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(a) The Agency shall monitor Contractors for compliance with the requirements of this Article and investigate complaints of violations. The Agency shall promulgate guidelines or rules for the administration of this Article. Such guidelines and rules shall not be adopted finally by the Agency until the Agency has held a public hearing. The guidelines and rules shall establish procedures for monitoring Contractors, receiving and investigating complaints, and determining whether a Contractor has breached a Contract based on the Minimum Compensation requirements of this Article. The guidelines and rules shall also establish procedures permitting Contractors to provide payroll information in confidence to the City for purposes of monitoring compliance under this Article and authorizing disclosure of the information by the City only when necessary for enforcement purposes. Upon the request of a Contracting Department, the Agency shall also issue a determination as to whether a particular instrument constitutes a Contract or agreement is subject to the requirements of this Article. The Agency shall report annually on compliance with this Article to the Board of Supervisors. Such report shall include cumulative information regarding the number of waivers granted by the Agency pursuant to Sections 111.10 and 111.11 of this Article and statistical data regarding such waivers.
(b) If the Agency determines that a Contractor is in breach of any term required to be contained in the Contract under this Article, the Agency shall notify the Contracting Department of its findings and of any action that the Agency requests the Contracting Department to take with respect to such breach. In order to ensure compliance with this Article and to enhance the monitoring activities of the Agency, the City desires to encourage reporting by Covered Employees of any breach. The Agency shall investigate any such report, The Agency shall keep confidential, to the maximum extent permitted by applicable laws, the Covered Employee’s name and other identifying information.
(c) In addition to any other rights or remedies available to the City under the term of the Contract or under applicable law, the City shall have the following rights, in the event of such failure by the Contractor:
(1) The right, at the discretion of the Agency, to charge the Contractor an amount equal to the difference between the Minimum Compensation levels required by this Article and any compensation actually provided to each Covered Employee who was not paid in accordance with the terms of this Article, together with simple annual interest of ten (10) percent on such amount from the date payment was due;
(2) The right, at the discretion of the Agency, to set off all or any portion of the amount described in the preceding clause (1) of this Subsection against amounts due to Contractor under the Contract;
(3) The right, at the discretion of the Contracting Department, to terminate the Contract in whole or in part;
(4) In the event of a breach by Contractor of the covenant referred to in Section 111.5(d), the right, at the discretion of the Agency, to require reinstatement of the affected Covered Employee and, if necessary, seek a court order for such reinstatement or to obtain other appropriate equitable relief and, in addition, to require payment of any wages lost because of the Contractor’s discriminatory or retaliatory action, together with simple annual interest of up to ten (10) percent from the date payment should have been made; and
(5) The right, at the discretion of the Agency or the Contracting Department, to bar a Contractor from entering into future contracts with the City for three (3) years.
(6) The City may bring a civil action against the Contractor to pursue the remedies provided by this Article and other applicable law. The prevailing party shall be entitled to all costs and expenses, including reasonable attorneys’ fees.
Each of these rights shall be exercisable individually or in combination with any other rights or remedies available to the City. Any amounts realized by the City pursuant to this subsection shall be paid to each applicable Covered Employee.
When this Article authorizes the Agency to charge interest, in determining the appropriate amount to charge the Agency shall give due consideration to the size of the Contractor’s business, the Contractor’s good faith, the gravity of the violation, and the history of previous violations.
