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A Seattle-based restaurant company has sued the city of Berkeley to block enforcement of a novel ordinance that would require businesses in the city’s Marina district to pay their workers a “living wage” that is substantially higher than the minimum wage. While numerous cities around the country are requiring businesses that have municipal contracts to pay a living wage, Berkeley’s law is the first in which a city requires a group of businesses beyond those it contracts with to adopt a living wage. Under the Berkeley law, which took effect Thursday, the city is relying on its police power authority — not just contract provisions — to enforce the living wage. The law requires businesses to pay workers a minimum of $9.75 per hour if their compensation includes benefits, or $11.37 per hour if it doesn’t. It also mandates that employees be given a minimum of 22 days off per year, including 12 paid vacation days. RUI One Corp., which owns the Skates on the Bay restaurant at 100 Seawall Drive, claims the ordinance is unfair to businesses in the Marina zone. In RUI One Corp. v. City of Berkeley, filed Thursday in U.S. district court in San Francisco, the company also claims Berkeley’s ordinance is pre-empted by the state minimum wage law and the federal ERISA statute, which governs employee benefits. The suit seeks an injunction of the ordinance. Approved by the City Council over the summer, the Berkeley ordinance was initially drafted to apply only to businesses and nonprofits that do business with or receive aid from the city, including lessees, said City Attorney Manuela Albuquerque. But in September, the council adopted an amendment that broadens the ordinance to cover all businesses in the Marina zone with $350,000 or more in annual gross sales and six or more employees. As a practical matter, very few businesses are affected. The Marina zone, which includes the Berkeley Aquatic Park and all land west of Marina Boulevard, contains only 11 businesses, according to plaintiffs lawyers. They say that of those, only four are large enough to fall under the law: Skates, the restaurant H’s Lordships, the Radisson Hotel and Hornblower Yachts. Albuquerque said the city has no current plans to expand the ordinance. But she said she is well aware that the Marina zone amendment breaks new legal ground by expanding the law beyond just businesses that have contracts with the city. The city’s rationale for the amendment, Albuquerque said, is that the few businesses allowed to locate in the Marina district receive special benefits, including the “ambiance” of the waterfront park. Held by the city in public trust since being deeded to Berkeley by the state in the early 1900s, the Marina area has been subject to increasingly restrictive statutory limitations on its use, Albuquerque said. The city wants Marina businesses to pass those benefits along to their workers. “Businesses there have a monopolistic advantage,” she said. “We feel that the people who work there should have benefits as well.” Skates’ lawyers, R. Zachary Wasserman and Les Hausrath of Oakland’s Wendel, Rosen, Black & Dean, dispute the city’s right to expand the living wage ordinance. “We are objecting to the city’s action in automatically extending the living wage ordinance” to businesses in the Marina district, not just those that have contracts with the city, Wasserman said. Since RUI One is a tenant of the city, it would ultimately have fallen under the original ordinance covering lessees — but not until 2017, when its lease comes up for renewal, said Wasserman, whose client estimates compliance with the new law would cost it $175,000 per year. After seeking and failing to receive a waiver from the City Council on Oct. 10, RUI One opted to sue. Wasserman cites a 1987 case, Ross. v. City of Berkeley, in which federal judge Marilyn Hall Patel struck down a Berkeley ordinance that restricted commercial rents and limited the basis on which eviction was permitted for businesses in the Telegraph Avenue district. “It certainly gives us reason to hope,” Wasserman said. Jennifer Thelen is a freelance writer in San Francisco.

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