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CHAPTER 12P: MINIMUM COMPENSATION

Sec. 12P.1. Title.

Sec. 12P.2. Definitions.

Sec. 12P.3. Minimum Compensation Components.

Sec. 12P.4. San Francisco International Airport.

Sec. 12P.5. Contract Requirements.

Sec. 12P.5.1. Additional Contract Requirements.

Sec. 12P.6. Administration and Enforcement.

Sec. 12P.7. Waivers by the Agency.

Sec. 12P.8. Additional Waivers by the Agency– Nonprofit Corporations.

Sec. 12P.9. Special Waiver by the Public Utilities Commission.

Sec. 12P.10. Waiver Through Collective Bargaining.

Sec. 12P.11. City Departments to Cooperate with Agency.

Sec. 12P.12. Relationship to Other Requirements.

Sec. 12P.13. Report by Airport Director.

Sec. 12P.14. Preemption.

Sec. 12P.15. Effective Date.

Sec. 12P.16. Severability.

SEC. 12P.1. TITLE.

This Chapter shall be known as the "Minimum Compensation Ordinance."

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.2. DEFINITIONS.

As used in this Chapter the following capitalized terms shall have the following meanings:

(a) "Agency" shall mean the Office of Labor Standards Enforcement.

(b) "City" shall mean the City and County of San Francisco.

(c) "Consumer Price Index" or "CPI" shall mean the Consumer Price Index for urban wage earners and clerical workers for the San Francisco-Oakland-San Jose metropolitan statistical area.

(d) "Contract" shall mean an agreement or portion of an agreement that provides for services to be purchased at the expense of the City or out of trust funds established by Charter, ordinance or Memorandum of Understanding ("MOU"). The term "Contract" shall include, without limitation, Included Subcontracts and agreements such as grant agreements, pursuant to which agreements the City grants funds to a Contractor for services (including, without limitation, cultural activities, performances or exhibitions) to be rendered to all or any portion of the public rather than to City government.

(e) Notwithstanding the foregoing, the term "Contract" shall exclude:

(1) Excluded Subcontracts;

(2)(A) Any agreement with a Contractor that, together with the Employees of any Included Subcontractor and of any entity that is owned or controlled by the Contractor or which owns or controls the Contractor, would have twenty (20) or fewer Employees;

(B) Notwithstanding subsection (e)(2)(A), for every Contract and Contract Amendment entered into on or after the Effective Date of the Amendment, the term "Contract" shall exclude any agreement with a Contractor that, together with the Employees of any Included Subcontractor and of any entity that is owned or controlled by the Contractor or which owns or controls the Contractor, would have five (5) or fewer Employees;

(3) Agreements for the purchase or lease of goods or for guarantees, warranties, shipping, delivery or initial installation of such goods;

(4) Agreements entered into pursuant to settlement of legal proceedings;

(5) Agreements for urgent or specialized litigation requirements where the City Attorney's Office finds that it would be in the best interests of the City not to include the requirements of this Chapter;

(6)(A) Agreements with any person or entity in which the cumulative amount of compensation payable to such person or entity under all agreements with a Contracting Department is less than twenty-five thousand dollars ($25,000.00), or fifty thousand dollars ($50,000.00) in the case of Nonprofit Corporations, in any fiscal year, provided that the agreement in question shall be deemed a Contract on and after the effective date of any instrument which causes such cumulative compensation under all agreements with a Contracting Department to exceed twenty-five thousand dollars ($25,000), or fifty thousand dollars ($50,000.00) in the case of Nonprofit Corporations;

(B) Notwithstanding the provisions of subsection (e)(6)(A) for every Contract and Contract Amendment entered into on or after the Effective Date of the Amendment, the term "Contract" shall exclude Agreements with any person or entity in which the cumulative amount of compensation payable to such person or entity under all agreements with a Contracting Department is less than twenty-five thousand dollars ($25,000) in any fiscal year, provided that the agreement in question shall be deemed a Contract on and after the effective date of any instrument which causes such cumulative compensation under all agreements with a Contracting Department to exceed twenty-five thousand dollars ($25,000);

(7) Agreements for the investment, management or use of trust assets where compliance with this Chapter would violate the fiduciary duties of the trustee;

(8) Agreements entered into prior to the Effective Date (unless and until a Contract Amendment is entered into);

(9) Agreements entered into after the Effective Date (unless and until a Contract Amendment is entered into) pursuant to, and within the scope of, bid packages or requests for proposals advertised and made available to the public prior to the Effective Date, which bid packages or requests for proposals were not amended on or after the Effective Date;

(10) Agreements involving the expenditure by the City of grant or special funds (A) to the extent the application of this Chapter would violate or be inconsistent with the terms or conditions of the applicable grant agreement, or with the rules, regulations or instructions of the public agency administering such grant agreement, which terms or conditions or rules, regulations or instructions provide for compensation lower than the Minimum Compensation, provided, however, that this subsection (A) shall not apply to terms or conditions of a grant agreement from the State of California that violates or is inconsistent with California Labor Code Section 1205(c), and/or (B) to the extent that application of this Chapter would require the City to use General Fund monies to supplement the grants, special funds or other non-General Fund revenues to maintain the current level of services;

(11) Agreements with a Contractor that is a public entity whose jurisdictional boundaries are not coterminous with those of the City;

(12) Agreements for employee benefits to be provided to City employees, where the Director of Human Resources finds that no entity is willing to comply with this Chapter and is capable of providing the required employee benefits;

(13) Agreements that require the Contractor to pay no less than the "prevailing rate of wage" in accordance with Section A7.204 of Appendix A to the City's Charter or any provision of the San Francisco Administrative Code, but only to the extent (A) each Covered Employee is covered by such requirement, and (B) such prevailing rate of wage is not less than the gross hourly compensation required under Section 12P.3(a)(i) of this Chapter;

