Committee Report CR-2
The Economic Development & University Committee conducted a public hearing on November 18, 2015 beginning at 10:00 a.m. in the Sullivan Chamber.
Present at the hearing were Councillor E. Denise Simmons, Co- Chair of the Committee, Councillor Marc McGovern, Vali Buland, First Assistant City Solicitor, Christian Schlachte, Aide to Councillor Cheung, Neal Alpert, Aide to Councillor Simmons and Paula M. Crane, Deputy City Clerk.
Also present were Lindsay McCluskey, Greater Boston Labor Council, Darlene Lombos, Community Labor United, Lou Mandarini, Allie Padgett, New England Regional Council of Carpenters, Jan Devereux, Phillip Reason, Community Labor United and John Cusack, Carpenters Local 40.
Councillor Simmons opened the hearing and gave an overview of the agenda of the hearing (Attachment A). Councillor Simmons stated that she has convened this hearing as part of the continuing efforts to ensure that Cambridge remains a leader in establishing best employment practices, raising the bar in how Cambridge treats its own employees, and striving to ensure that all people working in the community are treated fairly. She stated that in September, this committee met to begin discussing the possibility of the City of Cambridge adopting a Wage Theft Ordinance. She stated that, at that hearing, the committee heard from allies in the labor sector, the Greater Boston Labor Council and the SEIU, who explained what a Wage Theft Ordinance is and why the City should consider adopting such an ordinance. She said that she wished to continue that discussion today. She noted that this hearing is just one step in the process of determining if this is an appropriate and workable ordinance for the City of Cambridge to adopt, and that people should not feel as if every question must be raised and answered by the conclusion of this hearing. She invited Ms. McCluskey and Ms. Lombos to walk the committee through the proposed changes to the DRAFT Cambridge Wage Theft Prevention Ordinance.
Ms. McCluskey gave an overview of the information included in the summary of draft language (Attachment B) for a potential Cambridge Wage Theft Ordinance (Attachment C). She stated that in essence, this ordinance is designed to ensure that the City of Cambridge is not doing business with companies that have a track record of wage violations. She said that this builds in protections to ensure that workers are protected from future wage violations if the City is doing work with such companies.
Ms. McCluskey explained that 5.01.012 of the proposed ordinance relates to the establishment of an Office of Wage Theft Prevention, which would be dedicated to the implementation and oversight of the City's Wage Theft Prevention activities. She stated that an Executive Director would run the office, would be responsible for staffing, and would report to the City Manager. She stated that an Advisory Council would be established with representation from the Greater Boston Labor Council, the Immigrant Worker Center Collaborative, community organizations, and the Chamber of Commerce. She added that this entity would receive notice preceeding any action on a license or permit issues by a City department and would notify the departments involved of any violations the applicant has had in the past three years.
Section 5.010.03 of the proposed ordinance related to Wage Bond requirements for certain permits and licenses. Ms. McCluskey stated that it would require employers that have admitted in writing to a wage theft violation within the past three years of license or permit application to obtain a wage bond or other insurance equal to one year of wages for all employees for duration of the license or permit. This bond would serve to ensure that workers would continue to be paid in the event of a complaint against the vendor they work for being filed.
Ms. McCluskey explained that Section 5.01.014 encompasses outreach to community organizations. She stated that the Office of Wage Prevention would establish and maintain a community outreach program to work with communities impacted by wage theft, and to create industry-specific educational materials for workers and educational materials for employers. The Office of Wage Theft Prevention would issue grants to organizations it partners with on outreach.
Ms. McCluskey explained that Section 5.01.015 relates to certifications and disclosures. She stated that every licensing, permitting, procuring, and contracting department in the City would create a certification and disclosure requirement for applicants providing they have not had a wage theft violation within the last three years, the disclosure of past violation in the application and notification to applicants that they have a duty to report violations.
Section 5.01016 relates to City procurement, contract and debarment. Ms. McCluskey explained that every RFP issued by the City must include certification and disclosure requirements, notify bidders of their duty to report violations and notify bidders that they may not contract with the City if they have been debarred by the City or State. She stated that successful bidders would provide certification of compliances, must post a notice accessible to all employees, and shall furnish monthly payrolls to the City. She stated that any bidder that had a violation within the last three years would be required to obtain a wage bond or other form of insurance equal to one year of wages for all employees. She added that if a wage theft complaint were to be filed against a City contractor, notice would be served and a hearing would be set. She noted that the City could issue an order to revoke the contract, suspend the contract, debar the contractor, or set conditions of future contracts with the city.
