This Chapter 82 shall be known as and may be cited as the San Francisco Local Hiring Policy for Construction (“Policy”).
(Added by Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017)
(Former Sec. 82.1 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
(a) Recognizing that the construction industry is one of the few industries providing a path to middle-class careers for individuals facing barriers to quality employment, the City has supported local hiring requirements since at least 1994 when the Board of Supervisors passed Ordinance No. 286-94. In 2010, after engaging in extensive fact-finding studies and hearings regarding the benefits of supporting hiring of disadvantaged local residents, the City enacted Ordinance No. 311-10, the Local Hiring Policy for Construction, to create mandatory local hiring requirements for its public work contracts. In the years following, the City extended the Policy to apply to construction projects on City-owned property and on City-owned property sold for Housing Development, as defined in Section 23.61 of the Administrative Code, by enacting Ordinance No. 85-14 and Ordinance No. 224-15, respectively. The City has a proprietary interest in the construction contracts it issues, and also has a proprietary interest in the leases and development agreements that it enters that all allow for construction on City-owned property.
(b) The Policy is necessary to counteract the loss of middle-income jobs and disproportionate concentration of high unemployment in several San Francisco neighborhoods, which face concentrated poverty. San Francisco’s job growth rate and changing job base has had major impacts on patterns of income inequality and disparity in the City, with distinctive, adverse, neighborhood-specific effects. The loss of middle-income jobs has been associated with a diminishing middle class in San Francisco, as indicated by rising income inequality. San Francisco’s unequal income distribution threatens the City’s future competitiveness and overall economic stability, and the City’s anti-poverty strategy aims to ensure that the City and its partners are marshaling limited resources in an effective and coordinated way to create economic opportunities in San Francisco’s low-income communities.
(c) The Policy advances the City’s workforce and community development goals, removing obstacles that may have historically limited the full employment of local residents on the opportunities created by covered projects, curbing unemployment, population decline, and reduction in the number of businesses located in certain neighborhoods in the City. Reports show that the Policy has proven to be a highly effective tool in guaranteeing good-paying jobs for local residents.
(d) The Board of Supervisors desires to ensure that employment and training opportunities created by such projects provide consistent and high-quality opportunities to the San Francisco labor pool, especially low-income residents of San Francisco and other disadvantaged residents. The City has made substantial public investments in its workforce development system to create job opportunities in industries such as construction, which are vital to the economic health of the local economy, are accessible to low- and middle-skilled individuals, have career ladder opportunities where workers can move up with additional training and skill development, and provide access to living wage and family-sustaining jobs. Construction projects subject to the Policy provide a crucial opportunity to connect participants to these workforce development programs and to sustained employment and training opportunities.
(e) The Policy initially established a 20% local hiring requirement, with an annual 5% increase towards a 50% requirement. Since its enactment in 2011, the Board of Supervisors has acted twice to maintain the local hiring requirement at 30% through March 24, 2017, by adopting Resolution No. 80-14 and Resolution No. 74-15, based on recommendations of the Mayor’s Construction Workforce Advisory Committee. In order to sustain the Policy’s goals, again based on recommendations from the Advisory Committee, the Board of Supervisors desires to set the local hiring requirement permanently at 30%. The Board of Supervisors, however, has not changed its intent with regard to the aspirational goal of a 50% requirement, and may increase the local hiring requirement through a legislative amendment in response to future market conditions.
(Added by Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017)
(Former Sec. 82.2 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
For purposes of this Chapter 82, the following terms shall have the following meanings:
Apprentice. Any worker who is indentured in a construction apprenticeship program that maintains current registration with the State of California’s Division of Apprenticeship Standards.
Area Median Income, or AMI. Unadjusted median income levels derived from the Department of Housing and Urban Development (HUD) on an annual basis for the San Francisco area, adjusted solely for household size, but not high housing cost area.
Awarding Department. A department or commission empowered on behalf of the City to contract for a Covered Project.
