Detroit’s New Living Wage Ordinance

A "NEW" MINIMUM WAGE: Late last year, the voters of the City of Detroit passed a Living Wage Ordinance. Employers who are either "contractors" with the City of Detroit (entities which have contracts with the City primarily for the furnishing of services where the total expenditure will exceed $50,000) and "grantees" of the City (recipients of any financial assistance for economic development or job growth from the City in excess of $50,000) are subject to its provisions. All subcontractors and leaseholders of both types of employers are covered. The Living Wage which must be paid by qualifying employers is 100 percent of the U.S. poverty level for a family of four if the employer provides "fully paid comprehensive family medical coverage" to the employee but, if not, then the wage rate must be 125 percent of the U.S. poverty level for a family of four. Currently (as of February, 1999), this scheme results in a wage rate of $8.35 per hour if fully paid comprehensive family health care coverage is provided and $10.34 otherwise. The Living Wage Ordinance applies to contracts or grants entered into or renewed after its effective date, December 3, 1998.

– COMMENT: The Living Wage Ordinance has spawned much initial concern and confusion due to inaccurate statements in the ballot proposal, and vague and ambiguous language in the Living Wage Ordinance itself. The ordinance contains monetary penalties against employers who do not comply, including payment for lost wages, reasonable attorney fees, costs and fines for willful violations. Therefore, if you are an employer doing business with the City of Detroit, it is important to comply with the City's new Living Wage Ordinance. Contact Malcolm Brown for more information.