work. i want to read this in context because when a lot of people here prevailing wage, they assume instead of making minimum wage, $10 an hour, they will not be making $30 or $40 an hour, and they make certain assumptions and generalizations about what prevailing wage means. i want to be very specific for janitors. prevailing wage, i believe, is approximately $12.75 or $12.80 an hour. the distinctions we're talking about our minimum wage, which is a little over $10 an hour now. i believe the nonprofit wage is about $11 an hour. and this is $12.75 approximately an hour. we're not talking about a distinction between low wage and middle-class wages. we're talking about very low and really, really low. unfortunately, we have seen a race to the bottom line in this country generally, and i think

it is completely appropriate to require that hard-working and janitors who are frequently raising their families at be paid something approaching a decent wage. i am offering two amendments today, which i am in formed by the city attorney will not require a continuance. the first is, and i have submitted this one in writing -- page 294. it is a partial reinstatement of the nonprofit exemption, to cover nonprofit organizations who are providing work experience for persons with disabilities. it reads -- a, exclusion peri od, the shall not apply to a contract with janitorial services with a nonprofit organization to provide work experience for persons with disabilities. this is to address some concerns around some nonprofits that are providing janitorial

services for people who have disabilities and are getting that kind of work experience. the second amendment, which did not make it into what i submitted in writing, so i will read it into the record. simply have -- i think it is already in the legislation. but to be crystal clear, this is not intended to extend prevailing wage requirements to, for example, homeless shelters or organizations that have are doing their own janitorial work internally. better not contacting with the city to provide those services. the legislative digest, the following sentences have been at it in under the janitorial section. there's no intent to broaden the contract beyond context entered into the city for janitorial services on property owned or

leased by the city. for example, no intend to include contracts entered into by the city would not brought it to provide shelter for the homeless, even at the shelter provider is required to keep the promises clean by using janitors or others. so the language that i am asking to be amended in to the ordinance would be at page two, line three. it would to the following -- this section does not extend to a contract beyond those entered into by the city, specifically for janitorial services on property owned or leased by the city. again, i think that is already in there, but just to make it crystal clear, we're putting that sentence in. those are the two amendments that i am proposing. colleagues, i would ask that the amendments be incorporated into the legislation, and i would ask the colleagues, that you, i hope, support the legislation. supervisor chu: thank you, supervisor wiener.

are there any department heads are any other presentations you would be introducing today on this item? supervisor wiener: no. supervisor chu: thank you. for me, i have a couple of questions i would like to ask. the religious clarification question. in terms of the issues with dph and hsa, this is actually, i think it goes to the amendments that you're suggesting, and i think we're on the same page about where we want to go with this and to make sure that it is explicit and clear. the idea was that there certain departments, like dph or hsa that might have contracts with master lease or sro's. there are youth facilities were the primary purpose is not janitorial, but it might be a different residential use or there is a janitorial component to it. if this were to apply in would require prevailing wage for that, that i think the impact is

going to be much larger than we even know at this moment, which would be a big concern for me in terms of the budget and how we would actually do this. i know that from conversations with the sponsor then it is not the intent. if i could ask either dph or hsa to explain where your concerns are and make sure that, from the city attorney's point of view, that that concern is explicitly allayed in the amendments, that would be helpful. >> yes, director contracts of the human services agency. thank you, supervisor chu and supervisor wiener for the admissions and amendments to have made. i think once we incorporate this language into the amended ordinance, and we will certainly work with the city attorney to make sure that the language does meet our needs, then i think we're fine with our nonprofits and the unintended consequences that the writing of this could have caused. so i think we're in pretty good shape with this amended

language, and i would like to thank you for that. supervisor chu: ok, in terms that the contracts you generally see, they would generally be residential facilities that we contract with someone come into the master lease for single individuals or may be individuals where medical services are provided on site a janitorial is included as part of it. it might include a service for the my own the facility themselves and are providing a residential use on that site for youth, for example, were the city my contract for that service where there is a janitorial component to it. but according to this legislative change, this amendment, you think that it is adequate to make sure that, as intended by the author, that is not included, correct? >> yes, we believe we do. it would cover the shelters, the master lease hotels, and all these supportive housing that the city provides support for which has those services. once we hammer out that language

