‘Total compensation’ in city’s minimum wage plan is a sham

The minimum wage increase recommended by the Mayor’s Task Force on Income Inequality – $12.50 by the year 2020 – falls far short of any real effort to address the poverty wages that plague our city’s poorest workers. However, that sorry figure is the least of the problems with the recommendation. The point that is truly an affront to every taxpayer and worker in Sacramento is the “total compensation” sham.

This provision is nothing more that an attempt by statewide corporate interests to use Sacramento as a test case for a political and legal gambit to fight minimum wage increases across California, and we must not let ourselves be used as guinea pigs for a law that will harm, not help, workers and citizens.

Under the “total compensation” proviso, any employer whose workers receive tips could opt into a program that would allow that employer to evade the local minimum wage and instead pay the lower state minimum wage if he or she can prove that their employees make $15 an hour or more when tips are included.

The forces that pushed that measure – including the California Restaurant Association and its lawyers – hope the average person won’t ask too many questions about how exactly that will work.

But we should. If we don’t, we are putting this city on the line for millions in legal and administrative fees.

Let’s say a nail salon owner decides to opt into the program. He claims his workers make well above the $15 base with the generous tips of patrons, and he therefore only needs to pay state minimum wage. How will that be monitored? Does he get to use an average of pay that covers all employees – meaning certainly that some will fall below the $15 but just be out of luck because an average is used? Or will he be required to make this calculation individually, an onerous burden on an employer? And how often will he have to calculate it – every paycheck? Or do we just say “too bad” during slow streaks when tips aren’t coming in?

Then let’s assume that not every employer has spotless integrity. Let’s say an employee disputes that they are making the threshold and wants local minimum wage. Assuming that they are not fired on the spot (what legal protection would they have to protest?), who will handle that dispute?

Will we create a new city department? Will employers who opt-in be required to open their books to audits to prove their claims? Audits are specialized work. Who would pay for that – employer or city? What penalties will be in place to prevent any employer – a dry cleaner, an auto body shop – from putting a tip jar by the register and opting in?

For these reasons and many more, the total compensation flimflam is flawed and disingenuous, and invites the exploitation of our most vulnerable workers. These workers would face a compensation system designed for abuse by employers and filled with instability and uncertainty.

It is not, as the task force claims, a fair plan for small business owners. It is a ploy by corporate interests to find a weapon against the Fight for $15. If City Council is foolish enough to pass it, our city will face enormous legal bills – from the challenges that are sure to happen – and millions in ongoing costs to implement such an ill-planned law.

Let’s not let our city get used this way. There’s a reason no other municipality in the United States has pursued this “total compensation” farce. It’s illegal, unfair and bad business for our city.

Bill Camp is the former executive-secretary of the Sacramento Central Labor Council.