco ≤20 employees & 20+ units worldwide
Affordable Care Act (ACA) ≤25 employees, avg. wage ≤$50k; tax credit
≤50 employees; small business marketplace

14. Definition of Small Businesses
14
• Comment from small business owners at City Council and
EDAC meetings suggests that ten or fewer employees
may be too small to capture many of the smaller,
independent businesses in Emeryville.
• The ACA limit of 50 employees for businesses that may
use the marketplace for insurance set aside for small
businesses was suggested as an alternative threshold
during public comment at the EDAC meeting.

15. Tipped Employees
• Tipped employees may have effective hourly wages at or
above the proposed minimum wage rate for Emeryville.
• State law does not allow for tip income to be credited for
the purposes of calculating minimum wage.
• Staff Recommendation: Ordinance to clarify No Tip Credit,
consistent with State law.
• Alternate approach: Seattle model
15

16. Medical Benefit Credit
• Employer-paid medical benefits considered part of an employee’s total
compensation package
• Not considered taxable income, and does not increase an employees’
gross income for taxation purposes.
• Use in minimum wage laws
• Seattle
• Richmond (approved) and Berkeley (proposed)
• Specific maximum amount currently $1.50/hr for Richmond and $2.28/hr for Berkeley
• Richmond: Can be applied to calculation of minimum wage. If valued at less than
specified amount or no benefit given, employer must make up shortfall in order to
achieve the minimum wage rate
• Berkeley: Health benefit over and above minimum wage. If valued at less than specified
amount, employer must add shortfall to minimum wage
• Most minimum wage laws do not allow a medical benefit credit for
minimum wage rate
• Difficulty in calculating the hourly rate of medical benefit compensation, as it is
not expressed on a per hour basis in payroll records.
• Legislation must be be carefully crafted to prevent exploitation of the credit
• Added burden of evaluating an employers’ health plan in addition to payroll
records
16

17. Living Wage Ordinance and Measure C
• Per the direction of Council, the proposed ordinance uses
the City’s current Living Wage rate as initial minimum
wage rate
• Both Measure C and Living Wage are inclusive of wages
and health benefits
• Monetary wages paid to the employees may be reduced by the
monetary value of the employer’s contribution for health benefits.
• Proposed Emeryville wage and sick leave ordinance, as
based on the Oakland initiative, does not have a
consideration for a health benefit credit
17

18. “Regionally Comparable” Wage Rate
• Comments from both the public and the EDAC suggested
that the wage rate be comparable to adjacent cities, or
“regionally comparable”.
• Main purpose is to remain competitive with adjacent jurisdictions
for the cost of doing business
• Minimum wage rate put forth by Council of $14.42 per
hour to be in place by July 1, 2015 is higher than the
minimum wage set by any other jurisdiction in the nation
for 2015
• The minimum wage of $12.25 per hour in the Oakland initiative,
effective as of March 2, 2015, is approximately 36% higher than the
current State minimum wage rate of $9.00 per hour while the draft
Emeryville rate represents a 60% increase over the current State
minimum wage.
18

19. “Regionally Comparable” Wage Rate
• East Bay: Current minimum hourly wages range from
$9.60 per hour in Richmond to $12.25 per hour in
Oakland
• Berkeley is in the process of considering an amendment to their
existing law, anticipated to be considered by their City Council in
the latter half of this year.
• Bay Area: San Francisco, San Jose, Sunnyvale, and
Mountain View also have adopted minimum wages
• Range from $10.30 per hour for the cities in the South Bay to
$12.25 in San Francisco (starting May 1, 2015)
• Depending on how a “regionally comparable” wage is
defined, such a wage would range between $9.60 per
hour to $12.25 per hour in 2015.
19

20. East Bay Minimum Wage
20
$8
$9
$10
$11
$12
$13
$14
$15
$16
$17
2015 2016 2017 2018 2019 2020
Emeryville
Berkeley
Berkeley Proposed
Oakland
Richmond
California

21. $15 per Hour Wage
• Recent discussion of $15 per hour as a desirable
minimum wage.
• Of the cities with approved minimum wages in the Bay
Area, only San Francisco will achieve a $15 per hour
minimum wage by 2018, and others will not do so even by
2021.
• Should Berkeley approve revisions of their minimum wage
ordinance as recommended by their Labor Commission,
that city will likely achieve a minimum wage at or above
$15 per hour by 2018 as well
21

22. $15 Minimum Wage
22
$8
$9
$10
$11
$12
$13
$14
$15
$16
$17
2015 2016 2017 2018 2019 2020
Emeryville
Berkeley Proposed
San Francisco
Los Angeles Proposed
Seattle (500+)