(14) Agreements for the investment of City monies where the Treasurer finds that requiring compliance with this Chapter will violate the Treasurer's fiduciary duties and for the investment of retirement, health or other funds held in trust pursuant to Charter, statute, ordinance or MOU where the official or officials responsible for investing or managing such funds finds that requiring compliance with this Chapter will violate their fiduciary duties;

(15) Agreements made in connection with loans or grants under which the City, as creditor or grantor, is providing funds to be used by the debtor or grantee to:

(A) Acquire an interest in real property on which residential improvements for low- or moderate-income households will be constructed;

(B) Construct improvements owned or leased by the debtor or grantee, on condition that residents of the improvements qualify as low- or moderate-income households; or

(C) Rehabilitate improvements owned or leased by the debtor or grantee; and

(16) Agreements (including, without limitation, any lease, concession, franchise or easement agreement) for the exclusive use of real property owned by the City or of which the City has exclusive use, other than agreements for the use of airport property as set forth in Section 12P.4.

(f) "Contract Amendment" shall mean the modification of a Contract in order to: (1) extend the term; (2) modify the total amount of payments due from the City under a Contract; (3) modify the scope of services to be performed by a Contractor; or (4) expand or relocate the premises covered under an airport property contract. The term does not include construction change orders.

(g) "Contracting Department" shall mean the City department, office, commission or other City entity which enters into the applicable Contract on behalf of the City.

(h) "Contractor" shall mean either:

(1) The person or entity that enters into a Services Contract with the City; or

(2) In the case of an Included Subcontract, the subcontractor who enters into the included Subcontract with the Contractor.

(i) "Covered Employee" shall mean:

(1) An Employee of a Contractor who, during the applicable Pay Period, performs at least four (4) hours per week during the Pay Period of work funded (in whole or in part) under the applicable Contract or on the project funded under the applicable Contract:

(A) Within the geographic boundaries of the City;

(B) On real property owned or controlled by the City, but outside the geographic boundaries of the City; or

(C) Elsewhere in the United States, but only if such related work performed elsewhere within the United States consists of at least ten (10) hours per each work week during the Pay Period in question.

(2) Notwithstanding the provisions of subsection (i)(1), for every Contract and Contract Amendment entered into on or after the Effective Date of the Amendment the term "Covered Employee" shall include an Employee of a Contractor who works elsewhere in the United States and who, during the applicable Pay Period, performs at least four (4) hours per week of work funded (in whole or in part) under the applicable Contract or to on the project funded under the applicable Contractor.

(3) Employees of the In-Home Supportive Services Public Authority shall be covered employees as designated in Section 70.11 of this Code.

(4) Notwithstanding the foregoing, the term "Covered Employee" shall exclude the following Employees of a Contractor that is a Nonprofit Corporation:

(A) Any Employee who is under the age of eighteen (18) and is claimed as a dependent for federal income tax purposes and is employed as an after-school or summer Employee; or employed as a trainee in a bona fide training program consistent with Federal law, which training program enables the Employee to advance into a permanent position; provided, however, these exemptions only apply when the Employee does not replace, displace or lower the wage or benefits of any existing position or Employee; and,

(B) Any disabled Employee of a Contractor, which disabled Employee: is covered by a current sub-minimum wage certificate issued to the Contractor by the U.S. Department of Labor; or would be covered by such a certificate but for the fact that the Contractor is paying a wage equal to or higher than the minimum wage.

(5) For every Contract and Contract Amendment entered into on or after the Effective Date of the Amendment, the term "Covered Employee" shall include an Employee of a Contractor who also participates in the CalWorks Program, or any similar successor program, who during the applicable Pay Period performs any welfare-to-work activities considered "employment" under the Fair Labor Standards Act (29 U.S.C. §§ 201 et. seq.) and any applicable United States Department of Labor regulations or guideline, funded (in whole or in part) under the applicable Contract or on the project funded under the applicable Contract; provided, however, that the hourly rate of payment for these Covered Employees shall be set by the Executive Director of the Department of Human Services at the maximum rate that is in conformance with CalWorks eligibility criteria so that these Covered Employees maintain CalWorks eligibility. Prior to June 1 of each year, the Executive Director shall provide such rate to the Office of Labor Standards Enforcement for publication. This amount shall be adjusted yearly, as necessary, to reflect any changes in federal or state law governing CalWorks eligibility.

(j) "Effective Date" shall mean the applicable effective date specified in Section 12P.15 of this Chapter.

(k) "Effective Date of the Amendment" shall mean the date thirty (30) days after adoption of the amendment to this Ordinance introduced on June 19, 2007.

(l) "Employee" shall mean any person who is employed by a Contractor, including part-time and temporary employees.

(m) "Excluded Subcontract" shall mean any agreement or portion of an agreement between a Contractor and a person or entity who is not an Employee of such Contractor, which agreement or portion of an agreement relates to a Contract but is not an Included Subcontract. The term "Excluded Contract" shall include, without limitation, an agreement pursuant to which a Contractor obtains from such a person or entity goods to be used in the fulfillment of the Contractor's duties under the applicable Contract. The term shall also include agreements (including, without limitation, any lease, concession, franchise or easement agreement) for the exclusive use of real property owned by the City or of which the City has exclusive use, other than agreements for the use of airport property as set forth in Section 12P.4.

(n) "Included Subcontract" shall mean an agreement or portion of an agreement between a Contractor and a person or entity who is not an Employee of such Contractor, pursuant to which such person or entity: (1) agrees to assist a Contractor in performing a Contract; or (2) agrees to assist a Contractor with a project funded by grant monies conveyed to the Contractor under the applicable Contract. An agreement to assist a Contractor shall mean an agreement to perform all or a portion of a component of the services covered by the Contract with the City.

(o) "Minimum Compensation" shall mean each of the components required under Section 12P.3. of this Chapter.

