Palo Alto's new minimum-wage law officially became a reality on Monday night, though in formally approving the new ordinance the City Council agreed to reconsider its application to tipped employees.
The decision to revisit the topic of whether the new $11-per-hour rate should apply to servers and other tipped workers was sparked by a last-minute push from the restaurant industry.
Owners of more than two dozen local restaurants signed a letter calling for the city to reconsider the minimum-wage law, which was initially approved last month and was scheduled to pass on a "second reading" (which is usually a formality) on Monday night.
The council agreed that the ordinance they passed in late August shouldn't be changed and it should apply to tipped and non-tipped employees alike. But members also committed to discussing the subject of tipped workers further and, if needed, to modify the ordinance at a later date.
Under the approved ordinance, Palo Alto's first local minimum wage is set to go into effect on Jan. 1, the same day that the state minimum wage is set to move up to $10 an hour. The council also agreed to explore plans for getting to a $15-per-hour minimum wage by 2018.
Jessica Lynam, director of government affairs for the California Restaurant Association, submitted a letter and addressed the council on the topic, urging council members to hold off on the wage increase. The letter noted that Cities Association of Santa Clara County had recently agreed to do a regional economic study on the topic and requested that all cities join the effort.
"Furthering a Minimum Wage proposal within the City of Palo Alto at this juncture will not benefit the community as a whole," the letter states. "The study will reflect the County of Santa Clara as a region and will dive deeply into many points that citizens within the community have asked the council during testimony to look into, such as exemptions and other impacts of the minimum wage."
Local business owners who expressed concerns about the new proposal included Laura Ekwall and Michael Ekwall, owners of La Bodeguita del Medio. Laura Ekwall read off a list of businesses with similar concerns, a group that includes St. Michael's Alley, Pizzeria Delfina, Old Pro, Sundance Steakhouse, Local Union 271 and Zola.
Michael Ekwall told the council that without the exemption, every penny of the minimum-wage increase will go directly to "some of our most highly compensated employees" those whose wages are supplemented by tips."
"All our non-tipped employees already earn more than the proposed minimum wage and they will receive no benefit from the minimum-wage proposal," Ekwall said.
The council had already committed at a prior meeting to further consider exemptions in the ordinance for certain workers, including tipped employees and teenagers with seasonal jobs.
On Monday night, the council decided to pay specific attention to tipped workers and to have its Policy and Services Committee consider the topic in the near future.
While Councilmen Marc Berman and Cory Wolbach argued that the council should stay on its original course and consider tipped workers in the context of other exemptions, the majority agreed that these workers should get priority consideration.
Councilman Greg Scharff and Councilwoman Liz Kniss, who respectively made and seconded the motion to revisit the topic, said the proposal basically elevates the priority level of this discussion.
"It's the only group out there that's complained about it," Scharff said, referring to restaurant owners and their concerns about tipped workers. "I haven't seen any other group complaining about the wage increase."
Councilman Eric Filseth agreed.
"This one has priority," he said. "We have to deal with it forthwith."
After Wolbach's amendment to hew the original plan failed, the council voted 8-0 on Scharff's motion to send the subject of exemptions for tipped workers to its committee.
"An exemption all employees who might be eligible for a tip is a very terrible idea, but I look forward to discussing it in the future," Wolbach said.