WeHo tosses businesses a bone: 6-month break from wage hikes

UPDATE: The city posted this on weho.org Tuesday: The City Council voted to affirm the City’s Minimum Wage rate of $19.08 per hour and current Leave Provisions through December 31, 2024. The Council directed staff to return with an update to postpone the next annual CPI increase from July 1, 2024 to January 1, 2025 and increase every January thereafter.  

West Hollywood City Council on Monday decided to delay the planned increase in the minimum wage scheduled to occur in July by six months, a small concession to the city’s business community, which had rallied for changes to the city’s divisive labor policies.

The decision falls far short of the requests made by the WeHo Chamber of Commerce, which included a new model for tipped workers and rescinding paid-time off for part-time workers. But the move is also likely to anger UNITE HERE Local 11 and other labor organizations, who helped coordinate the policy’s passage three years ago, and have since been pushing for even higher increases in wages.

THE POLICIES AND THEIR EFFECTS

Laura Biery, the Director of Economic Development, summarized the progress and background of the minimum wage ordinance. This ordinance, approved on November 15, 2021, initially set a minimum wage for hotel workers and included phased implementation for non-hotel businesses with additional leave provisions.

The council meeting addressed the financial challenges local businesses faced due to the new wage standards, as evidenced by letters from 55 businesses. These businesses requested amendments to the ordinance and additional support, which led to the council approving measures like fee waivers and marketing support totaling $300,000 to drive business in West Hollywood.

Various updates were given, including marketing efforts and surveys conducted among employees and employers to assess the ordinance’s impact. The labor advocacy groups raised concerns about the complexity of implementing a two-tiered system for compensated leave, which might reduce worker protections.

The meeting also reviewed business tax certificates to provide data on new and closed businesses, helping to illustrate the economic landscape in West Hollywood. Updates on compensated leave provisions compared to other cities were discussed, showing West Hollywood’s unique approach to including paid vacation and personal necessity leave alongside sick leave. West Hollywood has aligned its leave accrual rates with California state law, requiring employers to provide an itemized breakdown of compensated leave hours on pay stubs for transparency. Additionally, the city encourages employers to follow West Hollywood’s minimum wage rates even if they receive a waiver and mandates that waiver notices include specific dates.

Probolsky Research presented survey results from hourly workers in West Hollywood, highlighting their demographic characteristics, awareness of the minimum wage ordinance, and overall sentiment about the city’s direction. The survey indicated that a significant majority were aware of the minimum wage law, but fewer understood other benefits of the ordinance. A substantial portion of hourly workers felt positively about the city’s direction, although there was room for improvement in compensation and benefits as highlighted by the workers.

The survey also revealed that most respondents live within 10 miles of the city, primarily drive alone to work, and a significant number, 31%, reported not receiving the mandated minimum wage. Regarding additional earnings, 23% received tips, and a small percentage earned commissions, with these being crucial for their overall compensation.

The survey discussed the impact of the minimum wage ordinance, with many reporting no significant change, although the data suggests a nuanced effect on hourly workers’ financial and employment situations.

Questions from councilmembers focused on the details of the survey, such as why the accrual rate for unpaid sick leave was adjusted, and the extent to which respondents’ employment status (part-time vs full-time) was considered in the survey. The results prompted a broader discussion about the effectiveness of the ordinance, potential improvements for future surveys, and the specific needs of hourly workers in terms of policy adjustments.

FM3 provided a summary of survey results regarding the conditions for employers in West Hollywood, focusing on their perceptions of the business climate and the impact of recent policy changes, including the minimum wage ordinance.

Key findings from the survey included:
– A diversity in the longevity of businesses operating in West Hollywood, with some being newly established and others having been in business for over 15 years.
– About 21% of businesses reported having employees paid only the minimum wage without additional compensation such as tips or bonuses. Conversely, 49% stated their employees receive supplementary financial compensation.
– Most businesses (about two-thirds) operate only one location, indicating a prevalence of non-chain, local businesses in West Hollywood.
– Employers’ general sentiment about the city’s direction is mixed: 39% believe things are heading in the right direction, 45% feel they are on the wrong track, and 17% are unsure.
– Regarding the business environment, about 50% expressed a favorable view of West Hollywood as a place to do business, while a notable portion, nearly 25%, rated it poorly.
– Top concerns for businesses included managing homelessness (20%), slowing or stopping minimum wage increases and mandatory benefits (12%), and addressing public safety (11%).
– Awareness of the $19.08 minimum wage was high at 90%, and 74% were aware of the compensated and uncompensated leave policies.