City. The City and County of San Francisco, California.
Contractor. Any person, firm, partnership, owner operator, limited liability company, corporation, joint venture, proprietorship, trust, association, or other entity that contracts directly to perform construction work on a Covered Project. A Contractor may also be referred to as a “Prime Contractor” or “General Contractor.”
Core Employee or Worker. An Apprentice or journey level employee, who possesses any license required by Federal or State law for the Project Work to be performed, of a Contractor or Subcontractor, who appears on that Contractor or Subcontractor’s certified payroll 60 of the previous 100 calendar days prior to date of award of a City contract.
Covered Project. A Public Work or Improvement project, construction project, or part thereof, to which this Chapter 82
applies, under standards set forth in Section 82.4.
Disadvantaged Worker. A Local Resident who (a) resides in a census tract within the City with a rate of unemployment in excess of 150% of the City unemployment rate, as reported by the State of California Employment Development Department; or (b) at the time of commencing work on a Covered Project has a household income of less than 80% of the AMI, or (c) faces or has overcome at least one of the following barriers to employment: being homeless; being a custodial single parent; receiving public assistance; lacking a GED or high school diploma; participating in a vocational English as a second language program; or having a criminal record or other involvement with the criminal justice system.
Local Resident. An individual who is domiciled, as defined by Section 349(b) of the California Election Code, within the City for at least seven days immediately prior to commencing work on the project.
New Hire. Any employee of a Contractor who is not listed on the Contractor’s quarterly tax statements for the tax period and has been hired prior to the commencement of work.
OEWD. The City’s Office of Economic and Workforce Development.
Project Work. Construction work performed as part of a Covered Project.
Project Work Hours. The total hours worked on a construction contract by all Apprentices and journey level workers, whether those workers are employed by the Contractor or any Subcontractor.
Public Work or Improvement. A Public Work or Improvement as that term is defined in Section 6.1 of the Administrative Code as amended from time to time.
Subcontractor. Any person, firm, partnership, owner operator, limited liability company, corporation, joint venture, proprietorship, trust, association, or other entity that contracts with a Prime Contractor or another subcontractor to provide services to a Prime Contractor or another subcontractor in fulfillment of the Prime Contractor’s or that other subcontractor’s obligations arising from a contract for construction work on a Covered Project.
Targeted Worker. A Local Resident or Disadvantaged Worker.
(Former Sec. 82.3 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
(a) Threshold for Public Work and Improvement Projects. This Policy applies to contracts issued by the City with Prime Contractors for Public Works or Improvements estimated to cost in excess of the Threshold Amount set forth in Section 6.1 of the Administrative Code, as that amount may be amended from time to time.
(b) Threshold for Projects Constructed on Property Owned or Sold by the City.
(1) For purposes of this Chapter 82 only, this Policy applies to
(A) all construction projects on real property owned by the City; and
(B) all construction projects on City-owned real property located within the jurisdictional boundaries of the City and County of San Francisco that is sold to private parties, or their successor in interest, for the purpose of Housing Development, as defined in Section 23.61(a) of the Administrative Code;
provided that, under either subsection 82.4(b)(1)(A) or subsection 82.4(b)(1)(B), the project is estimated to cost in excess of the Threshold Amount set forth in Section 6.1 of the Administrative Code, as that amount may be amended from time to time, including construction contracts that are issued by an entity or individual other than the City.
(2) The following construction projects are exempt from this subsection 82.4(b):
(A) tenant improvement projects estimated to cost less than $750,000 per building permit, where the project is undertaken and contracted for by the tenant;
(B) projects for special events where the special event is three or fewer consecutive or non-consecutive days within a two-week period;
(C) construction projects for which the construction work is fully funded and performed by a donor or donor’s agent as a gift-in-place donation, where the gift agreement does not require City funds to be used for the construction and where the gift agreement includes a requirement that workers be paid the same prevailing rate of wages as would be required for a Public Work project; and
(D) projects that as of July 19, 2014, the effective date of a prior amendment to the Policy, have a term sheet that has been endorsed by the Board of Supervisors and have findings of fiscal feasibility, to the extent that such projects agree to be bound by a legally enforceable document, enforceable by OEWD, committing the project to Local Hire mandatory participation level of 30% per trade. All grant agreements, leases, development agreements, and other contracts that the City enters into that allow for such non-exempt construction projects on property owned by the City must contain a provision that such construction shall comply with this Policy.
