REPORT TO COUNCIL
SUBJECT
Title
Discussion and Possible Action to Introduce Service Worker Retention Ordinance
Report
BACKGROUND
At the September 20, 2025 Council meeting (RTC 25-0246), staff presented findings from outreach to the business community and labor groups and recommended against adopting a Service Worker Retention Ordinance (SWRO) because Sunnyvale does not share the conditions present in cities that have adopted similar ordinances including convention centers, airports and major event facilities where service worker retention issues have surfaced. Council directed staff to return with a proposed SWRO for consideration with the following parameters:
• Draft language clarifying how the ordinance applies to federal contracts or to businesses that have the Federal Government as a client or a funding source;
• Apply the ordinance to businesses with 50 employees or more;
• Clarify the for-cause termination details of the ordinance;
• Perform outreach to business and labor groups to seek input;
• Return to Council within 1 year with the draft ordinance; and
• Change the $25,000 or more threshold for contracts for building and/or food services to $50,000 or more.
Staff researched cities with similar ordinances, developed a draft ordinance based on Council’s requested parameters, and conducted additional outreach to business and labor groups. Staff’s research did not identify a comparable ordinance that applies broadly to private businesses in a city without the types of large facilities that have been a focus of similar ordinances, such as convention centers, airports, major event facilities, or other large venues. Some jurisdictions identified through the research have more limited ordinances that apply to specific geographic areas, facilities, or circumstances.
EXISTING POLICY
Policy 5.1.1 Socio-Economic -Goal 5.1D Support efforts to create employment opportunities for economically disadvantaged individuals, disabled individuals, minorities, women, youth and others with special employment needs
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental, organizational or administrative activity that will not result in direct or indirect changes in the environment.
DISCUSSION
A Service Worker Retention Ordinance generally requires a service vendor to retain existing service employees for 90 days when there is a change in service contracts. The purpose of a SWRO is to provide greater employment stability during contractor transitions, minimize potential disruptions to service delivery, and preserve institutional knowledge and experience.
Based on staff’s research, analysis and stakeholder outreach, staff has not identified a demonstrated worker-retention problem in Sunnyvale that would be addressed by the proposed ordinance. Staff also has not identified evidence that the proposed ordinance would meaningfully increase worker protections or improve service delivery in Sunnyvale.
The ordinance would establish requirements for private businesses and service contractors, but the City would have no direct role in monitoring or enforcing those requirements. Enforcement would primarily occur through private legal action by an affected employee or collective bargaining representative.
Staff also did not identify evidence from comparable jurisdictions demonstrating that a similar ordinance has measurably improved worker retention or service delivery. The proposed Sunnyvale ordinance is modeled on the City of Santa Clara’s ordinance, which has been in place for nearly a decade and contains provisions that are generally consistent with the parameters of the proposed Sunnyvale ordinance.
The provisions included in the proposed Sunnyvale SWRO are as follows:
• Require a terminated contractor to provide a list of current workers to the successor contractor no less than 15 days before terminating any food service or building service contract;
• The successor contractor will retain terminated contractor’s employees for a period of 90-days with no substantial changes to the current worker’s work shift or work location;
• The successor contractor will post a notice stating the rights of the terminated employees at the affected sites, include a list of these employees with home addresses and phone numbers redacted, and provide a notice to the food or building service employees’ collective bargaining representative, if any;
• After the 90-day transition period, the new contracting agency will be able to adjust employee count needed for the current contract. If less employees are needed, a workforce reduction would be possible with priority for existing positions offered by seniority within job classifications;
• During the 90-day period, the successor contractor will not discharge a food service or building service employee retained without a cause. Cause means a fair and honest reason for termination of a worker that is supported by facts reasonably believed to be true, that is made in good faith and is not arbitrary, capricious, discriminatory, retaliatory, pretextual, or unrelated to legitimate business needs or objectives;
• At the end of the 90-day transition period, the successor contractor will complete a written performance evaluation for each food or building service employee retained. If a food or building service employee's performance during such 90-day period is satisfactory, the successor contractor will offer continued employment to the employee under the terms and conditions established by the successor contractor; and
• A covered entity may be relieved from compliance of the ordinance in whole or in part if the covered entity establishes that such compliance would conflict with federal law that regulates or otherwise governs the covered entity’s contracts.
The proposed SWRO applies to entities with 50 or more employees that enter building and/or food service contracts valued at $50,000 or more. It requires a 90-day transition period during contractor transitions and establishes requirements related to termination, workforce reductions, and continued employment. The ordinance may be waived in whole or in part through a bona fide collective bargaining agreement, provided that the waiver is set forth in writing in clear and unmistakable terms.