23. Proposed Lift Up Revisions
• Provide greater transparency with respect to the distribution of
the service charge and clarify that service charges cannot be
considered a component of meeting the minimum wage
requirement.
• Each Hospitality Employer shall disclose in writing to each employee
its plan of distribution of service charges to employees and shall report
to employees on each payroll date on the amount of service charges
collected and amounts distributed to employees for the pay period in
question.
• No Hospitality Employer or agent thereof shall deduct any amount
from wages due an Employee on account of a Service Charge, or
require a Hospitality Employee to credit the amount, or any part
thereof, of a Service Charge against and as a part of the wages due
the Hospitality Employee from the Hospitality Employer.
23

24. Hospitality Service Charge
• Service Charge: Collected by Service Employer for
service provided by employees who actually performed
service (excluding managerial employees).
• Draft Ordinance
• Service Charges to be paid entirely to employees who performed
service
• No part paid to supervisors except for portion of customer service
actually performed
• Does not apply to tips or gratuities.
24

25. Exemptions or Phased Implementation
• Some minimum wage ordinances prescribe that certain
businesses or types of employment be exempt, or that the
increase be phased for those businesses.
• Example categories for exemption and/or phasing include
internships or training programs, small businesses, and
nonprofits.
25

26. Exemptions or Phased Implementation
• Nonprofits and small businesses candidates for phasing
• Allow a longer period to amend business plans to
accommodate the new minimum wage, including but not
limited to changing product/service pricing, accessing
bridge funding, or amending grant provisions
• Commenters asked that all 501(c) nonprofit organizations
be considered for exemption, not just 501(c)(3) which are
recognized as charitable organizations
• Berkeley does provide for a phase-in period for non-profit
organizations, but specifically limits it to 501(c)(3)
organizations
26

27. Exemptions or Phased Implementation
• Internships and youth are candidates for exemptions from the
citywide minimum wage ordinance.
• Meant to be for a limited duration, and are primarily meant to provide
job training, skills, and experience as a pathway to career
advancement
• Not intended as a means to support a household, particularly with
respect to youth employment, as it expected that minor employees are
under the care of a parent or guardian.
• Lower costs will allow the employers to maximize the potential
number of job opportunities.
• Both Richmond (up to age 21) and Berkeley (up to age 25)
provide an exemption for youth employment in specific
nonprofit or governmental youth employment programs.
• State minimum wage law allows “learners” to be paid 85% of
minimum wage for the first 160 hours of employment
27

28. Implementation Timeline
• In consideration of meeting July 1 implementation timeframe
public comment would be gathered from City Council meetings,
including this study session, and any comments submitted to
City staff.
• No community workshops or other special meeting would be held.
• As noted in their March 4, 2015 motion, the EDAC asked for
more opportunities for public comment.
• Effective date of the ordinance could be postponed to August or
September of 2015.
• Concern raised that continued deliberations on the proposed
ordinance would create an insecure environment for businesses
making planning for changes in labor costs difficult
• Not part of the formal motion, but general consensus that a firm date
for implementation is desirable so as not to create unstable conditions
for both existing businesses and businesses considering relocating to
or establishing in Emeryville
28

29. AB 669 (Daly)
• Existing State law: $10/hr Minimum Wage (Jan. 1, 2016)
• Bill would cap wage for “Qualifying Tipped Employee” at
$9/hr (Jan. 1, 2016)
• “Qualifying Tipped Employee”
• Employee who receives wages at rate at least $15/hr, including tips
29

30. AB 669 (Daly)
• Supersedes local minimum wage laws unless the local
law specifically states the local jurisdiction’s intent to
establish higher minimum wage for Qualifying Tipped
Employees
• Staff Recommendation: Add statement explicitly stating
Emeryville’s intent to establish higher minimum wage
30

31. Paid Sick Leave
• Proposed ordinance is based on the Oakland initiative,
which includes provisions for paid sick leave.
• AB 1522, the “Healthy Workplaces, Healthy Families Act
of 2014,” which provides for provides for paid sick leave
state-wide
• The Oakland initiative largely mirrors AB 1522 but there
are differences between the two statutes which staff
highlighted for the City Council’s consideration at the
February 17, 2014 meeting.
31

32. Paid Sick Leave
• AB 1522 is Floor, not Ceiling
• Staff Recommendation: Ordinance to clarify AB 1522
applies, unless otherwise provided in Ordinance
32

33. AB 1522 – Paid Sick Leave (July 1, 2015)
• Covered Employees: working 30+ days / year
• Accrual Rate: 1 hour / 30 hours worked
• Start Date for Use: 90 days after effective date
• Maximum Usable Hours: 24 hours or 3 days / year
• Maximum Hours Accrued: 48 hours or 6 days / year
• Exemption: If employer already offers paid sick leave
• No Payout at Separation
• Floor, Not Ceiling: City may adopt regulations allowing for expanded
benefits.
33