that is sufficient mighting this goes a long way to getting there, then i think it will definitely minimize the impact of this. supervisor chu: great. >> thank you. supervisor chu: this is a question perhaps to olsc. so the legislation does a number of different things. it does make sure that we eliminate any exclusions that deal with conflicts when there is prevailing wage versus underlining negotiated contracts. there is, again, the elimination of the nonprofit exemption, except that we have clarified language for dph and hsa were leading the attack will be much more far-reaching. the component about the small business exception. a retention policy that goes for 90 days to 180 days. and there is also changes in consolidation of general standards and enforcement, which makes sense to me. and setting of the prevailing

wage. in terms of the employee requirement, this is a question that i had, because i think the intention of this legislation is to make sure that we are closing in the loopholes with regards to what the worker, whether you are a janitor or whether you are a hauler, ultimately gets paid. we want them to get paid the prevailing wage, because that was the intent of the prevailing wage legislation. my question is, the legislation, the way that we do if it is to say that we cannot have independent contractors, per se, but they have to be employees of the contractor. i am wondering, why is that distinction necessary? why do we say that they have to be an employee? what is the value of that it the intent is to make sure that everyone is being paid the prevailing wage? i am think you have had experience and can speak to that issue. >> at good morning. manager of the city's office of

labor standards enforcement. the prevailing wage ordinance that covers the hauling up by a solid was passed in 2006, and the intent was that the city would set a prevailing wage rate that had to be paid for all truckers to perform that work. for the city. the office of labor standards enforcement has twice audited that contract, and there is a loophole in that contract that, excuse the pun, but contractor driving a mack truck through. that is the definition of employee in that ordinance exempts managerial or supervisory role persons, a person who exercises those duties. so, whereas the prevailing wage

is paid to workers who are in an employer/employee relationship, truckers who are owner- operators, and at this point the current contractor only offers employment opportunities to owner-operators, are paid by the load instead of by the hour at a rate that, when you convert it to hourly, is more than the prevailing wage rate, but that owner-operator it is responsible for their own expenses, the cost of their vehicle, the insurance on their vehicle, the cost of gas, tolls, licensing, and more. and when you take out the owner- operator's expenses, what is left for wages and benefits or the prevailing wage rate, it is

significantly less than the prevailing wage. we have let of examples where it is no more than minimum wage. so the whole intent of the prevailing wage ordinance is undermined, and it is only by refighting employee -- refighting employee that we're able to ensure that the prevailing wage and benefit is actually paid to the person that performs that work. so in the amendment, you will see that the prevailing wage must be paid to any individual who performs work under the contract, and they must be in an employer/employee relationship to try to address that loophole. supervisor chu: i guess the definitions are little bit fuzzy in my head. the way that i am is seeing it, if you are currently an employer

and individuals who work for you, you can have an individual who is an employee of you. you provide benefits, salary, file tax returns, summit taxes, all these other things that are part of that relationship. there are other instances, it sounds like, where you have an employer who does not necessarily have employees in that technical world or that technical way, but instead has perhaps an independent contractor, say, with individuals. and they provide services to that relationship. i guess the question is, is it important for us to distinguish that they're actually employees to that employer? or is it that we really want to try to make sure that whatever, even an independent contractor, is being paid should just be the prevailing wage, net of all the expenses, like the fuel and all these other things that you explain? i guess i am trying to understand why it is tempore to

call it an employee/supplier relationship versus we do not really care that it is an independent contractor so long that you get paid the prevailing wage, net of all these other expenses. >> both the state of california division of labor standards enforcement, department of investor relations, and the city have looked at the possibility of setting a prevailing wage rate for owner-operators, which i think addresses your question. and both have declined to do so. i think primarily because there is no -- every owner operator's costs are different and insurance rates are different. , and it is just an impossible enforcement conundrum of how to enforce a prevailing wage with the owner operator, so there is no rate, and that is why the

city now proposes to require the employer/employee relationship. supervisor chu: it sounds like primarily an enforcement issue. >> i believe that is true. supervisor chu: ok. thank you. >> you are welcome. supervisor chu: why don't we go to the budget analyst report. >> we do need to use the microphone. would you mind using the podium? supervisor chu: the one next to

you. >> none of them are working. would you mind using the podium, please? >> good morning. i am from the budget and legislative analyst's office. we updated our report on the proposed revision to the prevailing wage legislation to provide more specific cost estimates. we identified two main areas for costs that result to the revisions to legislation. one was by extending the prevailing wage requirements to nonprofit contractors for a janitorial services and the other was to predefined independent contractors as employees. for the nonprofit contractors, we did not have the most recent amendment proposed today in terms of excluding services that are provided to disabled

individuals but as our estimates will include that. i would have to refer to hsa on what the difference would be. but in terms of looking just at the wage differential between minimum wage for contractors and prevailing wage for janitorial services, per public health services and real estate, we found it to be about $184,000. that does not include a, sort of, other costs. compensation, things that are driven by wages, a percentage of wages. for solid waste contractors, we had a harder time, because we do not actually have data on how many individuals are involved. so we simply compared contract costs, per unit costs, between the contract or their bid for services using employees, compared to sns trekking, which uses it ended in a contractor's.