The survey also explored the broader impacts on businesses from various issues, with significant portions reporting negative effects, particularly regarding recent policy changes. 

PUBLIC COMMENTS

Public comments during the meeting showed a deeply rooted concern among local business owners and community representatives regarding the minimum wage increases and associated benefits in West Hollywood. 

Business owners, particularly from the restaurant and bar sectors, expressed significant distress over the financial implications of the minimum wage increases. Carmen Bolas, general manager of La Boheme, highlighted the detrimental impact on their operations, including the necessity of laying off 40% of their staff—primarily entry-level workers and non-English speakers who are often given opportunities to grow in the industry. These layoffs were not just a matter of reducing headcount but were seen as a last resort to sustain the business amidst rising labor costs.

The profitability of such establishments was noted to be under severe strain, with margins as low as 5%, and instances where businesses operated at a loss. Bolas emphasized the real-world consequences of well-intentioned wage policies, which, while designed to improve worker conditions, have resulted in increased operational burdens on businesses already struggling to recover from the economic effects of the COVID-19 pandemic.

Representatives from the West Hollywood Chamber of Commerce and related entities voiced concerns over the broader impact on the community’s cultural and economic fabric. They noted a significant decrease in customer visits and a general decline in the economic vibrancy that characterizes West Hollywood. The area, known for its dynamic nightlife and hospitality industry, was described as becoming increasingly deserted, a change attributed to the high cost of doing business which deters both new and existing establishments from flourishing or even maintaining stable operations.

Business representatives called for a more sustainable approach that balances the needs of workers with the realities of business operations. They suggested that without such adjustments, the local economy might face longer-term decline, with fewer job opportunities and reduced community services as businesses close or move away.

Carlos Rubio, representing Teamsters Local 911, voiced strong opposition to amendments affecting the city’s minimum wage and paid time off policies, warning of negative repercussions for local standards, particularly for parking attendants and potentially other sectors. He linked the issue to broader social struggles, exemplified by setbacks in LGBTQ+ rights in other regions.

Veronica Alvarado, a hotel worker, supported wage increases for hotel workers, correlating her wage with her living conditions and the need for better pay to support her family, including a child with autism.

Several other speakers, including restaurant workers and hospitality organizers, discussed the challenges faced by tipped and hourly workers in West Hollywood, advocating for fair wages and working conditions to support the diverse community and prevent the city from losing its unique character due to economic pressures.

Kareem Amhurst and others expressed concern that diluting minimum wage and PTO policies could lead to greater economic inequality, particularly harming back-of-house staff like kitchen and janitorial workers who rely heavily on these wages. They suggested that rather than weakening worker protections, efforts should focus on supporting businesses in ways that do not sacrifice worker compensation, such as reducing commercial rents or other innovative measures.

COUNCIL’S DISCUSSION

During discussion, several councilmembers expressed views on the importance of educational outreach to ensure both employers and employees are well-informed about their rights and obligations under these policies. The councilmembers talked about potential adjustments to the PTO provisions to align more closely with other cities, which generally offer less PTO than West Hollywood. The city’s leadership role in setting high standards for workers’ benefits was reaffirmed, although the feasibility of a total compensation model that might include a tip credit was questioned due to legal uncertainties and potential non-compliance with state laws.

The council was advised that any major changes to wage policies would need thorough legal vetting and public notice before implementation. Discussions also highlighted the need for continued advocacy at both the city and state levels to ensure that wage increases benefit the lowest-paid workers and did not lead to job losses or shifts in pay structures that could disadvantage them.

Councilmember Sepi Shyne addressed accusations of corruption specifically linked to campaign contributions made by UNITE HERE Local and the Chamber of Commerce. Shyne aimed to clarify and refute claims suggesting that financial contributions from these organizations to councilmembers’ campaigns could influence council decisions in a corrupt manner. 