(d) Each Covered Employee shall be a third-party beneficiary under the Contract as set forth in this subsection and in subsection (e) of this Section, and may pursue the following remedies in the event of a breach by the Contractor of any contractual covenant described in Section 111.5(a) or Section 111.5(d), but only after the Covered Employee has provided the notice and participated in the administrative review hearing provided in this subsection. The Covered Employee shall give written notice of a breach to the Contractor and to the Agency. If the Agency and the Contracting Department determine that no breach has occurred, or if the Contracting Department fails to obtain the cure of a breach by the Contractor within sixty (60) days after receipt of notice by the Covered Employee, the Covered Employee may request an administrative review hearing. The Covered Employee must request such a hearing within ninety (90) days after giving written notice of the breach. Unless the Covered Employee withdraws the request for a hearing, the Agency shall conduct, or arrange to have conducted, a hearing. The Employee shall have the right to attend the hearing personally or through a designated representative. The Agency shall notify the Contractor of the hearing so that the Contractor may attend and present evidence. After the hearing is completed, the person conducting the hearing shall determine whether the Contractor has breached the Contract. Upon the issuance of a written decision finding a breach, and after a waiting period of twenty-one (21) days, the Covered Employee may bring an action against the Contractor for such breach in the Superior Court of the State of California, as appropriate, unless the City has commenced an action against the Contractor based on the breach, or obtained compliance, within the twenty-one-day waiting period and provided notice to the Covered Employee of that action. If the Covered Employee prevails in such action, the Covered Employee may be awarded: (1) an amount equal to the difference between the Minimum Compensation and any compensation actually provided to the Covered Employee, together with simple annual interest of ten (10) percent on such amount from the date payment was due; and (2) in the event of a breach by Contractor of the covenant referred to in Section 111.5(d), the right to seek reinstatement or to obtain other appropriate equitable relief.
(e) In the event of any legal action or proceeding between Contractor and a Covered Employee arising from this Agreement, the unsuccessful party to such action or proceeding shall pay to the prevailing party all costs and expenses, including reasonable attorneys’ fees and disbursements, incurred by such prevailing party in such action or proceeding and in any appeal in connection with such action or proceeding; provided, however, that a Contractor shall be entitled to such costs and expenses only if the court determines that the Covered Employee’s action or proceeding was frivolous, vexatious or otherwise an act of bad faith. If such prevailing party recovers a judgment in any such action, proceeding or appeal, such costs, expenses and attorneys’ fees and disbursements shall be included in and as a part of such judgment.
(f) The City shall maintain the confidentiality of payroll information obtained in the course of monitoring compliance with this Article and shall disclose such information only as necessary for enforcement purposes.
(g) The Agency shall develop a procedure for obtaining an assurance from Contractors when they sign an agreement subject to this Article that they comply with the requirements of this Article, such as the signing of an affidavit of compliance.
(h) The Agency may compromise and settle unlitigated claims that Contractors have violated the requirements of this Article, including Contractors that have agreements for real property as set forth in Section 111.4.
(i) All Contractors and Contracting Departments shall cooperate fully with the Agency in connection with any investigation of an alleged violation of this Article or with any inspection conducted by the Agency.
(Added as Administrative Code Sec. 12P.6 by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007; redesignated by Ord. 221-23, File No. 230835, App. 11/3/2023, Eff. 12/4/2023, Oper. 1/4/2024)
Every Contract and Contract Amendment entered into on or after the Effective Date of the Amendment shall contain a provision in which the Contractor agrees:
(a) To be liable to the City for liquidated damages as provided in this Section;
(b) To be subject to the procedures governing enforcement of a breach of the terms of a Contract, which terms are required by this Article, as set forth in Section 111.9;
(c) That Contractor’s commitment to pay the Minimum Compensation as required in this Article is a material element of the City’s consideration for the Contract and that the failure of Contractor to comply will cause significant and substantial harm to the City and the public which is extremely difficult to determine or quantify, and that the liquidated damages set forth in this Section are reasonable amounts to pay for the harm caused by the Contractor’s non-compliance;
(d) That for any failure to provide the required Minimum Compensation (hourly wage and time off), the Agency may require the Contractor to pay the City liquidated damages of up to one hundred dollars ($100.00) for each one-week pay period for each employee not provided the required compensation. The Agency shall adjust this amount proportionately for Contractors that use a pay period other than one (1) week;
(e) That for any failure to provide reports to the City or access to pertinent records, or any failure to cooperate with any audit, inspection or investigation conducted by the Agency, the Agency may require the Contractor to pay the City liquidated damages of up to one thousand dollars ($1,000.00);
(f) That while liquidated damages in the maximum amounts set forth in this Section are a reasonable estimate of the harm caused by the Contractor’s non-compliance with contractual provisions required by this Article, the Agency may determine that less than the full amount is warranted depending on the circumstances of each case. The Agency shall give due consideration to the following factors in determining the amount of liquidated damages: the size of the Contractor’s business, the Contractor’s good faith, the gravity of the violation, the history of previous violations, the failure to comply with record-keeping, reporting, anti-retaliation or other non-wage requirements, and the extent to which the imposition of liquidated damages would undermine the purpose of this Article by imposing unreasonable financial burdens on the Contractor, thereby restricting its ability to fulfill its obligations under this Article.