(c) Projects Constructed Outside the City. Covered Projects constructed outside the jurisdictional boundaries of the City and County of San Francisco shall be governed by the terms of this Policy, except that percentage requirements shall apply in proportion to the City’s actual cost after reimbursement from non-City sources compared to the total cost of the project, and, unless a reciprocity agreement exists, the “local” requirement shall include San Francisco residents, and workers residing within the San Francisco Public Utilities Commission service territory. If a reciprocity agreement with another local agency exists, the terms of that reciprocity agreement shall govern. Awarding Departments shall work with OEWD and regional local hiring programs to comply.
(d) Projects Utilizing Federal or State Funds.
(1) Segregation of Funds and Contract Awards. Where the application of this Policy would violate Federal or State law, or would be inconsistent with the terms or conditions of a grant or a contract with an agency of the United States or the State of California, the City department or agency receiving the grant or contract shall, where administratively feasible, segregate Federal or State funds from City funds, and/or segregate project administration and contracts, so as to maximize application of this Policy to City-funded construction work.
(2) Alternative Terms in Case of Conflict. Where the provisions of this Policy would be prohibited by Federal or State law, or where the application of this Policy would violate or be inconsistent with the terms or conditions of a grant or a contract with an agency of the United States or the State of California, and where segregation of funds pursuant to subsection 82.4
(d)(1) is not administratively feasible with regard to some or all of the project in question, then OEWD, in consultation with the Awarding Department, shall adapt requirements of this Policy into a set of contract provisions that advance the purposes of this Policy to the maximum extent feasible without conflicting with Federal or State law or with terms or conditions of the State or Federal grant or contract in question. The Awarding Department shall include this set of contract provisions in the contract for the Covered Project with regard to the project or portions of the project for which this Policy would conflict with Federal or State requirements.
(e) Out-of-State Workers. Project Work Hours performed by residents of states other than California shall not be considered in calculation of the number of Project Work Hours to which the Local Hiring Requirements apply. Contractors and Subcontractors shall report to Awarding Departments and OEWD the number of Project Work Hours performed by residents of states other than California.
(Added by Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017)
(Former Sec. 82.4 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
(a) For each Covered Project, the following requirements shall apply to each Prime Contractor and Subcontractor that performs Project Work in excess of the Threshold Amount set forth in Section 6.1 of the Administrative Code, as that amount may be amended from time to time, with regard to Project Work actually performed by the Prime Contractor and work included under any subcontract, including all work performed by a Subcontractor and all lower-tier Subcontractors under the subcontract:
(1) The mandatory participation level shall be 30% of all Project Work Hours within each trade performed by Local Residents, with no less than 15% of all Project Work Hours within each trade performed by Disadvantaged Workers.
(2) At least 50% of the Project Work Hours performed by Apprentices within each trade shall be performed by Local Residents, with no less than 25% of Project Work Hours performed by Apprentices within each trade to be performed by Disadvantaged Workers.
