Montgomery County Council

March 24, 1999

Questions and Answers on the Living Wage Bill

Q: What does the Living Wage legislation require?

A: The legislation applies to County government contracts or subcontracts involving five or more employees or $50,000 or more annually. It requires that these contractors pay employees who are paid with County funds a living wage of $9 an hour (112 percent of the federal poverty level for a family of 4) if family health insurance is provided comparable to that offered by the County and with the employer paying at least 80 percent of the premium), and $10.44 per hour (130 percent of the federal poverty level) without health benefits.

The legislation also applies to businesses receiving more than $100,000 in County economic development assistance. These companies must pay the living wage described above to all employees at the site of the assistance, including to an employee of a contractor of subcontractor whose primary work site is located on the property when it receives assistance.

Q: Does this apply to all businesses and employees in Montgomery County?

A: No.

This legislation only applies to County government contracts and to companies receiving business tax credits or other economic assistance from the County. And, even within these contracts and assistance agreements, it doesn’t apply to any employee who already earns more than the $9 (with benefits) or the $10.44 (without benefits).

Q: Are there exemptions?

A: Yes.

If you are a County government contractor or grant recipient, you are exempt if you have fewer than 5 employees or if you receive or will receive less than $50,000 from the County during a 12-month period.

Businesses receiving less than $100,000 in County government economic development assistance are also exempt.

Businesses and organizations located in the Silver Spring urban renewal area are exempt both as contractors and as those receiving economic development assistance.

A majority of Councilmembers have stated that the final legislation will exempt County enterprise zones as well. The County’s two enterprise zones are downtown Silver Spring and downtown Wheaton.

In addition, the following conditions either supersede, result in , or may result in a living wage exemption:

Q: Does it apply to all County government agencies?

A: No.

It does not apply to the Montgomery County Public Schools, the Housing Opportunities Commission, the Washington Suburban Sanitary Commission, and the Park and Planning Commission.

Q: Who is responsible for administering and enforcing the law?

A: The Director of Procurement must actively enforce and investigate complaints of violations.

Q: What are the penalties for non-compliance?

A: Potential loss of County government contract or economic development assistance. In addition, an aggrieved employee may file a civil action to enforce payment of wages and recover any unpaid wages and a reasonable attorney’s fee.

Q: Will County government employees also receive a living wage?

A: Yes.

Councilmembers and the County Executive are committed to extending the wage provisions in the legislation to County government employees, almost all of whom are already paid above the requirements of this legislation. The estimated annual cost for full and part-time County employees is less than $1 million.

Q: How many employees would be covered or affected by the legislation?

A: Thousands of employees would be covered, but only employees currently paid below the living wage requirement would be affected. Since employers are not currently required to disclose to County government the wages of their employees, there is some difficulty in estimating numbers. About 1,000 to 1,500 may be a reasonable number.

Q: What is the estimated fiscal impact?

A: That would depend on the numbers involved and the share of the cost that might be borne by the County or the covered organization/business. If 1,000 employees were affected and their average wage increase was $1.50 an hour, and the cost was absorbed equally by the county and covered organizations, the annual cost to the County would be $1,560,000.

Q: What economic development assistance would and would not be exempt under this bill? How would this affect a company like Marriott?

A: Any economic development assistance agreement first contracted for before July 1, 2000 would be exempt. However, any new assistance after July 1, 2000 would be covered, as would all tax credits, which must be approved annually. For Marriott, this means the economic development assistance portion of the package, so long as it is closed before July 1, 2000 would be exempt. The tax credits portion of the package would not.

Q: Would the requirements for living wage coverage mean that any employee working at any location for a given company within Montgomery County that makes less than the living wage requirement would be covered – or just assisted location?

A: Just the assisted location.

Q: What is the effective date of the legislation?

A: July 1, 2000

Bobbi Walton, (301) 217-6614