Since 2005, Philadelphia has had an ordinance on the books that requires any person who employs more than five employees and is a "City financial aid recipient" or receives a covered "service contract" from the City to pay its employees at least 150% of the state or federal minimum wage, whichever is higher. Those entitled to this "super minimum wage" are employees performing work that arises directly out of the City financial aid or covered contract.
A person qualifies as a City financial aid recipient by receiving any of the following which, in the aggregate in any 12-month period, amounts to at least $100,000: grants, tax incentives, loan guarantees, or waiver of City fees. In addition, for-profit service contractors also are covered if they receive City contracts of $10,000 or more in a 12-month period and have more than $1,000,000 of annual gross receipts. Certain subcontractors also are covered. Financial aid recipients are required to comply for a period of five years following receipt of the aid.
Now, a bill has been introduced in City Council that would expand the law to treat anyone who leases property from a financial aid recipient with respect to that property as a financial aid recipient thus requiring the tenant to pay at least 150% of minimum wage to its employees.
Under existing law and the proposed bill it is unclear whether the 10-year real estate tax abatement or KOZ (Keystone Opportunity Zone) benefits are tax incentives. If passed, the law may require a tenant who leases real estate from a landlord who enjoys a 10-year real estate tax abatement to pay its employees at least 150% of minimum wage.
Another ambiguity is the absence of any grandfathering provision in the proposed amendment for persons with more than five employees who already have leases of property from a recipient of a City benefit. The existing Ordinance contained such a grandfathering provision when first enacted.
The law provides for various remedies including suspension of the financial aid or City contract until the violation is cured.
City Council will hold hearings on the pending bill on December 2, 2010.