(Added as Administrative Code Sec. 12P.6.1 by Ord. 212-07, File No. 070921, App. 9/14/2007; redesignated by Ord. 221-23, File No. 230835, App. 11/3/2023, Eff. 12/4/2023, Oper. 1/4/2024)
(a) Determination of Violation. Upon determining that a Contractor may have violated the terms of a Contract required under this Article, the Agency shall send written notice to the Contractor of the possible violation and of the Contractor’s right to respond to the Agency’s initial determination by submitting pertinent documents and other information. The written notice shall also notify the Contractor that the Agency is authorized to direct the Controller to withhold payment otherwise due to the Contractor pursuant to the provisions of subsection (e). If after providing the Contractor with a reasonable opportunity to respond to the allegations the Agency makes a final determination that a violation has occurred, the Agency shall provide a written notice of violation to the Contractor.
(b) Right to Appeal. The Contractor may appeal the Agency’s final determination. The Contractor must file an appeal with the Agency in writing, specifying the basis for contesting the determination, no later than fifteen (15) days after the date of the notice of determination. Failure to file an appeal in writing with the Controller within fifteen (15) days shall cause the Agency’s determination to be deemed a final administrative decision by the City.
(c) Administrative Hearing.
(1) Within fifteen (15) days after the Agency receives an appeal, the Controller shall appoint a hearing officer and shall notify the Agency and the Contractor.
(2) The hearing officer shall promptly set a date for a hearing. The hearing shall commence within forty-five (45) days of the notification of the appointment of the hearing officer and conclude within seventy-five (75) days of such notification, unless all parties agree to an extended period.
(3) The Agency shall have the burden of producing evidence that the Contractor has violated the requirements of this Article and the burden of proving the violation.
(d) Hearing Officer’s Decision.
(1) Within thirty (30) days of the conclusion of the hearing, the hearing officer shall issue a written decision consisting of findings and a decision affirming, modifying, or vacating the Agency’s determination. If the hearing officer vacates the Agency’s determination in its entirety, that decision shall also vacate any assessment of liquidated damages. If the hearing officer affirms the Agency’s determination, the hearing officer shall issue a decision upholding the Agency’s determination, including the amount of the liquidated damages assessed by the Agency. With respect to liquidated damages, the hearing officer’s jurisdiction to modify the Agency’s assessment is limited and the following procedures apply. If the hearing officer modifies the Agency’s determination, the hearing officer shall transmit the decision to the Agency, which shall within five (5) business days modify the assessment of liquidated damages consistent with the hearing officer’s decision based on the criteria set forth in Section 111.8 and transmit the modified assessment to the hearing officer. Upon receiving the modified assessment from the Agency, the hearing officer shall within three (3) business days issue a final decision which shall include the amount of the liquidated damages assessment as modified by the Agency.
(2) The decision of the hearing officer shall be final. The Contractor may seek review of the hearing officer’s decision only by filing in the San Francisco Superior Court a petition for a writ of mandate under California Code of Civil Procedure, section 1094.5, as may be amended from time to time.
(3) The failure of the Controller or hearing officer to comply with the time requirements of this Section shall not cause the Controller or the hearing officer to lose jurisdiction over an appeal from the Agency’s determination filed under this Section.
(4) Upon receiving the hearing officer’s decision affirming or modifying the Agency’s determination, the Contractor shall take the corrective action, including the payment of liquidated damages, if any, within fourteen (14) days of receiving the hearing officer’s decision. If a Contractor fails to take corrective action within the time required by the provisions of this Section, the City may immediately pursue all available remedies against the Contractor.
(e) Withholding of Payments by Controller.
(1) When the Agency sends notice to a Contractor under Section 111.9(a) of its final determination that the Contractor has violated the requirements of this Article and of the Contractor’s right of appeal to the Controller, the Agency may direct the Contracting Department and the Controller to deduct from the payment or payments otherwise due to the Contractor the amounts that the Agency has determined the Contractor must pay to Covered Employees for violation of this Article and to the City for liquidated damages. The Controller, in issuing any warrant for any such payment, shall deduct the amounts specified by the Agency.