(p) "Nonprofit Corporation" shall mean a nonprofit corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and (if a foreign corporation) in good standing under the laws of the State of California, which corporation has established and maintains valid nonprofit status under Section 501(c)(3) of the United States Internal Revenue Code of 1986, as amended, and all rules and regulations promulgated under such Section.

(q) "Pay Period" shall mean the applicable Contractor's regular pay period.

(r) "Projected shortfall" shall mean that the Joint Report prepared by the Mayor, the Board's Budget Analyst, and the Controller pursuant to Section 3.6 of this Code has projected a shortfall for the upcoming fiscal year of 1% or more of total General fund uses.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.3. COMPONENTS.

(a) Minimum Compensation shall consist of each of the following:

(1)

(A)(i) Hourly gross compensation in the amount of nine dollars ($9.00) per hour.

(ii) In no less than twelve (12) nor more than eighteen (18) months from the Effective Date, the City shall increase the hourly gross compensation to ten dollars ($10.00) per hour; provided, however, that in the case of Nonprofit Corporations and public entities, this adjustment shall only be made if the Joint Report issued by the Controller, Mayor's Budget Office, and Budget Analyst, pursuant to San Francisco Administrative Code Section 3.6, finds that the City has sufficient funds to pay the anticipated costs of the adjustment. A finding of "sufficient funds" shall mean that the City will not be required to reduce services in order to pay the anticipated costs of the adjustment.

(iii) For each of the next three (3) years after the adjustment provided in Subsection (a)(ii) is made, at annual intervals, the City shall make an additional adjustment of two and one-half (2.5) percent.

(B) For Contracts and Contract Amendments with parties other than Nonprofit Corporations or public entities entered into on or after the Effective Date of the Amendment, hourly gross compensation in the amount of ten dollars and seventy-seven cents ($10.77). In order to prevent inflation from eroding the value of this rate, on January 1, 2008, the ten dollars and seventy-seven cent ($10.77) rate shall increase by an amount corresponding to the prior year's increase, if any, in the CPI. Annually thereafter on the first of January, the hourly gross compensation in effect for the prior calendar year shall increase by an amount corresponding to any prior year's increase in the CPI.

(C)(i) For Contracts and Contract Amendments with Nonprofit Corporations and public entities entered into on or after the Effective Date of the Amendment, hourly gross compensation in the amount of ten dollars and seventy-seven cents ($10.77). It shall be the policy of the City to endeavor to maintain the hourly gross compensation for Contracts with Nonprofit Corporations and public entities equal to the rate that applies to for-profit Contractors. As such, this ten dollars and seventy-seven cent ($10.77) rate shall increase by an amount corresponding to the prior year's increase, if any, in the CPI. These CPI adjustments shall be made on January 1, 2008 and every January 1 thereafter. Notwithstanding the provisions of this Subsection, when the Joint Report shows a projected shortfall, there shall be no automatic CPI increase in hourly gross compensation for Nonprofit Corporations and public entities as otherwise provided in this Subsection and the Mayor and the Board of Supervisors shall follow the procedures set forth in Subsections (C)(ii) and (iii).

(ii) YEARS WITH PROJECTED BUDGET SHORTFALL. When submitting the annual proposed budget to the Board of Supervisors for any upcoming fiscal year in which there is a projected shortfall, the Mayor shall transmit a written report to the Clerk and to each member of the Board of Supervisors stating whether the proposed budget contains funding to pay all of the costs of the projected CPI increase for Nonprofit Corporations and public entities for the upcoming fiscal year, as well as for any prior fiscal years for which the Agency has granted a waiver. If the proposed budget does not contain sufficient funding for all of such costs, the report shall state the extent to which any portion of the CPI increase has been funded in the proposed budget and, in addition, shall set forth the basis for the Mayor's determination that no alternative funding sources or prudent reductions in City expenses were available to enable the City to pay the additional costs of the CPI increase for the upcoming fiscal year, and for any prior fiscal years for which the Agency has granted a waiver, without jeopardizing City operations.

(iii) When the Mayor has transmitted a report to the members of the Board providing notice that the proposed budget does not contain sufficient funding to pay the additional costs of the CPI increase for the upcoming fiscal year for Nonprofit Corporations and public entities and for any prior fiscal years for which the Agency has granted a waiver, the Budget and Finance Committee of the Board (or any successor committee as determined by the President of the Board) shall hold a hearing before adoption of the budget to consider the report and whether there are alternative funding sources or prudent reductions in City expenses available to enable the City to pay the additional costs of the CPI increase for the upcoming fiscal year, and for any prior fiscal year for which the Agency has granted a waiver, without jeopardizing City operations. The Board may amend the budget to provide full or partial funding for the CPI increase(s).

(iv) The hourly gross compensation for Nonprofit Corporations and public entities for the upcoming calendar year following the adoption of the budget shall be the rate required in the current calendar year, plus the amount of any CPI increase provided for in the budget. This rate shall apply notwithstanding the failure of the Mayor to make the report or the Board to conduct the hearing required by Subsection (C)(ii) and (iii). The Agency shall provide notice of the amount of hourly gross compensation for Nonprofit Corporations and public entities on the Agency's website. Except for those years in which the budget has sufficient funds to bring the rate for Nonprofit Corporations and public entities into parity with rate for for-profits, the Agency shall grant a blanket waiver applicable to all contracts with Nonprofit Corporations and public entities, which waiver shall authorize payment under such contract of hourly gross compensation that reflects either no CPI increase or only such increase as is covered by the budget. The Controller's Office shall provide notice to all City departments of the hourly gross compensation for Nonprofit Corporations and public entities as determined by the Agency.

