130 cities across the country have something called the “living wage” ordinance meaning that certain government contractors must pay wages that meet the “livable standards” of the community.
Hayward, California is one such city with a living wage. The ordinance, passed in 1999, is as follows:
In April, the Hayward City Council approved the Hayward Living Wage Ordinance which provided that a living wage be paid to direct employees of the City of Hayward, as well as employees of certain firms contracting with the city for at least $25,000. The living wage is set at no less than $9.41 an hour if health benefits are paid to the employees, or $10.86 per hour if no such benefits are paid. (06/05) The wage will be upwardly adjusted annually in accordance with the area cost of living calculation. The contracted service categories covered under the policy are: automotive repair and maintenance, facility and building maintenance, janitorial and custodial, landscaping, laundry services, temporary personnel, pest control, security services, and social service agencies. The ordinance entitles covered workers to a minimum of 12 paid days off and 5 uncompensated days off per year. The ordinance also allows for the terms of a collective bargaining agreement to provide that said agreement may supersede the requirements of the living wage ordinance upon mutual agreement by both parties (Alameda County Central Labor Council, Hayward Democratic Club).
Unfortunately, the CINTAS Corporation did not believe that the ordinance applied to them and now they are over a million dollars poorer for it.
Specifically, Cintas argued it should not have to pay employees who worked on the contract a living wage for hours that they did not spend on the city contract. The lawsuit was filed in 2003 and was certified as a class action on behalf of 219 people who had worked in either of the two laundries from 1999 to 2003. The court found for the workers and the civil judgement amounted to $805,000 in back wages and $300,000 in interest plus attorney’s fees.
CINTAS will probably appeal. But even if the decision is reversed, the company still has many more battles ahead as the Teamsters have their eyes on CINTAS. And publicity like this doesn’t help.
A very expensive lesson.