“UNITE HERE Local specifically had not given to any of the campaigns directly,” Shyne said. “OK, the Chamber of Commerce also gives candidates funds, so to say that certain votes are corrupt because they go one way or the other is misleading. Every candidate is supported by people, by unions, by businesses, by the chamber, and just because a vote goes one way or the other doesn’t necessarily mean there’s corruption. That’s how politics works, that’s how campaigns are funded.”

Councilmember Lauren Meister excoriated City Hall’s approach to the research.

“I’m really concerned that with regard to the two surveys, staff did not ask our researchers to draw conclusions and provide recommendations regarding the research,” Meister said. “I’m just shocked that we have information—are you concerned that 22% of employees said they were laid off from their previous job in West Hollywood? That 177% had their hours or shifts reduced, and 10% are making less money than before? Are you concerned? I’m asking you this, my question to you. Do you know if that’s a good number or a bad number? It could be that 22% being laid off is a great number, or maybe it’s a horrible number; we don’t know, and you are not telling us. So for us to be sitting here trying to devise policies at 11:07 at night—or even receive and file—and not having that information, it’s just a waste of whatever you spent on that research.”

Meister proposed hiring a consultant specialized in economic policy and employer-employee relations to address ongoing issues, citing the divisiveness and operational challenges local businesses face due to frequent policy changes. She recommended allowing new businesses a one-year grace period to operate under state wage regulations to help them establish themselves before adhering to city-specific regulations. She called for her colleagues to reconsider the timing of planned Consumer Price Index (CPI) adjustments to give businesses more time to stabilize.

While previously expressing a willingness to revisit the policies, Vice Mayor Chelsea Lee Byers had since had a change of heart.

“In the ways I was interested in looking at that part-time provision change, I’m truly not anymore. I really think we are doing something radical and transformational and necessary for the baseline of our workers,” Byers said. “The reasons aren’t just about the quality of life. I do have fears that guardrails won’t be insured for part-time workers. We already know that people in West Hollywood choose West Hollywood because they get the hours they want here, that may be less than 40 hours, and we can’t accept that all full-time employees are the only people who should get this sort of policy. So, that’s a no-go for me. I just want to say that clearly.”

“I don’t believe in the total compensation package,” Byers continued. “I can go into my long list of reasons why after looking at this policy fuller, but I don’t believe it’s something that is going to be good for workers in the long run.”

Mayor John M. Erickson also defended the policies. 

“I was in this room in 2015 when the city council voted down the $15 minimum wage,” Erickson recalled of his time prior to being elected. “I sat back there; I couldn’t believe what I saw. And back then, I’m hearing the same exact thing I’m hearing now: ‘too much, too soon, give us more time.'”

“But back then, minimum wage was $15 an hour, and now we’re talking at $19. That was 8-9 years ago, and we’re still talking about this way that we’re keeping people to live in poverty,” Erickson said. “The idea that I think the policy conversation that we’re trying to have here is what’s best for—I think what we need to do to live in a city like West Hollywood, and let me tell you, it’s $40 an hour, and it probably needs to be higher than that.”

THEIR DECISION

Councilmember John Heilman summarized the key issues revolving around the conditions and rules for part-time employees, consultation hiring, and certain exemptions for new businesses, with a focus on the scheduled Consumer Price Index (CPI) adjustment for minimum wage.

Heilman noted there was no majority support for changing the leave policies for part-time employees, but said there was consensus that there needs to be more education regarding the existing ordinance on minimum wage and the associated benefits. Meister’s idea of querying the state labor department about the total compensation method allowed under the state labor code lacked support among the council.

A proposal for exempting new businesses from certain regulations for one year was discussed, but the council’s sentiment leaned towards not supporting this exemption. The rationale was that new businesses should be aware of and able to comply with the existing wage laws upon entering the city.

In a 4-1 vote, Council agreed to delay the CPI increase (used to adjust minimum wage) from July to January 1st, effectively postponing it for six months. This would synchronize future adjustments to the start of the calendar year, which could simplify administrative processes but requires revising the existing ordinance. Shyne was the lone “no” vote.

This decision is to be formalized through an ordinance change to implement the CPI adjustment annually starting in January. The council is set to vote on this motion, and other items are to be received and filed, indicating they will not proceed to further action at this time.