December 30th 2019

By Gabriel San Roman

Capital & Main

Disney workers are taking Orange County’s largest employer to court over its evasion of a living wage law passed by Anaheim voters last year. Back then, Disney had already agreed to raise pay for many — but not all — of its workers to $15 per hour while at the negotiating table with several unions during the heated ballot campaign. Even non-union “cast members,” as workers are called in Disney-speak, got a raise before the election. Still, a majority of voters expected the more than 30,000-strong workforce to be covered under the law.

But by the time Measure L took effect in January, Anaheim had exempted the theme park from it and left thousands without an immediate $15 per hour raise. Joined by the Coalition of Resort Labor Unions, workers responded with a class-action lawsuit, one that hinges on a decades-old Disneyland Resort expansion deal passed by the Anaheim City Council in 1996.

As written, the living-wage law applies only to resort-area companies that receive “tax rebate” subsidies from the city. Attorneys representing the workers argue that a half-billion in bonds issued by Anaheim for the Disneyland expansion in 1996 is such a subsidy requiring Disney to pay up.

Wearing a “cast member” pin bearing her name, Kathy Grace approached a podium atop the steps of Anaheim city hall during a Dec. 9 press conference announcing the suit. A Unite Here Local 11 union member, she works for SodexoMAGIC, a subcontractor also being sued, as a Starbucks cashier and barista in the “backstage” Harbor Point location for workers. (Disclosure: Unite Here is a financial supporter of this website.)

“I have many co-workers who can’t pay rent,” said Grace, a plaintiff whose $14.67 per hour wage falls short of the $15 minimum wage established by the law. “I’m here to represent all of them and make sure that we get what everyone deserves as a living wage here in the city of Anaheim.”

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The city positioned Disney to be exempt from the law when it terminated two subsidy agreements in August 2018, in the run-up to the vote on Measure L. Disney requested the Anaheim City Council terminate the agreements, including a decades-long gate-tax exemption and $267 million in tax breaks for a planned luxury hotel whose construction plans were shelved. Both agreements clearly fit the “tax rebate” definition of a subsidy under the law. The gate-tax exemption promised that the city would not tax admission tickets for 30 years in exchange for a $1 billion expansion at Disneyland Resort. The hotel deal offered a 70 percent bed tax break over 20 years.

Disney spent heavily in past elections backing pro-subsidy candidates but now claimed the subsidies should be terminated because such policies had become politically “divisive.” Critics, including U.S. Senator Bernie Sanders, claimed the move showed the corporation would rather give back its tax breaks than pay its workers a living wage.

Even with the two subsidy agreements scrapped, the Pasadena-based Hadsell, Stormer, Renick & Dai law firm representing Disney workers in the case believes that the Mouse House isn’t off the hook with the 1996 deal still on the books.

Disney didn’t respond to repeated requests for comment, but provided a statement to the Orange County Register last week. “We have yet to see the lawsuit,” said Liz Jaeger, company spokeswoman, “but the union coalition is well aware that the city attorney has previously looked at this issue and clearly stated that Measure L does not apply to Disneyland Resort.”

A month before the election, Anaheim City Attorney Robert Fabela gave a nonbinding opinion during a council meeting that the 1996 deal, including a $108 million Mickey & Friends parking structure built by the city and leased to Disney for a dollar per year, didn’t fit the definition of a subsidy. “We didn’t see a discount in Disney’s tax payments or any sort of refund of the taxes they were paying,” he said. “It’s complicated but we’re pretty clear it doesn’t amount to a tax rebate.” That opinion helped fuel a business coalition’s renewed opposition to the living-wage law before the ballot, labelling it a “job killer.”

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The law’s principal author, Richard McCracken, had argued last year that Disneyland wouldn’t be exempt from the law if passed. Now he has become an attorney in the suit. Since Anaheim has to continue paying off the 1996 bond through 2037 – mostly with sales, property and transient occupancy taxes generated by the Disneyland Resort – the corporation reaped the economic value of tax revenues diverted away from the city’s general fund.

Or in the simpler words of the suit, “Disney got a rebate of the best kind: it got its taxes back before it paid them.”

“We respectfully disagree with the assertion,” said Mike Lyster, city of Anaheim spokesman, after the press conference. “Our thinking on this hasn’t changed.”

This year, the city has applied the law to two non-union hotels in the resort area with bed tax break agreements.

Attorney Randy Renick acknowledges the possibility of a long fight against a formidable foe in Disney. The living-wage law tops pay out at $18 per hour by 2022 with cost of living adjustments taking over afterward, but workers would be entitled to back pay. “Last year, Anaheim voters showed up to the polls and said that when Disney takes a subsidy from the city, it must pay its workers a living wage of $15 per hour,” said Renick. “But Disney has refused to comply with its duties to pay its workers a living wage.”

Tom Bray, a Disneyland Hotel bellman who’s also a plaintiff in the suit, makes just a quarter above the state’s $12 minimum wage despite 31 years on the job. The living-wage law sought to cover tipped workers like him.

“The voters of Anaheim wanted Measure L to be followed by Disney,” said Bray, also a Unite Here Local 11 member. “People are struggling to make a living.”

Posted with permission