(2) The Controller shall withhold these funds until (A) the hearing officer issues a decision finding that the Contractor does not owe all or a portion of the amount withheld, in which case the Controller shall release funds to the Contractor consistent with the hearing officer’s decision or (B) the Contractor consents to the use of the funds to pay Covered Employees and/or the City the amounts that the Agency or hearing officer found due. As to any funds being withheld for which neither (A) nor (B) applies, the Controller shall retain the funds until the hearing officer’s decision is no longer subject to judicial review, at which time the Controller shall distribute the funds as provided in subsection (e)(3) of this Section, provided that this action is consistent with any final determination of a court of competent jurisdiction. Notwithstanding the provisions of this subsection, the Agency may authorize the release of payments withheld from the Contractor under this Section if the Agency determines that the continued withholding of funds imposes a substantial risk of endangering public health or safety, interfering with a service or project that is essential to the City, or having an unreasonable adverse financial impact on the City.
(3) The Controller shall distribute amounts withheld from Contractors under this Section in the following order:
(A) The Agency shall make its best efforts to distribute any amounts that are determined due to the Contractor’s Covered Employees to those individuals, or may require the Contractor to do so. The Controller shall hold the balance of any such amounts for Covered Employees whom the Agency and Employer, despite best efforts, cannot locate. Funds held for at least two (2) years shall be deposited in the City’s General Fund.
(B) Sums imposed as liquidated damages shall be deposited in the City’s General Fund.
(Added as Administrative Code Sec. 12P.6.2 by Ord. 212-07, File No. 070921, App. 9/14/2007; redesignated by Ord. 221-23, File No. 230835, App. 11/3/2023, Eff. 12/4/2023, Oper. 1/4/2024)
The Agency shall waive the requirements of this Article where the Contracting Department has certified in writing to the Agency, and the Agency has found that:
(a) The needed services under the applicable Services Contract are available only from a sole source; and the prospective Contractor is not currently disqualified from doing business with the City or any other governmental agency; or
(b) Pursuant to Chapters 6 and 21 of the Administrative Code, the Contract is necessary to respond to an emergency which endangers the public health or safety; and no entity that complies with the requirements of this Article and is capable of responding to the emergency is immediately available to perform the required services; or
(c) There are no qualified responsive bidders or prospective vendors that comply with the requirements of this Article; and the Contract is for a service, project, or property that is essential to the City or the public; or
(d) The Services to be purchased are available under a bulk purchasing arrangement with a federal, state or local governmental entity; purchase under such arrangement will substantially reduce the City’s cost of purchasing such Services; and purchase under such an arrangement is in the best interest of the City or the public.
(Added as Administrative Code Sec. 12P.7 by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007; redesignated by Ord. 221-23, File No. 230835, App. 11/3/2023, Eff. 12/4/2023, Oper. 1/4/2024)
A Nonprofit Corporation may seek a waiver from the requirements of Section 111.3(a)(1) if the highest paid managerial position in the organization earns a salary which, when calculated on an hourly basis, is not more than six (6) times the lowest wage paid by the organization to a Covered Employee. The Nonprofit Corporation shall provide to the Contracting Department a written statement, prepared and signed by the Nonprofit Corporation, setting forth an explanation of the economic hardship to the Nonprofit Corporation or the negative impact on services that would result from compliance with this Article. If the Contracting Department determines that the written explanation is adequate to justify the waiver and that substantial evidence supports the written explanation, it shall recommend the requested waiver to the Agency. The Agency shall grant the requested waiver. Each waiver shall be effective for a period of up to one (1) year, and subsequent waivers may be requested and granted.
(Added as Administrative Code Sec. 12P.8 by Ord. 216-00, File No. 001272, App. 8/9/2000; Ord. 212-07, File No. 070921, App. 9/14/2007; amended by Ord. 232-18, File No. 170297, App. 10/12/2018, Eff. 11/12/2018; redesignated by Ord. 221-23, File No. 230835, App. 11/3/2023, Eff. 12/4/2023, Oper. 1/4/2024)
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