if you look at the costs and the actual mileage for 2011, we got a cost of $630,000. this would be somewhat inclusive of the differences in costs. there may be other costs associated in terms of the transitional employment requirements, increasing it to six months, if employers were hiring former employees of a prior contractor at a higher rate because there were more senior, but we have no way to quantify or know what those costs would be. supervisor chu: thank you. follow-up question for either the sponsor or to the department. with regard to eliminating the exclusion for the conflicts with the prevailing wage legislation, where there is an underlining negotiated contract of i am wondering, in our current practice, how have we dealt with that generally? >> could you repeat the question again in the context -- supervisor chu: this is not

necessarily just for hsa. it is across the board for the other sectors as well. part of the proposal includes eliminating the exclusion where there is a conflict from what the prevailing wage is stating versus what underlying it negotiated contracts are. i am just wondering, generally, how we have treated that. generally, i imagine we have been paying the negotiated contract amount. >> generally a collective bargaining agreement would take precedence. when negotiating, we honor the collective bargaining agreement. supervisor chu: is this true for some of the other sectors? in addition to the nonprofit world, some of the other areas? >> we have not run into that at all. supervisor chu: ok, so generally this has not applied except for nonprofits, it sounds like. >> we did actual survey all the departments in terms of whether there agreement paid the

collective bargaining wage or prevailing wage. we found in all cases the prevailing wage is what was paid. supervisor chu: ok, thank you. and on the category of off- street parking, i notice that now we have included a number of specific categories. employees at off-street parking on page 6, but it does not specify who or which employee categories were included. now we have included washers, attendants, cashiers, divert folks. have we always included those folks anyway and is this just clarifying by putting them in? >> those classifications are listed in the collective bargaining agreement adopted by the city, so that does not reflect a change. supervisor chu: just a clarification in the language? >> correct. supervisor chu: ok. colleagues, why don't we open this item up for public comment.

are there members of the public who wish to speak on this item, number 11? >> good morning, supervisors because attorney for local 350. i just wanted to emphasize, in response to the question that keeps coming up, and that is the difficulty of having independent contractors and having the prevailing wage ordinance. the problem, as pointed out, it is and possible -- it is not only an impossibility that this city that has dealt with, but the state has dealt with it, to apply a prevailing wage ordinance to persons or not employees. there is no level playing field. there's no place there. the way an independent contractor is compensated has no relationship to wages. an independent contractor is compensated with a contract price for doing the job plus the additional costs. in regard to one contract that has done a lot of attention, the

costs and all were the costs of the truck, cost of insurance, cost of licensing, and all the other things did you at all that up, is on a fairly large amount of money. but when you subtract all the costs of doing business from that, disease and in well below what would be the prevailing wage because of the intent here is to try to establish a solid base from which to establish parity in terms of how much employees are paid. again, when the state of california was confronted with this, specifically in regard to building trades issues, it was the same response. we cannot form a prevailing wage. we cannot enforce a prevailing wage with order to input the contractors, because we're not dealing with a wage. [bell rings] supervisor chu: i have a follow- up question to have there been attempts to set ablaze in might be unwieldy, but i am wondering if you apply a sort of prevailing wage on independent contractors that say the prevailing wage shall be a certain level, but you have to provide information about how

much is being net it out for some of these other expenses -- has that been part of the conversation? clearly in a calling situation, you know, the vehicle, the fuel, some of the inherit costs that would otherwise not be borne by that employee or the person that they were employees of the business, has there been a conversation are wrong, does it make sense to say that what we're really getting at is that that person should be paid the prevailing wage, and we want to make sure that if you back out all these other extraneous our cost of doing business items, that you still are being paid a prevailing wage? has that been talked about? >> knowing that this is a potential lightning rod in this area, there has been a lot of attention to that question. it is not just a question of semantics but there's literally no wage, w-a-g-e, within a been a contractor's bid as others nearly double-no way to establish any kind of parity. the way in which an independent