(v) Years with no one (1) percent projected budget shortfall. As provided in Subsection (a)(1)(C)(i), the hourly gross compensation for Nonprofit Corporations and public entities shall be adjusted in any year in which there is no projected budget shortfall by an amount corresponding to the prior year's increase, if any, in the CPI. When submitting the annual proposed budget to the Board of Supervisors for any upcoming fiscal year in which there is no projected shortfall but there is disparity between the rate for for-profit entities and for Nonprofit Corporations and public entities, the Mayor shall transmit a written report to the Clerk and to each member of the Board of Supervisors stating whether the proposed budget contains sufficient funding to bring the hourly gross compensation for Nonprofit Corporations and public entities into parity with the amount applicable to for-profit entities under Section (a)(1)(B).

(vi) When the Mayor has transmitted a report to the members of the Board providing notice that the proposed budget does not contain sufficient funding to bring the hourly gross compensation for Nonprofit Corporations and public entities into parity with the amount applicable to for-profit entities, the Budget and Finance Committee of the Board (or any successor committee as determined by the President of the Board) shall hold a hearing before adoption of the budget to consider the report. The Board may amend the budget to provide full or partial funding toward such parity. If additional funds are provided in the budget to obtain such parity or to bring Nonprofit Corporation and public entities closer to such parity, the hourly gross compensation for such entities shall increase to the extent provided in the budget and the Agency shall provide notice of the amount of hourly gross compensation on the Agency's website.

(2) Compensated time off (at the compensation rates specified in subsections (a)(1) of this Section) in an hourly amount that, on an annualized basis for a full-time employee, equals twelve (12) days per year. Such time off shall vest with the Covered Employee at the end of the applicable Pay Period and may be used, for sick leave, vacation or personal necessity. Notwithstanding the foregoing, if a Contractor reasonably determines, in good faith, that the Contractor cannot comply with this requirement for compensated time off, the Contractor shall provide the Covered Employee with a cash equivalent of such compensated time off.

(3) Uncompensated time off in an hourly amount that, on an annualized basis for a full-time employee, equals ten (10) days per year. Such time off shall vest with the Covered Employee at the end of the applicable Pay Period and may be used, at the option of the Covered Employee, for sick leave for the illness of the Covered Employee or such Covered Employee's spouse, domestic partner, child, parent, sibling, grandparent or grandchild.

(b) By December 1 of each year, the Agency shall make available at its office and on its website the hourly rates required by this Section.

(c) When preparing proposed budgets and requests for supplemental appropriations for contract services, City departments that regularly enter into agreements for the provision of services by nonprofit corporations shall transmit with their proposal a written confirmation that the department has considered in its calculations the costs that the nonprofit corporations calculate that they will incur in complying with the Minimum Compensation Ordinance.

(d) Subject to the budgetary and fiscal provisions of the Charter, it shall be the policy of the City to ensure sufficient funding to prevent a reduction in the services to the community provided by Nonprofit Corporations and public entities.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.4. SAN FRANCISCO INTERNATIONAL AIRPORT.

The requirements of this Chapter shall apply to a written agreement (including, without limitation, any lease, concession, franchise or easement agreement) for the exclusive use of real property that is owned by the City or of which the City has exclusive use, if such property is under the jurisdiction of the San Francisco Airport Commission and the term of the agreement exceeds twenty-nine (29) days in any calendar year, whether by single or cumulative instruments. If cumulative instruments cause the term of the agreement to exceed twenty-nine (29) days, the agreement in question shall be subject to this Article only on and after the effective date of the instrument which causes the term to exceed twenty-nine (29) days. The requirements of this Chapter shall also apply to (i) any sublease or other agreement allowing other parties the exclusive right to occupy or use all or any portion of the property covered by the agreement and (ii) any agreement between a tenant or subtenant and any other person or entity to perform services on the airport property. Contractors who have agreements covered by this Section shall comply with the requirements of this Chapter insofar as they have "Covered Employees." For purposes of this Section, "Covered Employee" shall mean an employee who provides at least ten (10) hours of work on the property that is the subject of the agreement in a two-week Pay Period, adjusted proportionately if the Pay Period is other than two (2) weeks. Notwithstanding the provisions of this Section, all exemptions and waivers from the requirements of this Chapter that apply to Contracts shall also apply to agreements for the use of airport property described in this Section, except that the exemption in Section 12P.2(e)(16) does not apply to agreements for the use of real property owned by the City or of which the City has exclusive use if the property is under the jurisdiction of the San Francisco Airport Commission. Except as otherwise specifically provided, all requirements of this Chapter, and the monitoring and enforcement mechanisms provided in this Chapter, shall apply to agreements covered by this Section.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.5. CONTRACT REQUIREMENTS.

Every Contract or Contract Amendment entered into on or after the Effective Date shall provide as follows:

(a) For each hour worked by a Covered Employee during each Pay Period during the term of the Contract (as such term may be extended from time to time), Contractor shall provide to such Covered Employee no less than the Minimum Compensation as required in this Chapter.

(b) Failure to comply with the foregoing requirement shall constitute a material breach by Contractor of the terms of the Contract. Such failure shall be determined by the City in its sole discretion.

(c) If, within thirty (30) days after the Contractor receives written notice of such a breach, Contractor fails to cure such breach or, if such breach cannot reasonably be cured within such period of thirty (30) days, Contractor fails to commence efforts to cure within such period, or thereafter fails diligently to pursue such cure to completion, the City shall have the right to pursue any rights or remedies available under the terms of the Contract or under applicable law.

(d) The Contractor shall not discharge, reduce in compensation, or otherwise discriminate against any Employee for complaining to the City with regard to the employer's compliance or anticipated compliance with this Chapter, for opposing any practice proscribed by this Chapter, for participating in proceedings related to this Chapter, or for seeking to assert or enforce any rights under this Chapter by any lawful means.

(e) The Contractor represents and warrants that it is not an entity that was set up, or is being used, for the purpose of evading the intent of this Chapter.

(f) The Contractor shall keep itself informed of the current Minimum Compensation, and shall provide prompt written notice to all Covered Employees of annual adjustments to the Minimum Compensation, as well as any written communications received by the Contractor from the City, which communications are marked to indicate that they are to be distributed to Covered Employees.

