In June 2008, the First District Court of Appeals held that employees are entitled to the protection of a living wage ordinance (LWO) even if they work outside the boundaries of the city. In Amral v. Cintas Corporation No. 2, the court found that in accepting a contract with the City of Hayward to provide laundry services Cintas certified that it would comply with the City’s LWO setting a minimum compensation level for all covered employees.
Hayward’s LWO defined covered employees as those employed on a service contract with the city. The court found it reasonable to construe that this required the payment of a living wage to all employees who performed work for the city under a service contract. Further, the LWO did not limit the employer’s obligation to pay a living wage only for the time spent performing tasks related to the contract with the city. Because work under the contract was distributed among all Cintas employees, the court found that they all might have worked on the city’s laundry. Since Cintas could not prove otherwise, the court found that all Cintas employees were covered by the LWO. Finally, the court found that because the LWO was intended to benefit employees who work on city contracts, they were third party beneficiaries who could sue their employer for breach of contract in failing to pay a living wage.
What this means for you?
If your business currently contracts with a city, county or other municipality with a living wage ordinance (LWO) in place, immediately review any contracts or agreements and the applicable LWO to determine whether all covered employees are properly compensated. Employers may be able to avoid paying the LWO to employees that do not work on the City’s project, but the employer will have to prove that the employee did not perform any work related to the project.
Phillip J. Griego & Associates 95 South Market Street, Suite 520 San Jose, CA 95113 Tel. 408-293-6341Original article by Karen Crowe, a Summer Intern at Phillip J. Griego & Associates
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