San Diego Chamber Leads Coalition Against 92% Increase in City Wage Enforcement Fee

The San Diego Regional Chamber of Commerce is leading a coalition of business organizations opposing a proposed 92 percent increase in the city's per-employee wage enforcement fee, which the Budget and Government Efficiency Committee approved unanimously on Sept. 23.

The fee, levied on every employer with one or more workers in the city, would rise from $1.47 to $2.82 per covered employee annually. The committee also approved two new fees: a Traffic Control Worker Minimum Wage Enforcement Fee at $38.85 per approved permit, and a Compliance System Usage Fee with eight tiers ranging from $144.24 to $4,853.24 per covered contract.

Together, the three measures would generate an estimated $2.18 million in new annual revenue for the Office of Labor Standards and Enforcement, according to the staff presentation. The fee increase alone accounts for roughly $1.5 million.

The 4-0 committee vote sends the proposal to the full City Council for final consideration. If approved, the new rates would take effect Nov. 1, 2026, according to a city fact sheet issued by City Attorney Heather Ferbert's office.

City's justification

City officials say the expanded fees are necessary to cover the cost of enforcing the city's growing list of wage ordinances. In 2016, voters approved the Earned Sick Leave and Minimum Wage Ordinance. In 2025, the City Council added the Hospitality Minimum Wage Ordinance, which took effect July 1.

The proposed rate "is designed to maintain existing services while providing additional capacity for the City's expanded wage enforcement responsibilities," the fact sheet states. The OLSE handles complaints, compliance reviews, and enforcement actions for both laws.

Chamber pushes back

The Chamber, however, argues the city has not made a clear case for why the fee needs to nearly double just one year after its initial adoption, according to a post on the Chamber website Monday.

"Officials did not make a clear case of why a 92% increase was necessary just one year after its initial adoption," the Chamber stated. "Given the lack of justification and stakeholder engagement, as well as the cumulative impact of rising fees and regulatory costs on local employers, the Chamber and our coalition opposed the proposal."

At the Sept. 23 committee hearing, Evan Strawn of the Chamber testified against the increase, citing the 92 percent jump and what the group called insufficient outreach to affected businesses. Kathleen Lippitt also testified, warning against burdening small businesses.

CJ Vallishek of the Center on Policy Initiatives supported the fees, telling the committee that wage theft affects 87 percent of workers, according to the meeting record maintained by OpenPublica.

The fee applies to all employers with one or more employees within San Diego city limits, including nonprofits and tax-exempt organizations. Sole proprietors with no employees are exempt. Most businesses are assessed the fee through their annual Business Tax Certificate renewal.

The Chamber said it will continue engaging with councilmembers and the City Attorney's office before the item reaches the full Council.