(g) The Contractor shall maintain employee and payroll records in compliance with the California Labor Code and Industrial Welfare Commission orders. Where a Contractor does not maintain or retain such records, or does not allow the Agency reasonable access to such records, it shall be presumed that the Contractor paid no more than the minimum wage required under State law. The Contractor shall have the burden of overcoming the presumption by clear and convincing evidence.

(h) The Contractor shall provide reports to the City in accordance with any reporting standards promulgated by the Agency.

(i) The Contractor shall provide the City with access to pertinent records after receiving a written request to do so and being provided at least five (5) business days to respond.

(j) The Agency may conduct random audits of Contractors. Random audits shall be (1) noticed in advance in writing; (2) limited to ascertaining whether Covered Employees are paid at least the minimum compensation required by this Article; (3) accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten (10) days of the written notice; and (4) limited to one (1) audit per Contractor every two (2) years for the duration of the Contract. Nothing in this Section shall be deemed to interfere with the authority of the Agency to investigate any report of an alleged breach of contract as provided in Section 12P.6.

(k) Any Contractor subject to the provisions of this Chapter shall promptly notify the Contracting Department of any subcontractors performing services covered by this Chapter and shall certify to the Contracting Department that it has notified the subcontractors of their obligations under this Chapter.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.5.1. ADDITIONAL CONTRACT REQUIREMENTS.

Every contract and contract amendment entered into on or after the effective date of the amendment, shall include the provisions set forth below, in addition to those requirements set forth in Section 12P.5. Where a conflict exists, the provisions of this section supersede those of Section 12P.5.

(a) Failure to comply with the requirements of this chapter shall constitute a material breach by contractor of the terms of the contract. The City in its sole discretion shall determine such failure.

(b) If a contractor fails to comply with the requirements of this chapter, the City shall have the right to pursue any rights or remedies available under this chapter, under the terms of the contract, and under applicable law, consistent with the procedures set forth in Section 12P.6.2.

(c) In order to monitor and determine compliance with this chapter, employees and agents of the City authorized to assist in the administration and enforcement of this chapter, including employees and agents of the agency, shall have the right to (1) engage in inspections of a contractor's job sites and conduct interviews with a contractor's employees and (2) conduct audits of contractors, provided that the City gives notice in advance of such audits and the audits are accomplished through an examination of pertinent records at a mutually agreed upon time and location within ten (10) days of the written notice.

(d)(1) Contractor may not interfere with, restrain, or deny the exercise of, or the attempt to exercise, any right protected under this chapter.

(2) Contractor may not discharge, threaten to discharge, demote, suspend, or in any manner discriminate or take adverse action against any person in retaliation for exercising rights protected under this chapter. Such rights include, but are not limited to, the right be paid the minimum compensation; the right to use compensated and uncompensated time off pursuant to this chapter; the right to file a complaint or inform any person about any alleged violation of this chapter; the right to cooperate with the agency in its investigations of alleged violations of this chapter; and the right to inform any person of his or her potential rights under this chapter.

(3) Contractor may not implement any absence control policy to count compensated or uncompensated leave taken under this chapter as an absence that may lead to or result in discipline, discharge, demotion, suspension, or any other adverse action.

(4) The provisions of this subsection (d) apply to any person who mistakenly but in good faith alleges violations of this chapter.

(5) If the contractor takes any adverse action against any person within 90 days of the person's doing any of the following, such adverse action shall raise a rebuttable presumption that the contractor has engaged in retaliation against the person for the exercise of one or more of the rights set forth in this Subsection (d): filing a complaint with the agency or a court alleging a violation of any provision of this chapter, informing any person about an employer's alleged violation of this chapter; cooperating with the agency or other persons in the investigation or prosecution of any alleged violation of this chapter; opposing any policy, practice, or act that is unlawful under this chapter; or informing any person of his or her rights under this chapter.

(Ord. 212-07, File No. 070921, App. 9/14/2007; Added by Ord. 226-07, File No. 071193, App. 10/2/2007)

SEC. 12P.6. ADMINISTRATION AND ENFORCEMENT.

(a) The Agency shall monitor Contractors for compliance with the requirements of this Chapter and investigate complaints of violations. The Agency shall promulgate guidelines or rules for the administration of this Chapter. Such guidelines and rules shall not be adopted finally by the Agency until the Agency has held a public hearing. The guidelines and rules shall establish procedures for monitoring Contractors, receiving and investigating complaints, and determining whether a Contractor has breached a Contract based on the Minimum Compensation requirements of this Chapter. The guidelines and rules shall also establish procedures permitting Contractors to provide payroll information in confidence to the City for purposes of monitoring compliance under this Chapter and authorizing disclosure of the information by the City only when necessary for enforcement purposes. Upon the request of a Contracting Department, the Agency shall also issue a determination as to whether a particular instrument constitutes a Contract or agreement is subject to the requirements of this Chapter. The Agency shall report annually on compliance with this Chapter to the Board of Supervisors. Such report shall include cumulative information regarding the number of waivers granted by the Agency pursuant to Sections 12P.7 and 12P.8 of this Chapter and statistical data regarding such waivers.

(b) If the Agency determines that a Contractor is in breach of any term required to be contained in the Contract under this Chapter, the Agency shall notify the Contracting Department of its findings and of any action that the Agency requests the Contracting Department to take with respect to such breach. In order to ensure compliance with this Chapter and to enhance the monitoring activities of the Agency, the City desires to encourage reporting by Covered Employees of any breach. The Agency shall investigate any such report, The Agency shall keep confidential, to the maximum extent permitted by applicable laws, the Covered Employee's name and other identifying information.