contractors paid is not based on wages. if you're trying to establish a prevailing wage, meaning a minimum standard, ordinarily cannot apply it in the context of an independent contractor. by definition, the ways in which and the contractors are paid, it varies all over the map. whereas if you had a wage, it is one set of standards that everybody understands when you talk about it. supervisor chu: supervisor mirkarimi has joined us. for example, you are saying if you are an independent contractor, you're provided a certain amount to complete a job, basically. you do not say necessarily how many hours or you're not required to say i am going to spend 10 hours on it and that is it, to israel to complete a job basically. >> it would generally be piece rate, but not always that way. witt and to the contractors, it could be based on an hours estimate.

but it would not necessarily be that way. if the alternative was to say let's include and the contractors, we would have to have a set of regulations that would be fine with a can put into their contracts so we could read the same level playing field. supervisor chu: ok, thank you. next speaker. >> i am the executive director of the san francisco labor council, representing 150 different unions in town, and i do a lot of work on labor law enforcement. thank you, budget share chu and supervisor kim, and a supervisor weaner for sponsoring this legislation. and supervisor mirkarimi -- and supervisor wiener, some as a mirkarimi, good to see. we want to move this forward with recommendations. i know that all of you, as supervisors, as well as the mayor's office and the

compliance office and everybody in san francisco has scratched their heads over some of the contracts they have had to get out where, ultimately, you have found out that workers are being exploited after these contracts are out because of loopholes. in particular, industries that we're talking about right now, the building construction trades, prevailing wages are firmly embedded in the city charter. that has been the model that these other industries have been trying to replicate as they move forward. i just want to say that -- and again, as we recommend in the labor council that we move forward, that to answer some of the questions about the independent contractors, i have been a labor representative an organizer for over 20 years. probably one of the most difficult things that i have had to witness and see over the last 20 + years is the increasing use of independent contractors. [bell rings] and the use of and that and

contractors has been very strictly that there is exploitation involved. and that is what we are seeing, and that is why we're trying to address this. they get to hide the wages. they get to give people a certain amount of money and let them go off on their own, and wages go down, standard of living goes down, and in many of our campaigns, there to make sure that this type of standard of exploiting our workers moves forward, and that is what independent contractors do. we really urge you to move this forward with recommendations. and we really thank you in sentences go here for seen this type of labor law moving forward. thank you. supervisor chu: thank you. >> good morning. my name is bob merlis, secretary-treasurer of local 350 peter i am here to ask for your support. i think it is an important message for the board of

supervisors to send to the communities that the workers, our garbageman in this city and recycling employees and yard waste employees deserve your support, that you send this ordinance directly to the board of supervisors with your full recommendation so that our members will have peace of mind that you do have a care for the duties as they serve your communities. so i think supervisor wiener for introducing this ordinance, and i hope it goes out of this committee with your full recommendation. see why so much -- thank you so much. supervisor chu: thank you. >> good morning. metzler with teamsters local 665, and we represent workers affected by this legislation as well. the work in the city garages in san francisco. in february, 14 of those garages

will be awarded to new operators, and the lack of acrimony and lack of displacement and other disruptions to both the public and to members and our families will be evident by the current legislation and hopefully by the improvements that are going to be brought about when this is moved to the full board. we really appreciate everyone who is supporting this legislation. i also want to echo what was said as far as in the and the contractors, a little bit of history. at one garage some years ago, unbeknownst to us, management had brought in people to do our work. as we were uncovering it, we found out that they actually inc. workers as a business individually amongst themselves in the city garage. there were in there for a few months. fortunately, we were able to do something. but it gives you an example of what the problem is with these and the contractors. it is an opportunity for people

to be exploited in the workplace. in this case, on city property. it was a terrible idea that some management people had. fortunately, we were able to put a stop to it. i hope that you are reviewing all of this, you'll recognize that their people out there that take advantage of others. especially low-wage workers. [bell rings] again, we appreciate you moving this to the full board for approval. thank you. supervisor chu: thank you. next speaker. >> good morning, supervisors. the last time that i was in front of you, we had members from local 261 and 87, janitors, and i am proud to see a lot of the members of the teamsters here today. we have been attending these hearings because this legislation is for all of our unions. this is monumental. being able to close a lot of the loopholes that contractors have been able to e