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April 15, 2016 <br />To: City Attorney Richard Pio Roda and City Manager Chris Zapata <br />From: Jennifer Lin, East Bay Alliance for a Sustainable Economy <br />Re: Large business and chain store definitions: Recommendations and examples from other cities <br />San Leandro has an opportunity to raise the minimum wage above the state minimum wage law that <br />will reach $15 by 2022, with a 1 year extension for businesses with greater than 25 employees in <br />California. <br />This memo outlines lessons San Leandro could learn, and our recommendations drawing from San <br />Francisco, San Jose, and other cities when defining large, corporate chain -stores. <br />EBASE, in conversation with our partners working in the retail, hotel, and warehousing sectors, <br />recommends the following definition for large businesses: <br />Employers who have more than 25 employees globally, or who have more than 10 <br />establishments globally. <br />Number of Employees Globally <br />25 employees or less in California is the threshold for a small business set by the recent <br />California minimum wage increase signed by Governor Jerry Brown earlier this month. Small <br />businesses have 1 additional year to comply with the statewide minimum wage. <br />It is important to count the number of employees in the largest geography possible. For <br />example, if a corporate fast food chain has 20 employees and there is only 1 location in San <br />Leandro, without counting the fast food chain's total employment globally or the franchisee's <br />other locations in other cities, it could be misconstrued as a small business (see franchises and <br />labor costs below). <br />Franchises <br />The State of California has established state definitions and regulations on franchises, including <br />Business and Professions Code Section 2000-20010. Cities may reference this definition in local <br />policies. <br />The franchise model is controlled at the top by the corporation, who set labor budgets and <br />staffing allocations through the franchise agreements.' These agreements limit the ability for <br />local store managers who want to pay higher wages from doing so. <br />See alternative language for chain stores below. <br />San Francisco's policy <br />San Francisco has a policy that covers "Formula Retail Establishments" (an existing land use and <br />planning definition of chain stores) with at least 40 establishments worldwide and 20 or more <br />employees in the city. <br />We recommend counting employees globally, both inside and outside of a city, when <br />determining business size. San Francisco has other policies that cover 20 employees located in <br />San Francisco and outside of San Francisco in determining employer size, as long as there is at <br />1 Alejandra Cancino, "SEIU seeks federal investigation of franchise industry." The Chicago Tribune, May 18, 2015. <br />Available http://www.chicagotribune.com/business/ct-fight-for-15-ftc-0519-biz-20150518-story.html. Accessed <br />April 2016. Referenced in Center for Popular Democracy, EBASE, and ACCE report, "Wages and Hours: Why <br />Workers in Emeryville's Service Sector Need a Fair Workweek." March 2016. <br />