(b) Pipeline and Retention Compliance. Contractors and Subcontractors may use one or more of the following pipeline and retention compliance mechanisms to receive a conditional waiver from the Local Hiring Requirements on a project-specific basis:
(1) Specialized Trades. Every two calendar years, OEWD shall publish a list of trades designated as “Specialized Trades,” for which the Local Hiring Requirements of this Policy shall not be applicable. Prior to designating a trade as a Specialized Trade, OEWD shall have made findings that: (A) considering all referral sources and best estimates of workers residing in the City, there will be insufficient numbers of qualified and available Local Residents and Disadvantaged Workers to enable Contractors and Subcontractors to satisfy the Local Hiring Requirements for such trade; and (B) best estimates indicate that on all Covered Projects during those calendar years, in the aggregate, demand for work hours in such trade will not exceed a maximum number of hours as determined by OEWD through the regulatory process set forth in subsection 82.9(a). All Contractors and Subcontractors shall report to OEWD the Project Work Hours utilized in each designated Specialized Trade.
(2) Credit for Hiring on Non-covered Projects. Contractors and Subcontractors may accumulate credit hours for hiring San Francisco Disadvantaged Workers on non-covered projects in the nine-county San Francisco Bay Area and apply those credit hours to contracts for Covered Projects to meet the applicable minimum mandatory hiring requirements set forth above or to work off penalties assessed under subsection 82.8(f). OEWD shall establish criteria for credit hours and their application to meet the minimum participation requirements. OEWD shall consider credit hours to be accumulated for work on non-covered projects performed by San Francisco Disadvantaged Workers only if (A) the San Francisco Disadvantaged Worker performing work on the non-covered project is paid prevailing wages for such work; and, (B) in the case of non-covered projects in the City, the number of hours to be credited for the non-covered project in question exceeds one-half of the number of Disadvantaged Worker hours that would be required if the project were a Covered Project.
(3) Sponsoring Apprentices. A Contractor or Subcontractor may avoid the assessment of penalties under subsection 82.8(f) for failing to meet applicable hiring requirements by demonstrating the high impracticality of complying with the mandatory participation level for a particular contract or classes of employees before project commencement by agreeing to sponsor an OEWD-specified number of new Apprentices in trades in which noncompliance is likely and retaining those Apprentices for the entire period of a Contractor’s or Subcontractor’s work on the project. OEWD will verify with the California Department of Industrial Relations Division of Apprenticeship Standards that the OEWD-specified number of new Apprentices are registered and active Apprentices prior to issuing a release from penalties.
(4) Direct Entry Agreements. OEWD is authorized to negotiate and enter into direct entry agreements with apprenticeship programs that are registered with California Department of Industrial Relations’ Division of Apprenticeship Standards, and, if OEWD is successful in such negotiations, to develop standards and procedures through which Contractors and Subcontractors may avoid assessments of penalties by hiring and retaining Apprentices who enrolled through such direct entry agreements. Such standards and procedures shall allow avoidance of penalty assessments only where OEWD has made a project-specific determination that compliance with Local Hiring Requirements would be impractical for that Contractor or Subcontractor. Direct entry agreements negotiated pursuant to this subsection 82.5(b)(4) shall: (A) be enforceable contracts; (B) require apprenticeship programs to enroll a class of Apprentices no less frequently than every 365 days; (C) specify all admissions standards related to applicants’ training and skills; (D) specify a minimum number of Local Residents and Disadvantaged Workers meeting those standards who shall be admitted in each class of Apprentices; and (E) be on file with and deemed permissible by the Division of Apprenticeship Standards. OEWD’s annual report to the Board of Supervisors as required by subsection 82.9(f) shall include the number of releases from penalties granted based on this subsection 82.5(b)(4), the number of Local Residents enrolled as Apprentices based on direct entry agreements, and the number of direct entry agreements in effect, and shall identify the trades in question.
(Added by Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017)
(Former Sec. 82.5 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
(a) Incentive Criteria. Contractors and Subcontractors may receive financial and non-financial incentives for exceeding the Local Hiring Requirements on a Covered Project. Project Work Hours credited under subsection 82.5(b) shall not be the basis for any financial or non-financial incentive payment or entitlement.
(b) Administration. Awarding Departments will work in consultation with OEWD to establish the operation and amounts of the incentives, if any.
