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Committee votes to close living wage loophole

Thursday, December 17, 2015 by Vicky Garza

City Council’s Economic Opportunity Committee approved a resolution at its meeting on Monday that would effectively close a loophole that allows some city contractors to avoid paying workers a living wage.

Both Bob Batlan, of Austin Interfaith, and Emily Timm, deputy director of Workers Defense Project, spoke in favor of the resolution.

“This is simply closing a loophole that currently allows bad actors to subcontract out and not comply with that living wage standard,” said Timm. She added that the requirements will ultimately “protect responsible contractors who are doing their best to comply with the city’s living wage standards that are already in place in the purchasing department.”

James Scarboro, the city’s purchasing officer, presented some of staff’s recommended policy options at the meeting. The recommendations stem from a resolution passed by City Council in June after the Living Wage Task Force identified areas where the city’s minimum wage for contracts had not been applied, such as for nonconstruction subcontractors as well as construction contractors and subcontractors.

The first recommendation from city staff is to apply the living wage program to only competitively awarded contracts and not to include interlocal, cooperative, sole-source or emergency contracts.

Staff also recommended excluding any existing contracts. The rationale, said Scarboro, is that the contractor would not have had a chance to include the wage in its cost model and, therefore, that cost would not have been considered when the contractor provided the proposal or the bid to the city. “So, adding it to an existing contract would perhaps put the city in a leveraged position in terms of absorbing a price increase,” Scarboro said.

Staff recommends that living wage provisions apply to work performed on city property or on city vehicles. However, the nature of the work and where it takes place should determine whether or not the provisions apply.

“What we would do is conduct an analysis while we were developing the solicitation with the customer and determine where the majority of the work is going to be performed,” Scarboro said. The program would apply only if the majority of work would be performed on city property; however, he said, “if the majority of the work was not going to be performed on city property, we would not recommend the program.”

Further, staff recommends that the policy apply only to non-construction contracts because construction contracts are already subject to a prevailing wage requirement. This recommendation is based on advisement from the Law Department, said Scarboro.

The last policy recommendation is to extend the living wage requirement from prime contractors to their subcontractors, excluding those that supply materials, such as parts or equipment, said Scarboro.

Scarboro laid out a few other items that would clarify current policies. For example, in order to make it easier for contractors to meet the wage expectations and for the city to monitor the program, staff recommends applying the living wage that is in place at the time of the award and applying it regardless of contractor type or unit of pricing.

Following the presentation, Council Member Ellen Troxclair asked if adopting these recommendations would affect small and minority-owned businesses. Veronica Briseño Lara, director of the city’s Small & Minority Business Resources Department, responded by saying that she had heard concerns in previous conversations with small businesses but that she thought “it would be helpful to hear directly from them so they can speak on their own behalf.”

All regular city employees are paid at least a living wage of $11.39 per hour as of October 2014. Council has voted to raise that wage to $13.03, effective Jan. 1, 2016.

Council Member Greg Casar moved to recommend the resolution to the full Council with the stipulation that it meet with the Law Department in executive session regarding construction contracts. He also asked that city staff put together a clear picture of what contract monitoring will entail.

After Council Member Ora Houston seconded the motion, the resolution was passed by a 3-1 vote, with Troxclair dissenting. The resolution is expected to go to the full Council in February.

Photo by Caitlyn Childs made available through a Creative Commons license.

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