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Mayor Swegles announced a representative from each group will have five minutes for their group and all remaining speakers will have two minutes each. He requested that those in support of the speaker raise their hands as a show of support instead of speaking on the item.
Mark Bowers, Solid Waste Program Manager, presented the staff report. He clarified some issues from the discussion of May 23, 2006. The request for proposal (RFP) deals with the contract for operation from 2008 to 2014. He stated most of the public comments received during the Public Hearing on May 23, 2006 dealt with the current contract and contractor, not the matter that Council was considering. Manager Bowers clarified that the employees of the contractor are treated fairly and paid at levels as identified in their contract. He stated at the beginning of this contract, the City took steps to make sure the workers were treated and compensated fairly.
Mayor Swegles asked David Kahn, City Attorney, to clarify the difference between living and prevailing wages. City Attorney Kahn stated that a prevailing wage is set by the Department of Industrial Relations (DIR) based on a set formula using objective standards set by the DIR statutes and is particular to a certain contract or industry. A living wage is substantially different from the prevailing wage and would apply to businesses throughout the City. Because the living wage has not been noticed for Council this evening, Council is able to consider the prevailing wage issue, but the living wage issue would be the subject of a separate Council meeting.
Vice Mayor Lee confirmed the recommendation for Alternative No. 2, would increase wages by approximately 1.7%, as there was already a 5.5% increase scheduled.
Councilmember Hamilton asked what action would enforce the current contract’s prevailing wage. Manager Bower stated they will begin with a demand letter to correct the wage issue. He stated that the contractor is being paid an amount by the City that allows them to pay the prevailing wage to their employees and the City’s payment to the contractor would not increase.
Councilmember Moylan asked if a new ruling on a prevailing wage could be asked for during the seven-year contract. Marvin Rose, Director of Public Works, stated that staff’s recommendation is to use the DIR wage and inflate it to 2007 wage level, but not raise it again for seven years. In seven years, staff would then get another determination. The reasoning for this approach was to avoid a DIR determination and the administrative issues associated with that determination. Manager Bower stated the end result would be titled the SMaRT station wage as opposed to a prevailing wage.
Councilmember Moylan asked if remediation for the recently discovered wage discrepancy (not being at a prevailing wage) will be retroactive or take place immediately. Director Rose stated the remediation is yet to be determined. Typically, for a Public Works project, once a prevailing wage violation has been determined, often it results in an immediate change in the wage to bring them to the prevailing wage, reinstatement of back wages, and penalties to the contractor for not paying them. However, in this situation the remediation is yet to be determined.
Councilmember Chu verified that a wage increase of 1.7% (as listed in Alternative No. 2) would correlate to an increase of $6.32 per year for a typical single family with unlimited service. This would be in addition to the $20.45 per year for the original 5.5% increase for a total of $26.77 per year (which would be an addition of $2.23 per month). Councilmember Chu verified that the current single-family rate is $30.99 per month.
Councilmember Spitaleri asked if staff has a report that shows the discrepancies and Manager Bower stated the discrepancy is with the health benefit.
Councilmember Spitaleri verified that a prevailing wage is not mandated by the state as it is not considered public work. Council has discretion to send out an RFP without any wage requirement except for the state minimum wage.
Councilmember Spitaleri verified that the term “prevailing wage” includes the value of benefits and that the amount within that wage for benefits and wages is left up to the employer and employee. An employee could choose all cash or a combination of health benefits and wages. Councilmember Spitaleri stated his concern that the staff report identifies the employee’s hourly rate at $16.20, but that is not the pure wage rate. Manager Bower stated that will be corrected.
Councilmember Hamilton verified that the City has extensive workers compensation requirements in the contract. City Attorney Kahn stated that because the workers are working for a private organization, the City would not have liability.
Mayor Swegles opened the Public Hearing at 8:21 p.m.
Todd Storti, General Manager for Green Team Zanker, offered explanations and defended their proposal. He stated the City’s language in the new proposed draft operating agreement is an improvement over the first draft, but does nothing to resolve the labor issues.
Councilmember Howe requested that the Mayor leave the Public Hearing open so Council may recall a spokesperson regarding an issue after they have spoken. Mayor Swegles agreed to do so for any of the three main speakers.