(1) Any financial incentives provided on a Covered Project shall comply with applicable law and shall not exceed 1% of the estimated cost of the project. If financial incentives are made available for a Covered Project, Awarding Departments shall pay such incentives, if earned by a Contractor or Subcontractor, only after a Contractor or Subcontractor has completed work on the project and OEWD has approved the Contractor’s or Subcontractor’s request for incentive payment. Subcontractors requesting incentive payments shall submit requests to the Awarding Department and OEWD through the Prime Contractor, not directly to the Awarding Department or OEWD. Payment of Subcontractor incentives shall be paid to the Prime Contractor for the benefit of the appropriate Subcontractor(s). The Prime Contractor must pay Subcontractor(s) within 10 days of receipt of financial incentives from the City.
(2) OEWD shall, by regulation, develop non-financial incentives such as expedited permitting and reduced administrative burden.
(Added by Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017)
(Former Sec. 82.6 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
(a) Local Hiring Plan for Large Projects. For Covered Projects estimated to cost more than $1,000,000, the Prime Contractor shall prepare and submit to the Awarding Department and OEWD for approval a local hiring plan for the project. The local hiring plan shall be a written plan for implementation of the requirements of this Policy, including an approximate time frame for hiring decisions of Subcontractors, a description of the hiring processes to be utilized by Subcontractors, an estimate of numbers of Targeted Workers needed from various referral sources, qualifications needed for such Targeted Workers, and a recruitment plan detailing an outreach strategy for candidates representative of local demographics. An Awarding Department shall not issue a Notice to Proceed (NTP) without receiving the local hiring plan. The Awarding Department may issue a NTP upon submittal of the plan, but in no case may any payment be made until such time as it has verified in writing that OEWD has approved the Prime Contractor’s local hiring plan.
(b) Referral Sources. Where a Contractor’s or Subcontractor’s preferred hiring or staffing procedures for a Covered Project do not enable that Contractor or Subcontractor to satisfy the Local Hiring Requirements of this Policy, the Contractor or Subcontractor shall use other procedures to identify and retain Targeted Workers. These procedures shall include requesting workers from CityBuild, San Francisco’s centralized referral program, and considering Targeted Workers who are referred by CityBuild within three business days of the request and who meet the qualifications described in the request. Such consideration shall include in-person interviews. Qualifications described in the request shall be limited to skills directly related to performance of job duties. When a Contractor or Subcontractor has taken these steps and a Local Resident or Disadvantaged Worker is not available, Contractor or Subcontractor may request a conditional waiver as described in subsection 82.5(b).
(c) Hiring Discretion. This Policy does not limit Contractors’ or Subcontractors’ ability to assess qualifications of prospective workers, and to make final hiring and retention decisions. No provision of this Policy shall be interpreted so as to require a Contractor or Subcontractor to employ a worker not qualified for the position in question, or to employ any particular worker.
(d) Subcontractor Compliance. Each Contractor and Subcontractor shall ensure that all Subcontractors agree to comply with applicable requirements of this Policy. All Subcontractors agree as a term of participation on a Covered Project that the City shall have third party beneficiary rights under all contracts under which Subcontractors are performing Project Work. Such third party beneficiary rights shall be limited to the right to enforce the requirements of this Policy directly against the Subcontractors. All Subcontractors on a Covered Project shall be responsible for complying with the recordkeeping and reporting requirements set forth in this Policy. Subcontractors with work in excess of the Threshold Amount shall be responsible for ensuring compliance with the Local Hiring Requirements set forth in Section 82.5 based on Project Work Hours performed under their Subcontracts, including Project Work Hours performed by lower tier Subcontractors with work less than the Threshold Amount.
(Added by Ord. 84-17, File No. 170004, App. 3/30/2017, Eff. 4/29/2017, Retro. 3/25/2017)
(Former Sec. 82.7 added by Ord. 148-99, File No. 990433, App. 6/2/99; repealed by Ord. 171-03. File No. 030422, App. 7/3/2003)
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