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The Detroit Living Wage Ordinance, passed by City of Detroit voters last November, applies to employers who, on or after December 16, 1998 and in an amount in excess of $50,000.00, either (a) obtain a contract to provide services to the City of Detroit or (b) receive financial assistance from the City. Although the term "financial assistance" is not specifically defined in the Ordinance, it includes monies received as part of a federal grant program administered by the City, revenue bond financing, planning assistance, tax abatements and tax credits. Subcontractors of covered employers and leaseholders at sites subsidized by such financial assistance are likewise covered.

The Ordinance requires a covered employer to pay certain employees wages equal to 100% of the federal poverty level if health benefits are furnished and 125% if no health benefits are furnished. This currently equates to $8.23 per hour and $10.28 per hour, respectively. (By contrast, the federal minimum wage rate is $5.15 per hour.) The federal government is expected to issue a new federal poverty level amount in the near future which would require revision of the Ordinance "living wage" amounts. While "health benefits" are defined in the Ordinance as "fully paid, comprehensive family medical coverage," we expect that standard health coverages calling for employee deductibles and co-pay will be sufficient.

The employees eligible for the "living wage" are those who perform work under the City contract for the covered employer and/or those working at a job site receiving the benefit of the City financial assistance. It is noteworthy that employees working on a City contract need not be located within Detroit to be entitled to the living wage. Full and part time employees are eligible.

The Ordinance directs that "to the greatest extent feasible," a covered employer shall hire Detroit residents to fill new positions created as a result of the contracts or financial assistance encompassed by the Ordinance.

Contracts with the City and grants of financial assistance will require the covered employer to agree to comply with the Ordinance. Covered employers are also required to post a copy of the living wage rate at any job site subject to the Ordinance. The Ordinance is administered by the City Purchasing Department. Remedies for violation of the Ordinance include (a) back pay of any living wage deficiency to each affected employee, (b) withholding of payments or financial assistance by the City, (c) a penalty of $50.00 per day for each day of willful violation, and (d) termination of the City contract or financial assistance for willful or repeated violations. The Ordinance also permits an employee to file a complaint with the City Purchasing Department. After 90 days if the employee is not satisfied with the resolution, the employee may file a lawsuit to enforce the Ordinance. An employee who prevails in such lawsuit is to be awarded reasonable attorney fees and costs.

The Ordinance is imprecise and implementation by the City will undoubtedly involve a trial and error process. Questions on the Ordinance can be directed to a member of the BL&D Labor and Employment Law Group.

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