Ms. McCluskey stated that Section 5.01.017 relates to severability. She stated that if any provision of this Chapter was held invalid or unenforceable by any court, such holding would not invalidate or render unenforceable any other provisions.
Ms. McCluskey explained that a similar wage theft ordinance was proposed in Boston and that Boston has implemented the standards by way of an Executive Order. She stated that Boston has taken up various pieces of this recommendation and the hope is that Cambridge will do more and go further in developing these standards.
Ms. Lombos stated that the process that was undertaken to develop the language is very important. She said that this is one of the strongest pieces of legislation in the country. She stated that the process of developing this policy included input by workers, experts, and policy makers, and is the right kind of collaborative process that results in solid and effective legislation. She stated that Boston's Executive Order has many elements of their initial proposal. She encouraged the committee to look at the language and stressed the importance of bottom-up policies. She added that this is a solid legal policy that enforces Cambridge's commitment to workers.
Councillor Simmons asked Mr. Mandarini to explain to the attendees the purpose of a wage bond. Mr. Mandarini responded that wage bonds are commonly used in the union setting. He stated that it is insurance policy that ensures payment to employees if a legal process is underway. He noted that there are several companies that sell wage bonds. He noted that requirements to purchase vary and added that a wage bond is available in all sizes and amounts. Councillor Simmons stated that wage bonds can be expensive but noted that the most important aspect of a wage bond is that an employee is not left in limbo without being paid if a complaint against their employer has been issued. She noted that while this is an important part of doing business, many companies do not have wage bonds. She stated that it is important for the City to know that companies that the City is doing business with have met all the requirements in order to pay their employees. Councillor Simmons noted that the City has gotten into the practice of outsourcing some services, and establishing a wage theft ordinance will send a message that all employees, even if contracted independently, will be paid equal to one another if they are doing the same work for the City. She stated that it is important to have protections for people who work in the City's name, even when they are not technically working directly for the City.
John Cusack stated that this is the fair thing to do. Councillor Simmons said that the City of Cambridge can be an example and send the message that we are going to pay anyone who works for the City a fair wage with benefits. She stated that she has heard numerous stories about misclassifications and the withholding of wages. Enacting this new ordinance would help prevent these scenarios.
Phillip Reason stated that there is an important value of having a wage bond. He stated that although it is an expensive tool, it is an important tool to have if a company has had a history of wage violations. He said that if you are a company that has not had wage violations within the past three years, then you do not need to worry as you will not be required to procure a bond. He stated that while it is frustrating when there is a violation, the wage bond continues to provide a sense of security for the workers. He stated that by having a Wage Theft Ordinance, the City will be taking responsibility and letting workers know that they are protected.
Councillor McGovern stated that the point of City Council committees is to be able to thoroughly vet out issues on a given topic before said topic goes before the full City Council. He stated that within his first three months of being elected to the City Council, he and some of his colleagues marched on three or four picket lines focusing upon workers who felt they were being mistreated, and the organizations they worked for were washing their hands of these complaints because these were subcontracted workers. He stated that it is difficult to urge organizations doing business within the city to treat their workers a certain way when he cannot point to the City itself as an example of this preferred treatment. He stated that this discussion is important because sometimes you don't know that wage violations exist, since people that are being violated often do not have a voice or feel safe to file a complaint. He asked if there is any sense of how often wage theft violations happen in Cambridge. Ms. McCluskey responded that they are currently working to document the numbers of wage theft violations, as there is no formal reporting system. She did state that there are over 5,000 every year that get filed with the Attorney General's office, but these complaints have not been broken down by geography. She said that in a span of five years, they have recovered lost wages of over $5 million dollars from just their organizations. She stated that every year, the Commonwealth recovers more than $20 million dollars in wage violations.
Councillor McGovern stated the reality is that one violation is too many. He said that the point is that if companies are operating properly in the first place, then they will not be subject to a wage bond. He stated his belief that this represents a reasonable ordinance and could probably be required of all companies without too much difficulty. Darleen Lombos stated that wage theft is more rampant in the private sector.