(c) In addition to any other rights or remedies available to the City under the term of the Contract or under applicable law, the City shall have the following rights, in the event of such failure by the Contractor:

(1) The right, at the discretion of the Agency, to charge the Contractor an amount equal to the difference between the Minimum Compensation levels required by this Chapter and any compensation actually provided to each Covered Employee who was not paid in accordance with the terms of this Chapter, together with simple annual interest of ten (10) percent on such amount from the date payment was due;

(2) The right, at the discretion of the Agency, to set off all or any portion of the amount described in the preceding clause (1) of this Subsection against amounts due to Contractor under the Contract;

(3) The right, at the discretion of the Contracting Department, to terminate the Contract in whole or in part;

(4) In the event of a breach by Contractor of the covenant referred to in Section 12P.5(d), the right, at the discretion of the Agency, to require reinstatement of the affected Covered Employee and, if necessary, seek a court order for such reinstatement or to obtain other appropriate equitable relief and, in addition, to require payment of any wages lost because of the Contractor's discriminatory or retaliatory action, together with simple annual interest of up to ten (10) percent from the date payment should have been made; and

(5) The right, at the discretion of the Agency or the Contracting Department, to bar a Contractor from entering into future contracts with the City for three (3) years.

(6) The City may bring a civil action against the Contractor to pursue the remedies provided by this Chapter and other applicable law. The prevailing party shall be entitled to all costs and expenses, including reasonable attorneys' fees.

Each of these rights shall be exercisable individually or in combination with any other rights or remedies available to the City. Any amounts realized by the City pursuant to this subsection shall be paid to each applicable Covered Employee.

When this Chapter authorizes the Agency to charge interest, in determining the appropriate amount to charge the Agency shall give due consideration to the size of the Contractor's business, the Contractor's good faith, the gravity of the violation, and the history of previous violations.

(d) Each Covered Employee shall be a third-party beneficiary under the Contract as set forth in this subsection and in subsection (e) of this Section, and may pursue the following remedies in the event of a breach by the Contractor of any contractual covenant described in Section 12P.5(a) or Section 12P.5(d), but only after the Covered Employee has provided the notice and participated in the administrative review hearing provided in this subsection. The Covered Employee shall give written notice of a breach to the Contractor and to the Agency. If the Agency and the Contracting Department determine that no breach has occurred, or if the Contracting Department fails to obtain the cure of a breach by the Contractor within sixty (60) days after receipt of notice by the Covered Employee, the Covered Employee may request an administrative review hearing. The Covered Employee must request such a hearing within ninety (90) days after giving written notice of the breach. Unless the Covered Employee withdraws the request for a hearing, the Agency shall conduct, or arrange to have conducted, a hearing. The Employee shall have the right to attend the hearing personally or through a designated representative. The Agency shall notify the Contractor of the hearing so that the Contractor may attend and present evidence. After the hearing is completed, the person conducting the hearing shall determine whether the Contractor has breached the Contract. Upon the issuance of a written decision finding a breach, and after a waiting period of twenty-one (21) days, the Covered Employee may bring an action against the Contractor for such breach in the Superior Court of the State of California, as appropriate, unless the City has commenced an action against the Contractor based on the breach, or obtained compliance, within the twenty-one-day waiting period and provided notice to the Covered Employee of that action. If the Covered Employee prevails in such action, the Covered Employee may be awarded: (1) an amount equal to the difference between the Minimum Compensation and any compensation actually provided to the Covered Employee, together with simple annual interest of ten (10) percent on such amount from the date payment was due; and (2) in the event of a breach by Contractor of the covenant referred to in Section 12P.5(d), the right to seek reinstatement or to obtain other appropriate equitable relief.

(e) In the event of any legal action or proceeding between Contractor and a Covered Employee arising from this Agreement, the unsuccessful party to such action or proceeding shall pay to the prevailing party all costs and expenses, including reasonable attorneys' fees and disbursements, incurred by such prevailing party in such action or proceeding and in any appeal in connection with such action or proceeding; provided, however, that a Contractor shall be entitled to such costs and expenses only if the court determines that the Covered Employee's action or proceeding was frivolous, vexatious or otherwise an act of bad faith. If such prevailing party recovers a judgment in any such action, proceeding or appeal, such costs, expenses and attorneys' fees and disbursements shall be included in and as a part of such judgment.

(f) The City shall maintain the confidentiality of payroll information obtained in the course of monitoring compliance with this Chapter and shall disclose such information only as necessary for enforcement purposes.

(g) The Agency shall develop a procedure for obtaining an assurance from Contractors when they sign an agreement subject to this Chapter that they comply with the requirements of this Chapter, such as the signing of an affidavit of compliance.

(h) The Agency may compromise and settle unlitigated claims that Contractors have violated the requirements of this Chapter, including Contractors that have agreements for real property as set forth in Section 12P.4.

(i) All Contractors and Contracting Departments shall cooperate fully with the Agency in connection with any investigation of an alleged violation of this Chapter or with any inspection conducted by the Agency.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.6.1. LIQUIDATED DAMAGES.

Every Contract and Contract Amendment entered into on or after the Effective Date of the Amendment shall contain a provision in which the Contractor agrees:

(a) To be liable to the City for liquidated damages as provided in this Section;

(b) To be subject to the procedures governing enforcement of a breach of the terms of a Contract, which terms are required by this Chapter, as set forth in Section 12P.6.2;

(c) That Contractor's commitment to pay the Minimum Compensation as required in this Chapter is a material element of the City's consideration for the Contract and that the failure of Contractor to comply will cause significant and substantial harm to the City and the public which is extremely difficult to determine or quantify, and that the liquidated damages set forth in this Section are reasonable amounts to pay for the harm caused by the Contractor's non-compliance;

(d) That for any failure to provide the required Minimum Compensation (hourly wage and time off), the Agency may require the Contractor to pay the City liquidated damages of up to one hundred dollars ($100.00) for each one-week pay period for each employee not provided the required compensation. The Agency shall adjust this amount proportionately for Contractors that use a pay period other than one (1) week;

