A proposed Sacramento ordinance would exempt restaurants and other service businesses from paying a higher minimum wage to employees who receive at least $15 an hour in total compensation, including tips, but the state legislative counsel says such an exemption would be illegal. Andy Alfaro Sacramento Bee file
A proposed Sacramento ordinance would exempt restaurants and other service businesses from paying a higher minimum wage to employees who receive at least $15 an hour in total compensation, including tips, but the state legislative counsel says such an exemption would be illegal. Andy Alfaro Sacramento Bee file

City Beat

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City Beat

State legal opinion: Key part of Sacramento minimum-wage plan illegal

By Ryan Lillis

rlillis@sacbee.com

October 08, 2015 01:07 PM

UPDATED October 08, 2015 08:29 PM

The state Legislature’s chief attorney has opined that a key provision of Sacramento’s proposed minimum-wage plan likely violates state labor law.

The controversial “total compensation” plan would exempt some businesses from paying the increased minimum wage if those businesses can prove their employees take home at least $15 an hour with tips. But a written opinion delivered Thursday by Legislative Counsel Diane Boyer-Vine’s office stated the proposal “would be preempted by state law” and that tips are the “sole property” of the employees.

Citing a section of state labor law, the Office of Legislative Counsel wrote that “it is unlikely that (tips) can be used as a credit toward an employer’s obligation to pay higher local minimum wages.” The opinion also cited a court ruling on a Los Angeles minimum-wage case that states: “California Labor Code prohibits the state and municipalities from establishing minimum wages that distinguish between tipped and non-tipped workers.”

The legal opinion was released by Assemblymen Kevin McCarty, D-Sacramento, and Roger Hernández, D-Baldwin Park. Hernández had requested the legal analysis after a task force appointed by Mayor Kevin Johnson recommended the total compensation plan last month. The provision is part of a broader recommendation to raise the city’s minimum wage to $12.50 an hour by 2020.

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“While I applaud the efforts of the Minimum Wage Task Force to take on the difficult task of addressing a raise in the minimum wage for working Sacramentans, I am deeply concerned about discussions regarding carve-outs for specified employees,” McCarty said in a written statement. “Paying working women and men a living wage, through a raise in the minimum wage, is the most direct way to ensure that we lift Californians out of poverty. The goal of building a world class city is indeed laudable, but must include paying for the labor that builds it. I urge the Sacramento City Council to adopt a fair, living wage, uniformly applied to all workers.”

The City Council is expected to vote on the task force recommendations later this month.

Hernández, chair of the Assembly Committee on Labor and Employment, said every city in the state that had considered a total compensation exemption in minimum-wage increases had later abandoned those efforts. He said the “anti-worker proposal simply invites unnecessary litigation” against the city of Sacramento.

Boyer-Vine’s memo also cited a state attorney general opinion that employees “who received the least in tips would have to be paid the highest wages to make up” the minimum wage. As a result, those workers who brought in fewer gratuities would likely be dismissed, according to the attorney general opinion.

Local labor unions have been critical of the total compensation element of Sacramento’s plan and have indicated they might challenge the provision in court.

Ryan Lillis: 916-321-1085, @Ryan_Lillis