WeHo Council Told It Can’t Impose ‘Living Wage’ Requirement on Hotels

West Hollywood’s City Council unanimously approved creation of a new Tourism Improvement District (TID) to promote the city’s hotels during its Monday night meeting, but was told it could not legally require participating hotels to pay employees a “living wage.”

Councilmember John Heilman wanted to add a requirement that only the hotels complying with the city’s living wage requirement (the minimum amount an employee must make) could be promoted by the TID.

“If we’re going to be dedicating an additional $2 million to promote these hotels, we should be insisting that the maids and the busboys and the other employees there are getting a wage of $9, $10, whatever our living wage ordinance requires right now,” Heilman.

In June 2011, the city approved an ordinance requiring businesses contracting with the city to pay employees a living wage of $11.89 per hour if it pays employee health benefits and $13.19 per hour if no health benefits are provided. A number of cities in LA County, including Los Angeles, Santa Monica and Pasadena, similarly enforce living wages, which set worker salaries above the federal minimum wage.

However, the ordinance does not apply to the private sector, including jobs at hotels. For years, Santa Monica tried to pass an unprecedented law that would have required some private businesses with no financial ties to the city to pay workers a living wage. Despite being passed by the City Council, it was defeated by voters in 2002.

Furthermore, City Attorney Mike Jenkins said state law would not allow Heilman’s requirement on hotels.

“Under California law, an assessment (tax) can only be imposed on a property or business owner who benefits from the assessment,” Jenkins said. “If we collect that assessment and then we have a contract that says the assessment cannot be used to benefit a hotel that has paid into the assessment, that would arguably contravene under the law. We would in effect have to return the assessment to the hotel that is not benefitting.”

The budget for the new West Hollywood TID will be $4 million. That extra money will come from increasing the amount taxed each night of a hotel room stay from 1.5 percent to 3 percent. That’s on top of the 12.5 percent transient occupancy tax (TOT) also charged.

John Lambeth, president of Civitas, the Sacramento-based consulting firm handling the legal paperwork for the TID’s formation, agreed with Jenkins.

“I know of no mechanism that would let you do what you want to do,” Lambeth said.

Councilmember John D’Amico said he believed in promoting the city’s hotels and also in living wages, but was uncomfortable with the “bait and switch” tactic the council was considering.

“These businesses are assessing themselves and they want to promote our city,” D’Amico said. “They want to promote the crazy, fantastic, whacky, extraordinary, exciting things we do in the city by assessing themselves. So I think we have to say yes to this and then we have to figure out a way to get ‘living wage’ to be a law of the land.”

Councilmember Jeffrey Prang instructed city staff members to return with a list of the hotels in the city that do comply with the city’s living wage requirement.

With approval of the creation of the Tourism Improvement District, the city will dissolve the existing West Hollywood Tourism Business Improvement Area and Hotel Marketing Zone created in 1989. While that business improvement area was the first ever created in the state, other city’s have since formed similar BIAs and now vastly outspend West Hollywood in tourism marketing efforts.

West Hollywood currently spends $1.8 million on tourism marketing, compared to $4.2 million for Beverly Hills, $5.5 million for Santa Monica and $28 million for Los Angeles.

Visit West Hollywood, the city’s recently renamed marketing and visitor’s bureau, will oversee the TID.