34. Paid Sick Leave: Council Direction
• Definition of Employee
• More expansive definition of employee based on the Oakland
initiative, rather than the narrower definition provided by AB 1522.
• Maximum Paid Sick Leave Hours Accrued
• Two tiered accrual cap for Small Businesses (currently defined as
10 or fewer employees) and all other employers.
• Small Business Employees: 48 hours/year
• All other Employees: 72 hours/year
34

35. Paid Sick Leave: Council Direction
• Maximum Hours of Usable Paid Sick Leave Per Year
• No limits on the amount of paid sick leave an employee could use
each year: i.e., the employee may use up to the amount of leave
accrued
• Use of Paid Sick Leave
• Employee may use paid sick leave to provide care for a designated
individual in the event the employee does not have a spouse or
registered domestic partner. The employee may change the
designation on an annual basis.
35

36. Fiscal Impacts
• Total Costs
• FY 2014-15
• $35,000 education and outreach materials
• FY 2015-16 and ongoing
• Administration and enforcement $125,000
• City staff additional wages and benefits $80,000
• Total ongoing: $205,000 (with annual adjustments to City staff additional
wages).
• Costs estimated that one full time employee would be
needed to administer and enforce the minimum wage
ordinance.
• Should the Council consider some of the more detailed credits,
such as consideration for tip income or health care benefits,
additional staff may be needed.
36

37. Conclusion
• In establishing any new legislation, there is a
consideration to ensure that the law is effective with
respect to outcomes and administration, while minimizing
any negative unintended consequences.
• Staff recommends the final ordinance language keep this
consideration in mind, with a key aspect of keeping the
ordinance fairly straightforward in order to:
• Allow for consistent and timely enforcement.
• Reduce the administrative burden on staff, thereby reducing City
costs.
• Reduce administrative burden on businesses, especially small
businesses.
37

38. Questions/Direction: Effective Date
Does Council wish to adjust the effective date in order to
allow additional time for public input, as well as allow
businesses some additional time to adjust their business
plans and practices and create some certainty with respect
to this element of the business environment, or keep the
July 1, 2015 effective date?
• If later, when?
• Additional community meetings?
38

39. Questions/Discussion: Small Businesses
• Does Council wish to provide special provisions for small
businesses?
• If so, what definition of small business does Council wish to use?
• Does Council wish to retain the different sick leave provision for
small businesses?
• Does Council wish to include a different wage rate structure for
small businesses included in the ordinance?
39

40. Questions/Direction Wage Rate
• Does Council wish phase-in wages for all businesses, or
just small businesses as included in the draft ordinance?
• If a phase-in is desired, should it be the schedule
proposed in the draft ordinance or mirror San Francisco’s
schedule, which is more aggressive than other East Bay
cities but still in line with the Bay Area region?
40
Phase-In Proposal San Francisco
July (or October 1), 2015 $12.25 $12.25
July 1, 2016 $13.50 $13.00
July 1, 2017 $15.18 (match Living
Wage)
$14.00
July 1, 2018 $15.57 $15.00

41. Questions/Direction: Tips & Health Benefits
Seattle Model: Tips and/or Health Benefits?
• Requires additional documentation beyond payroll that
would need to be acquired, submitted, verified and
evaluated
• Increases the administrative time and cost burden for all
parties
• May delay workers receiving the approved higher
minimum wage.
• Does Council wish to consider the Seattle model?
41

42. Questions/Discussion: Exemptions
• Youth
• Does Council wish to allow an exemption for youth employed in
temporary youth employment programs funded, at least partially, by
non-profit or governmental entities in order to maximize
opportunities for job training for youth?
• Collective Bargaining
• Does Council wish to retain the exemption for ratified collective
bargaining agreements be retained, as this a feature of all other
minimum wage laws and to the degree possible, regional
consistency will also help with administration and enforcement?
42

43. Questions/Discussion
• Hospitality Charges
• Does Council wish to accept the additional language with respect
to hospitality charges suggested by LiftUp?
Staff requests the City Council to provide direction on the
preceding items and provide direction on any other aspect
of the ordinance the City Council may wish to address
43

44. Summary of Discussion Questions
1. Effective date: July 1, 2015 or later?
2. Small business: Retain sick leave special sick leave
provisions? Different wage schedule? If so, what definition to
use?
3. Phase-In: All businesses, or just small businesses? If
phased-in, use schedule in ordinance, San Francisco, or
other?
4. Credits: Seattle Model?
5. Exemptions: Youth? Collective bargaining?
6. Hospitality charge changes incorporated into final draft?
44