The ordinance provides a private right of action rather than a City enforcement mechanism. An affected employee or collective bargaining representative may bring an action in Superior Court, and the court may award remedies provided in the ordinance, including back pay, treble back pay for willful violations, and reinstatement.
The City does not currently track changes in private businesses’ service contracts and would have no practical method of determining when the ordinance’s requirements are triggered. Therefore, the City would not be able to independently identify potential violations, investigate compliance, or require a business or contractor to comply with the ordinance. Staff conducted outreach to businesses and community stakeholders through two community meetings held on August 18 and 19, 2026. Ten participants including representatives from the Sunnyvale Chamber of Commerce, Moffett Park Business Group, businesses, and Unite Here Local Union 19 participated in the meetings. Staff also conducted individual meetings with businesses and union groups to solicit additional feedback.
Unite Here Local Union 19 expressed support for a SWRO as additional protection for service workers during contractor transitions, particularly for low-wage workers and workers of color who Local Union 19 stated are most impacted by service contract changes (Attachment 2). They cited situations in which workers received short notice of layoffs and stated that the ordinance could provide greater employment stability and continuity of services. They also acknowledged that enforcement would not be performed by the City and would instead be pursued through existing legal remedies.
Business representatives and business organizations reiterated that they and their members already implement worker retention practices during vendor transitions. They expressed concern that the City is overstepping in the private sector employment practices. They continued to question why a SWRO is necessary since there are no real issues related to worker retention practices in Sunnyvale and the City will not be actively enforcing the ordinance.
The Sunnyvale Chamber of Commerce (SCC) expressed continued opposition to an SWRO, stating that there is no data or evidence demonstrating a problem that would justify an ordinance in Sunnyvale (Attachment 3). SCC submitted a letter to staff outlining several concerns, including significant operational and compliance burdens, increased business costs, enforcement ambiguity and legal risk, and potential conflicts with the City’s Economic Development Strategic Plan. SCC stated that the ordinance could affect the City’s support for small- and medium-sized businesses by reducing vendor competition, discouraging investment, and potentially affecting Sunnyvale’s reputation as a business-friendly city.
An SCC member representing small businesses shared that an SWRO could limit a small business’s ability to grow and compete for contracts with companies that operate at multiple sites, particularly when a new vendor could perform the same work at a lower cost with fewer employees. The member noted that some contracts can total more than $200,000 and expressed concern that the proposed $50,000 contract threshold could create challenges for small businesses.
The Moffett Park Business Group similarly stated that it is not aware of a demonstrated worker-retention problem in Sunnyvale. The group identified existing tools, including contractual transition provisions, collective bargaining agreements, WARN requirements and workforce-development resources, that may address worker transitions without a new local ordinance (Attachment 4).
The stakeholder outreach therefore reflected differing perspectives on the policy objective but did not identify a documented local problem or information demonstrating that the proposed ordinance would improve worker protections or service delivery in Sunnyvale.
FISCAL IMPACT
Adoption of this ordinance may have a small impact on staff resources related to responding to potential questions from businesses and employees regarding the ordinance.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the City Hall reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website. Staff conducted two community meetings on August 18 and 19, 2026. Stakeholders included local major companies and small businesses, labor representatives, and business associations. Staff also conducted individual meetings with businesses and labor groups. Staff notified all attendees who attended the outreach meetings of this meeting and sent a link to the staff’s report.
ALTERNATIVES
1. Introduce the Service Worker Retention Ordinance as proposed.
2. Introduce the Service Worker Retention Ordinance with modifications.
3. Do not introduce a Service Worker Retention Ordinance.
4. Other Council Direction.
STAFF RECOMMENDATION
Recommendation
Staff makes no recommendation.
JUSTIFICATION FOR RECOMMENDATION
Staff is presenting the proposed ordinance in response to Council direction. While staff completed the requested research and outreach, staff’s analysis continues to indicate that a Service Worker Retention Ordinance is not necessary in Sunnyvale based on the lack of a demonstrated local need and the City’s limited ability to monitor or enforce the ordinance.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $500 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
An “X” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract*
___ Labor or personal employment contract
___ Contract under $50,000 or non-fiscal
___ Contract between public agencies
_X_ General policy and legislative actions
* "Competitively bid" means a contract that must be awarded to the lowest responsive and responsible bidder.
Staff
Prepared by: Christine Velasquez, Economic Development Manager
Reviewed by: Rebecca Moon, City Attorney
Reviewed by: Connie Verceles, Assistant City Manager
Approved by: Tim Kirby, City Manager
ATTACHMENTS
1. Proposed Sunnyvale Service Worker Ordinance
2. Letter from Unite Now Local Union 19
3. Letter from Sunnyvale Chamber of Commerce
4. Letter from Moffett Park Business Group