Tuesday, July 24, 2007 | As the longtime launderer for several city of San Diego departments, Prudential Overall Supply is paid about $156,000 a year to make sure the city’s park rangers, street sweepers and trash collectors start their shifts in clean and freshly pressed garb, regardless of how dirty they get before punching out.
But while Prudential continues to care for the attire of hundreds of city employees, the company has refused to mind a city-required standard for its own workers.
The company has declined to pay a so-called “living wage” to its workers for several months despite a year-old law that says Prudential and other outside service contractors must pay employees who work on those contracts a minimum amount, documents show.
The City Council passed the living-wage law in 2005 after labor and religious leaders sought a higher standard of living for blue-collar workers performing services the city had farmed out to private contractors. Beginning July 2006 for jobs ranging from landscaping to security to janitorial service, the city required the private companies to pay employees $12 an hour or $10 per hour plus health care coverage in the law’s first year, with adjustments for cost-of-living increases every subsequent year.
But in the regulation’s first year, City Hall and its contracting businesses have stumbled at times in carrying out the controversial law. At least one company, Prudential, blatantly ignored it.
The city has been unclear on the rule’s application. On Thursday, various city officials are scheduled to meet to discuss differing opinions on a rule governing cost-of-living increases that went into effect July 1. Also beginning this month, the living-wage law was expanded to certain contractors at city facilities such as the San Diego Convention Center and Qualcomm Stadium, but the city is still sorting out which companies must adhere to it.
Mayor Jerry Sanders has assigned one employee the part-time task of overseeing companies’ compliance despite a recommendation that it would take five employees to successfully administer the law.
And while Prudential has thumbed its nose at the living wage, the city has yet to conduct its first periodic review of its contractors’ records, a requirement of the law, despite an assertion found in an internal city report of anecdotal evidence suggesting “some employers” might be skirting it.
“It’s not surprising, but we think it’s important to raise the standard and eliminate some of those practices,” said Quynh Nguyen, the living-wage organizer for the Center on Policy Initiatives, a left-leaning research group that advocated for the living wage.
Nguyen is one of several people who are expected to rally Tuesday for Maria Gurrola, a laundry worker at the Prudential facility in Chula Vista. Gurrola filed a complaint with the city’s Purchasing and Contracting Department on Monday, alleging the company has been paying her $8.38 per hour plus health benefits. For a 40-hour week, the difference between the living-wage level and her pay is nearly $65.
Gurrola’s complaint, filed in conjunction with a letter from the laundry workers’ union, is the first received by the city, said Nora Nugent, the city’s living-wage administrator.
The complaint was not a shock to the Sanders administration, which was told bluntly by Prudential earlier that the company was refusing to comply. It had assured the city a year ago that it would.
On Jan. 24, the company was sent a letter confirming the city and company’s intentions to extend its uniform contract by three months. Prudential General Manager Bryan Harris signed the one-page contract, but only after crossing out a sentence that stated, in part, “It is further understood that as part of this agreement your company will ensure full compliance with the Living Wage Ordinance.”
A month later, Harris returned a contract for providing laundry service for the city’s Streets Division after checking a “no” box that followed the question on whether Prudential would pay a living wage.
On Feb. 21, Harris wrote an e-mail to Sanders saying Prudential would no longer be able to carry out the service. He noted that his delivery staff and production staffs were both represented by labor unions, but that the living wage was impractical for local laundry companies.
“With that in mind, I would guess that the city likely will have to take the processing of their uniforms outside of the county,” Harris wrote. “Moving the city’s business to a company based outside of San Diego, to let’s say Los Angeles, seems to me to be diametrically opposed to the city’s commitment to it’s [sic] own tax paying constituents.”
The contracts for the laundry service will be fielded by Los Angeles-based AmeriPride beginning Aug. 10, Nugent said. Chief Deputy City Attorney Michael Calabrese said the decision to solicit bids on the contract was based on Prudential’s defiance of the living-wage law and other issues.
Prudential opted not to bid again on the contract, and Harris remains unapologetic about Prudential’s decision.
“We followed all the guidelines of the city and we actually said we do not comply with living wage,” he said in a brief interview Monday. “We never signed anything that said we were going to.” The company had agreed on a July 31 contract to pay a living wage, but Harris would not comment on that decision.
Harris said the city didn’t exercise an option to pay the company more money to compensate for the added expense despite a requirement that the city absorb the new costs. The company had asked the city for an additional $1,540 per week — a 50 percent cost increase — in January.
The business community has long complained about the living-wage rule, launching a fierce campaign to defeat the initiative when it was proposed to the City Council. Businesses that would potentially be impacted by the law complained that it added layers of new expense to their operations.
For Michael Berumen, president of Four Star Private Patrol, it has become much more expensive for his Temecula-based company to provide security at the city’s wastewater plants. But he noted that it is the city government and not his company that is shouldering the cost 35 percent increase attributable to the living wage.
“We did take a hit, but ultimately, like anything else, we passed it on to the consumer, which is the city,” Berumen said. “If one were to make the economic argument against doing this, it would be that it increases the cost to the taxpayer and not the business.”
In a February internal report, Nugent said the rule caused the city’s contracts to expand by about $931,000 during the first six months of the ordinance, a 24 percent increase.
For taxpayer groups, the increases are untimely. The city is wrestling with multibillion-dollar deficits in its retirement and infrastructure costs. Recent budgets for park maintenance, swimming pools and police officers have been constrained by those long-term costs.
Sanders, who oversees the administration of the living wage, told voters when he ran for mayor that he opposed the rule because it added cost to the city’s budget. But spokesman Fred Sainz said the mayor believes the city should carry out the law despite his political opposition to it.
“There is a serious effort to enforce the law that applies,” Sainz said.
The city’s enforcement of the law is driven by complaints and by periodic spot checks of payroll records. The city will begin randomly inspecting contractors’ records as their contracts come up for renewal, Sainz said, but the accounts were not examined during the law’s first year.
Sainz said Sanders disagrees with Nugent’s assertion that “currently assigned staffing is insufficient to performing excellent [living wage] administration” despite a pledge that the city will being ramping up its oversight of the rule.
“Every single law does not need a team of civil service employees attached to it, 24-7,” Sainz said.
The Purchasing and Contracting Department, which monitors the living-wage issue, was the first city department to undergo Sanders’ streamlining initiative, known as “business process reengineering,” in which departments try to become more efficient and better performing.