Duane Beeson, representative of Teamsters Local 350, stated the aspirations the Union expressed at the May 23, 2006 Council meeting are no longer within the realm of possibility. Mr. Beeson stated the negotiations have not progressed and he expressed to Council that it is not likely that both parties will reach an agreement (in the immediate future) that would be useful to potential bidders. He stated the original concept, which required a prevailing wage, did not produce any of the results that Council had anticipated. He stated if they ask for a new prevailing wage for the new contract, the wage that will come forward is the current Green Team Zanker wage. The best way to remedy this problem is for the Union to continue to negotiate and attempt to reach an agreement.
Mr. Beeson stated the Union has requested that the potential bidders be informed of what the Union’s position is and that a contract is not in effect for the eighty sorters. He stated the Union would like to see the wages somewhere between $13 and $15 per hour. Mr. Beeson stated that if the Council wished to set a wage floor (a basis where wages could not go below); he is not aware of any reason that the City would have to go through the DIR.
He stated in the staff report percentages regarding wages were used, but listing percentages is not as effective as listing the actual amount of money which is how the analysis should be represented. Mr. Beeson passed out a document which indicated the wages for the surrounding counties for comparable work.
Vice Mayor Lee asked Mr. Beeson what his thoughts were on the revised staff report which stated that the prevailing wage for 2007 should be $16.20. Mr. Beeson stated the Union does not want to be involved in collective bargaining with the Council; rather they want to bargain with the contractor. He did not wish to comment on what the wages ought to be; instead the Union insists on comparability.
Harry Adams, representing Assemblywoman Sally Lieber, thanked staff and Council for their efforts toward developing a request for proposal that will create conditions for improved wages and benefits for the sorters. Mr. Adams stated this is an opportunity to create a better situation for the future with the terms of the RFP 2008-2014 franchise agreement. He stated they urge Council to adopt an RFP that establishes the following:
- A floor of a prevailing wage (or the rate established by collective bargaining)
- Worker retention language sufficient to provide protection for current employees
- A wage determination based on a Bay Area standard for similar work (not strictly sticking to the DIR standards)
- The flexibility that if there are improvements through collective bargaining or a different determination of increased wages and benefits, that there is an opportunity to consider that by Council action during the contract.
Richard Leasi, Labor Counsel for Green Team Zanker, stated the area for determination for DIR is set by statute and they look at the City of Sunnyvale, which is the problem as they then look at Green Team Zanker’s wages. He stated the DIR’s determination in their February 6, 2006 report lowered the wage of sorters by 40%. Mr. Leasi stated he agreed with Mr. Storti that the new proposal goes a long way toward rectifying the problems of the old contract.
Vice Mayor Lee verified with Mr. Leasi that he is of the opinion that Green Team Zanker is not in breach of the contract as the DIR calculation is inaccurate (as the law defines prevailing rate). He stated that Council has the authority to set a floor and that they should do so rationally.
Councilmember Hamilton verified that Green Team Zanker has received an annual CPI increase every year of the contract and yet the employees have not seen the increase. Mr. Leasi stated the contractor may not make any changes to wages without first going through the Union. Councilmember Hamilton stated the CPI increase should have passed through to the workers.
Larry Daugherty, Teamsters Local 350, stated the staff report incorrectly identifies an amount per hour that the Union requested. He stated the Union is seeking around $18.00 per hour. He stated during collective bargaining attempts, this contractor continued to stall negotiations.
Philip Bump, South Bay Labor Council, spoke in favor of a living wage for the workers at Green Team Zanker. He stated if they are able to reach an agreement with the employer before the RFP goes into place, they would like to see that become the floor amount for the workers so that the wage does not go backward.
Kate McDermott spoke in favor of the Council and the practices and ability to listen to the issues.
Virginia Shea stated she is in support of a higher garbage bill in order for the workers to receive a living wage.
Greg Plant urged Council to include a strong enforcement clause to avoid this situation in the future.
Pat Plant spoke in favor of a living wage for the workers. She urged Council to enforce the contract and raise the workers salaries until the contract ends in 2008.
Margaret Lawson stated this is a moral issue and supports a living wage for the workers.
Laura Casas Frier asked that Council resolve all the disputes and create fairness toward the workers.
No one else wished to speak and Mayor Swegles closed the Public Hearing at 9:18 p.m.
Vice Mayor Lee asked if Council has to use the prevailing wage for this proposal or can they fix a dollar wage. City Attorney Kahn stated the Council is at liberty to either fix the prevailing wage or set a wage floor as part of this RFP.
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