San Francisco businesses are likely to be charged with a new fee to enforce a city minimum wage law that City Hall says it cannot afford to enforce.
The department charged with making sure businesses comply with the minimum wage is struggling with the workload and has yet to receive any fines from companies allegedly underpaying employees the mandated $8.82 an hour, according to officials.
Supervisor Sophie Maxwell has authored legislation that could generate about $1.2 million a year to beef up the Office of Labor Standards Enforcement, which is responsible for putting into effect The City’s minimum wage ordinance, which was adopted in November 2003.
Maxwell’s legislation took a significant step forward Wednesday when the Budget and Finance Committee voted 3-1 to support the fee. The legislation is scheduled for a Board of Supervisors vote on Tuesday. If approved, the proposal could become law as soon as August.
Two major business organizations oppose the legislation, which would set fees based on the size of the business and range between $33 and $107 annually.
Kevin Westlye, executive director of the Golden Gate Restaurant Association, said the fees are not daunting but shouldn’t be imposed in the first place since there is money available in The City’s operating budget. He further pointed out that the fee would be unnecessary if the current businesses that violate the law were fined.
"Sometimes elements of city government look to businesses as a cash cow," Westlye said. "The fact that it could be funded without a fee makes it very difficult to stomach."
Jim Lazarus, vice president of the San Francisco Chamber of Commerce, said the department should use fees from the penalties to fund enforcement and "not vex us" with additional fees.
The OLSE has not received any money in penalties yet and has three pending cases against business owners, said Donna Levitt, OLSE division manager.
Since 2003, the OLSE has recovered a total of $245,000, a result of complaints from about 1,100 employees.
Levitt said the legislation would allow for two additional enforcement employees, bringing the department total to five. It also would provide the city attorney with nearly $300,000 a year to take legal action against violators.
This is the second time in as many months the Chamber of Commerce has clashed with the Board of Supervisors.
The City’s largest business group, along with the Committee on Jobs, filed a lawsuit last month against the Board of Supervisors alleging it has not complied with Proposition I, which was passed by voters in 2004 and requires The City to establish an Office of Economic Analysis and review all legislation for its economic impacts before it goes to a vote.
Supervisor Aaron Peskin, who referenced the lawsuit prior to voting, said later that it had not influenced his vote.
"I just think it’s important to ensure the minimum wage ordinance is being enforced. It’s a tiny fee," he said.
Supervisor Sean Elsbernd, who voted against the ordinance, said asking businesses to pay new fees "should be a last resort." He said money might be available in The City’s operating budget to fund more OLSE positions.