BOARD MEETING DATE: May 4, 2007
AGENDA NO. 31

PROPOSAL:

Living Wage Options for Board Consideration

SYNOPSIS:

At the conclusion of the Board’s discussion of a living wage requirement for janitorial, security guard, and landscape services contractors at the Board Retreat on March 29, 2007, the Board directed staff to prepare specific options for Board consideration. Three basic options were presented at the Special Board meeting on April 20, 2007, but since Board Members had not had sufficient time to review the material, staff was directed to bring the matter back for Board consideration. Based on the Board’s earlier discussions, this item presents three options for Board consideration.

COMMITTEE:

Not Applicable

RECOMMENDED ACTION:

Option 1 –	No change
Option 2 –	Award incentive points for contractors who provide employee medical benefits, based on the Orange County Transportation Commission model
Option 3 –	Establish a living wage standard (details to be specified by the Board), based on Los Angeles City and Los Angeles County models

Barry R. Wallerstein, D.Env.
Executive Officer

Background

During discussion of the janitorial services contract recommendation at the January 2007 Administrative Committee meeting, Board Member Carney noted that AQMD’s contracting policy does not include a living wage requirement and questioned whether the Board should adopt such a policy. The Committee asked that the contract recommendation be postponed pending Board discussion of the matter. A living wage requirement for janitorial, security guard, and landscape services contractors was then discussed by the Board at its Board Retreat on March 29, 2007, and the Board asked staff to prepare some specific options for Board review and, in the interim, to continue the existing janitorial contract provided low VOC/non-toxic materials are used. Options were presented to the Board at its Special Board meeting on April 20, 2007, but since there had not been sufficient time for Board Members to review the material, staff was directed to bring the matter back to the Board for consideration.

Proposal

Based on previous Board discussions, three options are provided here.

Option 1

No change

Option 2 (based on Orange County Transportation Commission model)

Requests for Proposals would contain the following language:

AQMD strongly encourages janitorial, security guard, and landscape services contractors doing business with the AQMD to offer affordable health insurance to their full-time employees. As an incentive for these contractors to provide affordable health care insurance, bidders may earn up to an additional 10 points during proposal evaluation if they are currently providing or agree to provide to their full-time employees health insurance with affordable deductible and co-payment terms.

For this purpose, the term “full-time employee” is defined to mean employees who work 30 hours or more per week. Further, the term “affordable health insurance” is defined to mean meeting the following minimum levels of coverage:

Employee Deductibles/Fees

PPO Plan Design
In-Network Deductible $500 single
In-Network Out-of-Pocket Maximum $2,500
Out-of-Network Co-pay 30%
Office Visit Co-pay $20 per visit
Retail Drug Co-pay $11 (generic)/$24 (premium)/$44 (nonformulary)
Mail Order Drug Co-pay $14 (generic)/$32 (premium)/$57 (nonformulary)
Single Contribution 30% or less of premium

HMO Plan Design
Office Visit Co-pay $20
Inpatient Hospitalization $250 deductible
Emergency Room Co-pay $50 per visit
Retail Drug Co-pay $11 (generic)/$24 (premium)/$44 (nonformulary)
Mail Order Drug Co-pay $14 (generic)/$32 (premium)/$57 (nonformulary)
Single Contribution 30% or less of premium

To receive 10 additional points, bidders must provide health insurance at one of the levels identified above or better. Documentation showing proof of insurance coverage must be submitted with your proposal. Documentation may be quotes from health insurance providers or a copy of the most recent health insurance invoice with an attached Plan Summary. Documentation must not include employee names or any personal employee information. An officer of the bidding company must certify in writing that the health insurance information provided is true and accurate and that, if selected, the company will provide health insurance to its full-time employees for the duration of the contract term at the same level shown above or better. The selected contractor will be required to update the proof of health insurance on an annual basis and to provide a certified copy of payroll if requested.

The cost of this option cannot be determined until actual proposals are received.

Option 3 (based on Los Angeles City and Los Angeles County models)

AQMD’s living wage standard (LWS) would require those who have janitorial, security guard, or landscape services contracts with AQMD to pay their employees a wage rate that is at least equal to the LWS adopted by the Board. This wage rate could be adjusted annually based on CPI or as set by the Board.

Los Angles City and County living wage requirements currently are:

Based on current AQMD contracts, were AQMD to adopt these minimum wage rates costs are estimated to be:

*Estimated costs were computed by applying to labor billing rates for each contract the percentage increase required to raise the lowest-paid employee to the new “living wage.”

Other contractor requirements (which could increase costs for this option) could include the following:

• Provide employees at least 12 paid days off per year for sick leave, vacation, or personal need and at least 10 unpaid sick days off per year
• Post forms in a prominent place at the work site that identify the minimum wage and other benefits that must be offered (forms must be translated into Spanish and any other dominant language of the work unit)
• Inform employees that they may qualify for the federal Earned Income Tax Credit and provide them the forms required to apply for the credit
• Cooperate with AQMD by providing access to the work site and to payroll and related documents to confirm compliance with the LWS
• Pledge to comply with federal laws prohibiting an employer from retaliating against employees for union organizing
• Pledge not to threaten, harass, or intimidate employees or retaliate against any employee who makes a claim about non-compliance with the LWS

Any subcontractor is also covered by the Standard and must comply with the requirements, including all reporting requirements. The prime contractor is responsible for making sure subcontractors comply.

Employees claiming violation of the LWS may file a complaint with AQMD’s Procurement Manager, who will initiate an investigation.

In the event an employer is found to be in violation of the LWS, payments due may be withheld. Also, the employer may be deemed to be in material breach of the contract. When that happens, AQMD may take the following steps:

• Terminate the contract and pursue all available contractual remedies
• Debar the employer from doing business with AQMD for three years or until all damages and restitution have been fully paid, whichever occurs last
• Bring a lawsuit against the employer for all unpaid wages and health benefit premiums and /or seek liquidated damages of up to $100 for each day the violation remains uncorrected.

Resource Impacts

Any budgetary impact will depend on the Board’s decision with respect to a living wage requirement.