By Josh Harkinson

San Francisco officials tightened enforcement of the Minimum Compensation Ordinance recently, closing a loophole that may have allowed many companies to evade the city's landmark wage law since it went into effect in 2001.

Passed with the help of Sup. Tom Ammiano and fair-wage activists, the law requires city contractors to pay their employees at least $10 an hour, offer 12 paid days of vacation a year, and boost salaries 2.5 percent annually until 2005. An accompanying Health Care Accountability Ordinance also sets standards for employer-funded health insurance.

Some companies may have sidestepped the law – intentionally or not – by avoiding written contracts and supplying services to the city through more informal purchase orders.

"Of course you will find some people who are intent on circumventing the ordinances by entering into a purchase order instead of a contract," said Kareem Olusegun, one of the city's contract compliance officers.

Nato Green, an organizer for the International Longshore and Warehouse Union, which represents couriers, has named Professional Messenger, one of San Francisco's largest courier businesses, as one of the companies not adhering to the living-wage law.

Instead of signing formal contracts with the city, the company bills for individual deliveries. Yet the bills add up to a lot of business: the living-wage law applies to contractors that do more than $25,000 in work annually for the city. Green said Professional Messenger does $75,000, but the company argues it is exempt from the law.

To clarify city policy, the Office of Contract Administration recently sent out approximately 9,000 letters, one to each of the city's vendors. The letters gave the businesses seven days to sign and return declarations that they would abide by the ordinances.

Joel Ritch, owner of Professional Messenger, said the city had previously approved his status as a noncontractor. "The issue was addressed two to three months ago," he said. "We explained our position to them, and they said it was fine."

Although Ritch is sticking with his claim that he's not a contractor, Judith Blackwell, director of the Office of Contract Administration, which is charged with enforcing the ordinances, doubts other companies will make the same assertion. "It's not a strong argument, and I would be shocked that anybody else would take it up," she said.

Records from the Office of Contract Administration list about 650 vendors that supplied the city with services exclusively though unwritten agreements over the past fiscal year and that also earned sufficient city dollars to fall under the purview of the Minimum Compensation Ordinance.

Yet the contract office records are not comprehensive: individual city departments often make their own arrangements with vendors, officials said, sometimes drawing up written contracts and sometimes eschewing them as a way to reduce paperwork.

Whatever the ultimate tally of vendors affected, exemptions will still apply to those that employ 20 workers or fewer or sell premade products (instead of services or labor). Certain exceptions also apply to nonprofits.

Despite the law's limitations, labor groups say broader enforcement of the ordinances could have a large impact.

For example, if Professional Messenger complies with the law, its employees could benefit significantly. Most of them already make more than $10 an hour but lack any paid time off.

Now that Green has tackled the living-wage law, he plans to redouble his efforts to get a contract signed between Professional Messenger and the ILWU. This spring, the company stopped recognizing the messenger union and hired temporary employees to work as scabs in the event of a strike.

Threatened by an October hearing before the National Labor Relations Board in which workers were set to testify against it, Professional Messenger agreed to resume negotiations with the union. It held its most recent meeting with union leaders this week.