DC Living Wage Act Not Live Yet

August 19, 2010

Back in July, the DC Council’s Economic Development and Housing and Workforce Development Committees held a joint hearing on how — or perhaps I should say whether — the District is enforcing two laws intended to make more good-paying jobs available to D.C. residents.

Just getting around to the outcomes, but the issues are still relevant.

One of the laws, the First Source Act, requires most contractors on projects funded in whole or in part with at least $100,000 in District funds to hire D.C. residents for at least 51% of all new jobs created by the project.

The other, the Living Wage Act, requires most, but not all companies that provide services to the District under contracts worth at least $100,000 and those with subcontracts worth $15,000 or more to pay employees working on the contracts a “living wage.” This requirement also applies to businesses that receive at least $100,000 in D.C. government assistance, e.g., a loan, grant or tax increment financing.

The law defines a “living wage” as $11.75 per hour and directs the Department of Employment Services to make annual adjustments in the rate, based on increases in the Consumer Price Index. The just-published 2010 rate is $12.50 — same as the unpublished rate for 2009.

The occasion for the hearing was an auditor’s report on compliance with these laws in real estate development projects formerly managed by two quasi-public independent corporations.

Bottom line was that DOES hadn’t been effectively monitoring compliance with the First Source Act and that the District had neither implemented nor enforced the Living Wage Act. As a result, the District and its residents lost at least $14.4 million. This apparently does not include the unknown amount lost in illegally low wages.

The auditor testified that she couldn’t do a complete job because the Fenty administration tried to stonewall her investigation. Same thing happened to the Councilmembers at the hearing. No one from the administration showed up, invitations notwithstanding.

However, the Attorney General’s office reportedly sent a letter asserting that “living wage regulations were indeed being enforced.” The quote her is from Housing Complex blogger Lydia DePillis. If verbatim, it’s something of a mystery because the District published proposed rules to implement the act eight days after the year.

The notice states that proposed rules were previously published in mid-March 2007. The new proposal, it implies, was necessitated by a 2009 amendment to the act. Nothing said about why a final rule wasn’t issued during the intervening year and a half.

However, the auditor’s report says that the City Administrator’s office asked DOES and the Office of Contracting and Procurement to hold off on implementing the living wage requirement until a fiscal impact study was completed. Didn’t know that District administrations were authorized to postpone enforcement of laws the Council had enacted.

In any event, we’ve got proposed rules now.

I flip to the enforcement section. All I see relevant to the living wage requirement is a paragraph saying that complaints “shall be made in accordance with, and subject to” the relevant provisions of the act.

So I go back to earlier sections. I find that businesses covered by the act are required to maintain, for three years, payroll records for employees who should be getting a living wage. They’re also required to provide the head of the contracting or assistance agency or other District “entity” with a list of these employees, if requested. Nothing about reviews of the records or any other process to ensure compliance.

So it seems that the burden of enforcement falls to workers who don’t get paid enough — and local nonprofits with the time and resources not only get them the wages they’re owed, but to ensure they understand their rights and, so far as possible, feel secure in asserting them. Active monitoring will apparently also be left to nonprofits.

Now, maybe the problem is just the bare-bones approach to regulation writing. Maybe DOES and OCP will establish genuine monitoring, worker education and complaint support processes.

But I hope the Economic Development and Housing and Workforce Development Committees stay on the case. The Living Wage Act isn’t the answer to the high rate of poverty in D.C. But it could make a difference. And those wages, after all, are our taxpayer dollars.


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