Councillor McGovern asked when the Executive Order was implemented in Boston. Mr. Lombos responded that it was implemented in October of 2015. She explained that that this was done in Boston by Executive Order and that many pieces were put in place incrementally. Councillor McGovern asked if Boston hired a person dedicated to the implementation and oversight of the Executive Order or if this position was absorbed by a department already in place. Ms. Lombos responded that Boston hired a person under the Workforce Development Department. She stated that Boston figured out how to expand a current office. Ms. McCluskey stated that the person would report to the City Manager and stated the possibility of this person being incorporated into the City Manager's office. Councillor McGovern asked if this is separate from the issue of displaced workers, and Ms. McCluskey confirmed that it is a separate issue. Councillor McGovern stated that when he speaks to developers and businesses, they note the importance of predictability. He stated that they look would more favorably on set standards as opposed to violations being filed, and therefore this ordinance change would help add to that sense of predictability.
Councillor Simmons stated that it would have been beneficial to have a representative of the City Manager's Office present at the hearing, but added that the issue will forwarded to the full City Council with a favorable recommendation by the committee. She said that it can then be vetted by the full City Council. Councillor Simmons stated that this piece of legislation speaks to the work of the Income Insecurity Task Force. She stated that legislation gives additional credibility to the work that is being done on this issue in the City of Cambridge.
Jan Devereux stated that the Wage Theft Ordinance is promising and added her support. She asked whose record a wage bond would be tied to, a General Contractor or a subcontractor. Ms. Lombos stated that a General Contractor could require a subcontractor to carry a wage bond. Councillor Simmons asked for additional clarification from Ms. Lombos. Ms. Lombos stated that whoever has the actual contract with the City has to have the wage bond, and that organization is also responsible for its contractors.
Jan Devereux asked how it came to be that the threshold for violations would be the previous three years. Mr. Mandarini stated that there was some internal discussion about this, and that Massachusetts has a statute for a filing period. He stated that it is drawn from the Mass Wage Act. Ms. Devereux inquired about liquor licenses and whether those would be covered under this ordinance. Ms. Lombos stated that Boston requires the same form for liquor licenses as they do for all contractors.
Councillor Simmons stated that she likes the reporting system piece of the proposed ordinance. She stated that the advocacy piece is very important to her. She stated that community engagement is very important as well. She stated that it is important for the City to be "in-front" of the issue. She stated that she feels that the position of Director of Wage Theft Prevention is important in terms of contract compliance in general. She said that there is nothing that says that wage theft compliance would be the only responsibility for this position, as it could entail compliance in many areas. She stated that it is important to recognize that if there is an ordinance, it is only as strong as the City's ability to enforce it.
Councillor Simmons asked how often one would check to see if a wage bond is in place. Mr. Mandarini responded that it would be checked yearly. Councillor Simmons stated that if she bought a bond and did not pay the premium and it was cancelled, one wouldn't know. Mr. Mandarini pointed to Section 5.01.013, located on page six, which states that the wage bond must be obtained for the duration of the license or permit. He said that with respect to the procurement side, the wage bond language says that it has to be in effect for the life of the contract. Ms. Lombos stated that they feel secure because in Boston the vendors must sign an affidavit which is a legal document. (CM Form 16 - Attachment D).
Ms. Lombos stated that this ordinance would do three things: Having the City set the example to all employers; Setting protections for workers; and ensuring that workers get paid in a timely manner if there is a wage violation. She stated that the Attorney General is overloaded with cases. She noted that outreach to community organizations sends a message that we are hoping people will report any violations they witness, and establishing this ordinance would help the City to enforce their own policies. She stated that if this office is set up, this would improve the ability to ensure that violations are reported, and that companies are in full compliance. She stated that, in full disclosure, Boston has rolled this ordinance out in phases and this is one piece that has not yet been rolled out. She added that this is currently an informal process.
Ms. Lombos stated that she will send a report to Councillor Simmons about how we frame the need for a wage theft ordinance, and she will work to get more specific statistics. She stated that in the report there is a section that discusses the costs of wage theft in multiple arenas: the worker, their families, their neighborhoods, their cities, the states, and the businesses themselves. She noted that if an individual worker is not getting paid, there is a definite ripple effect felt across the community.
ORDERED: That the draft Cambridge Wage Theft Prevention Ordinance be forwarded to the full City Council with a favorable recommendation for referral to the Ordinance Committee with the stipulation that minutes and notes are sent to the City Manager where his questions and commentary will be forwarded inclusively.