(e) That for any failure to provide reports to the City or access to pertinent records, or any failure to cooperate with any audit, inspection or investigation conducted by the Agency, the Agency may require the Contractor to pay the City liquidated damages of up to one thousand dollars ($1,000.00);

(f) That while liquidated damages in the maximum amounts set forth in this Section are a reasonable estimate of the harm caused by the Contractor's non-compliance with contractual provisions required by this Chapter, the Agency may determine that less than the full amount is warranted depending on the circumstances of each case. The Agency shall give due consideration to the following factors in determining the amount of liquidated damages: the size of the Contractor's business, the Contractor's good faith, the gravity of the violation, the history of previous violations, the failure to comply with record-keeping, reporting, anti-retaliation or other non-wage requirements, and the extent to which the imposition of liquidated damages would undermine the purpose of this Chapter by imposing unreasonable financial burdens on the Contractor, thereby restricting its ability to fulfill its obligations under this Chapter.

(Added by Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.6.2. INVESTIGATION AND DETERMINATION OF VIOLATIONS.

(a) Determination of Violation. Upon determining that a Contractor may have violated the terms of a Contract required under this Chapter, the Agency shall send written notice to the Contractor of the possible violation and of the Contractor's right to respond to the Agency's initial determination by submitting pertinent documents and other information. The written notice shall also notify the Contractor that the Agency is authorized to direct the Controller to withhold payment otherwise due to the Contractor pursuant to the provisions of subsection (e). If after providing the Contractor with a reasonable opportunity to respond to the allegations the Agency makes a final determination that a violation has occurred, the Agency shall provide a written notice of violation to the Contractor.

(b) Right to Appeal. The Contractor may appeal the Agency's final determination. The Contractor must file an appeal with the Agency in writing, specifying the basis for contesting the determination, no later than fifteen (15) days after the date of the notice of determination. Failure to file an appeal in writing with the Controller within fifteen (15) days shall cause the Agency's determination to be deemed a final administrative decision by the City.

(c) Administrative Hearing.

(1) Within fifteen (15) days after the Agency receives an appeal, the Controller shall appoint a hearing officer and shall notify the Agency and the Contractor.

(2) The hearing officer shall promptly set a date for a hearing. The hearing shall commence within forty-five (45) days of the notification of the appointment of the hearing officer and conclude within seventy-five (75) days of such notification, unless all parties agree to an extended period.

(3) The Agency shall have the burden of producing evidence that the Contractor has violated the requirements of this Chapter and the burden of proving the violation.

(d) Hearing Officer's Decision.

(1) Within thirty (30) days of the conclusion of the hearing, the hearing officer shall issue a written decision consisting of findings and a decision affirming, modifying, or vacating the Agency's determination. If the hearing officer vacates the Agency's determination in its entirety, that decision shall also vacate any assessment of liquidated damages. If the hearing officer affirms the Agency's determination, the hearing officer shall issue a decision upholding the Agency's determination, including the amount of the liquidated damages assessed by the Agency. With respect to liquidated damages, the hearing officer's jurisdiction to modify the Agency's assessment is limited and the following procedures apply. If the hearing officer modifies the Agency's determination, the hearing officer shall transmit the decision to the Agency, which shall within five (5) business days modify the assessment of liquidated damages consistent with the hearing officer's decision based on the criteria set forth in Section 12P.6.1 and transmit the modified assessment to the hearing officer. Upon receiving the modified assessment from the Agency, the hearing officer shall within three (3) business days issue a final decision which shall include the amount of the liquidated damages assessment as modified by the Agency.

(2) The decision of the hearing officer shall be final. The Contractor may seek review of the hearing officer's decision only by filing in the San Francisco Superior Court a petition for a writ of mandate under California Code of Civil Procedure, section 1094.5, as may be amended from time to time.

(3) The failure of the Controller or hearing officer to comply with the time requirements of this Section shall not cause the Controller or the hearing officer to lose jurisdiction over an appeal from the Agency's determination filed under this Section.

(4) Upon receiving the hearing officer's decision affirming or modifying the Agency's determination, the Contractor shall take the corrective action, including the payment of liquidated damages, if any, within fourteen (14) days of receiving the hearing officer's decision. If a Contractor fails to take corrective action within the time required by the provisions of this Section, the City may immediately pursue all available remedies against the Contractor.

(e) Withholding of Payments by Controller.

(1) When the Agency sends notice to a Contractor under Section 12P.6.2(a) of its final determination that the Contractor has violated the requirements of this Chapter and of the Contractor's right of appeal to the Controller, the Agency may direct the Contracting Department and the Controller to deduct from the payment or payments otherwise due to the Contractor the amounts that the Agency has determined the Contractor must pay to Covered Employees for violation of this Chapter and to the City for liquidated damages. The Controller, in issuing any warrant for any such payment, shall deduct the amounts specified by the Agency.

(2) The Controller shall withhold these funds until (A) the hearing officer issues a decision finding that the Contractor does not owe all or a portion of the amount withheld, in which case the Controller shall release funds to the Contractor consistent with the hearing officer's decision or (B) the Contractor consents to the use of the funds to pay Covered Employees and/or the City the amounts that the Agency or hearing officer found due. As to any funds being withheld for which neither (A) nor (B) applies, the Controller shall retain the funds until the hearing officer's decision is no longer subject to judicial review, at which time the Controller shall distribute the funds as provided in subsection (e)(3) of this Section, provided that this action is consistent with any final determination of a court of competent jurisdiction. Notwithstanding the provisions of this subsection, the Agency may authorize the release of payments withheld from the Contractor under this Section if the Agency determines that the continued withholding of funds imposes a substantial risk of endangering public health or safety, interfering with a service or project that is essential to the City, or having an unreasonable adverse financial impact on the City.

