Sacramento would require larger businesses to pay a higher minimum wage before small businesses with fewer than 40 employees, according to a draft of the ordinance obtained by The Sacramento Bee.
A task force convened by Mayor Kevin Johnson recommended last month that the city gradually increase its minimum wage to $12.50 an hour on Jan. 1, 2020. The first increase would boost the rate to $10.50 per hour on Jan. 1, 2017, $11 on Jan. 1, 2018, and $11.75 an hour on Jan. 1, 2019.
But for businesses with fewer than 40 employees, the increases would take effect six months after the hikes for larger companies, culminating in a $12.50 per hour rate for small businesses on July 1, 2020.
The City Council is scheduled to vote on the task force recommendations at its Oct. 13 meeting. The city’s current rate is $9 an hour, but the state rate will go to $10 on Jan. 1, 2016.
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In addition to the small-business wages, the draft ordinance provides details on a “total compensation” provision that labor groups have already criticized. Sacramento would be the first California city with a total compensation “carve out” in its minimum wage law.
Under that provision, employers who register with the city as total compensation businesses won’t have to pay employees the minimum wage if they paid those workers at least $15 in total compensation for the previous pay period. Total compensation would include tips earned by restaurant workers and other service employees.
In order to qualify for the total compensation provision, businesses would have to pay other employees who didn’t make $15 an hour in total pay at least $11 an hour starting Jan. 1, 2017.
Total compensation businesses would be required to register with the city manager’s office and pay an annual fee.
The ordinance includes a health care credit for businesses that pay workers at least $2 an hour for medical benefits. Those credits will begin at 37 cents an hour when the minimum wage is $10.50 and top out at $1.50 when the minimum pay hits $12.50.
Businesses will be required to keep payroll records for three years and agree to city inspections to ensure they are complying with the law. Employers who violate the ordinance could be charged with misdemeanors, and the city will have the authority to conduct workplace inspections, according to the ordinance. Civil penalties ranging from $250 to $25,000 could also be handed out to violators.
When the plan was announced in early September, Johnson called it “balanced” and said “no one received everything they wanted.” The recommendations were made by a 15-member panel of labor leaders, business officials and policy experts.
Some restaurant owners said the increase was fair. But labor leaders, including Sacramento Central Labor Council chair Fabrizio Sasso, said it would not do “enough to lift (low-wage workers) out of poverty or to truly address income equality in Sacramento.”
Sasso could not be reached for comment Wednesday.