(3) The Controller shall distribute amounts withheld from Contractors under this Section in the following order:

(A) The Agency shall make its best efforts to distribute any amounts that are determined due to the Contractor's Covered Employees to those individuals, or may require the Contractor to do so. The Controller shall hold the balance of any such amounts for Covered Employees whom the Agency and Employer, despite best efforts, cannot locate. Funds held for at least two (2) years shall be deposited in the City's General Fund.

(B) Sums imposed as liquidated damages shall be deposited in the City's General Fund.

(Added by Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.7. WAIVERS BY THE AGENCY.

The Agency shall waive the requirements of this Chapter where the Contracting Department has certified in writing to the Agency, and the Agency has found that:

(a) The needed services under the applicable Services Contract are available only from a sole source; and the prospective Contractor is not currently disqualified from doing business with the City or any other governmental agency; or

(b) Pursuant to Chapters 6 and 21 of the Administrative Code, the Contract is necessary to respond to an emergency which endangers the public health or safety; and no entity that complies with the requirements of this Chapter and is capable of responding to the emergency is immediately available to perform the required services; or

(c) There are no qualified responsive bidders or prospective vendors that comply with the requirements of this Chapter; and the Contract is for a service, project, or property that is essential to the City or the public; or

(d) The Services to be purchased are available under a bulk purchasing arrangement with a federal, state or local governmental entity; purchase under such arrangement will substantially reduce the City's cost of purchasing such Services; and purchase under such an arrangement is in the best interest of the City or the public.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.8. ADDITIONAL WAIVERS BY THE AGENCY– NONPROFIT CORPORATIONS.

(a) A Nonprofit Corporation may seek a waiver from the requirements of Section 12P.3(a)(1) if the highest paid managerial position in the organization earns a salary which, when calculated on an hourly basis, is not more than six (6) times the lowest wage paid by the organization to a Covered Employee. The Nonprofit Corporation shall provide to the Contracting Department a written statement, prepared and signed by the Nonprofit Corporation, setting forth an explanation of the economic hardship to the Nonprofit Corporation or the negative impact on services that would result from compliance with this Chapter. If the Contracting Department determines that the written explanation is adequate to justify the waiver and that substantial evidence supports the written explanation, it shall recommend the requested waiver to the Agency. The Agency shall grant the requested waiver. Each waiver shall be effective for a period of up to one (1) year, and subsequent waivers may be requested and granted.

(b) If City's budget contains funding for all or a portion of a CPI increase for Nonprofit Corporations for the fiscal year, but a Nonprofit Corporation does not receive an adequate increase in its contract allocation to pay for the CPI increase for the fiscal year, the Nonprofit Corporation may seek a one-year waiver from the CPI increase or from that portion of the CPI increase that is unfunded. The Nonprofit Corporation shall provide to the Contracting Department a written statement, prepared and signed by the Nonprofit Corporation, demonstrating that it has not received adequate funding. The Contracting Department shall report to the Agency whether the Nonprofit Corporation received from the Contracting Department an increase in its contract allocation to pay for the CPI increase and, if it received funding to pay only a portion of the CPI increase, what portion of the increase was funded. If the Department has not provided adequate funding to the Nonprofit Corporation for the full CPI increase, it shall explain the reason in its statement to the Agency. If the Department certifies that the Nonprofit Corporation did not receive an adequate increase in its contract allocation to pay for the CPI increase, the Agency shall grant a one-year waiver from the CPI increase or the unfunded portion of the increase as reported by the Contracting Department. Each waiver shall be effective for a period of up to one (1) year, and subsequent waivers may be requested and granted.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.9. SPECIAL WAIVER BY THE PUBLIC UTILITIES COMMISSION.

The General Manager of the Public Utilities Commission may waive the requirements of this Chapter where the Contractor is providing to or on behalf of the San Francisco Public Utilities Commission services relating to:

(a) The provision, conveyance or transmission of wholesale or bulk water, electricity or natural gas; or

(b) Ancillary requirements such as spinning reserve, voltage control, or loading scheduling, as required for ensuring reliable services in accordance with good utility practice; provided, however, that:

(1) The purchase of such services may not practically be accomplished through the City's standard competitive bidding procedures; and

(2) The Contractor is not providing direct, retail services to end users within the geographic boundaries of the City.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007)

SEC. 12P.10. WAIVER THROUGH COLLECTIVE BARGAINING.

All or any portion of the applicable requirements of this Chapter may be waived in a bona fide collective bargaining agreement, provided that such waiver is explicitly set forth in such agreement in clear and unambiguous terms.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.11. CITY DEPARTMENTS TO COOPERATE WITH AGENCY.

All City departments shall cooperate with the Agency by providing such information and assistance as the Agency shall request with respect to implementation of this Chapter.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.12. RELATIONSHIP TO OTHER REQUIREMENTS.

This Chapter provides a minimum level of compensation and shall not be construed to preempt or otherwise affect any other law, regulation or requirement providing a higher level of compensation.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.13. REPORT BY AIRPORT DIRECTOR.

One year after the Effective Date, the Airport Director shall prepare a written report assessing the impact of this Chapter on Airport property contracts, including any economic impact, benefits, and recommended changes. The Airport Director shall submit the report to the Clerk of the Board, who shall schedule a hearing before the appropriate committee to consider the report.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.14. PREEMPTION.

Nothing in this Chapter shall be interpreted or applied so as to create any power or duty in conflict with any federal or State law.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.15. EFFECTIVE DATE.

This Chapter shall become effective 30 days after it is adopted. This Chapter is intended to have prospective effect only.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)

SEC. 12P.16. SEVERABILITY.

If any part or provision of this Chapter, or the application of this Chapter to any person or circumstance, is held invalid, the remainder of this Chapter, including the application of such part or provisions to other persons or circumstances, shall not be affected by such a holding and shall continue in full force and effect. To this end, the provisions of this Chapter are severable.

(Added by Ord. 216-00, File No. 001272, App. 8/9/2000)