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.
en , OF SAN BERNARD~_..O - REQUL~T FOR COUNCIL AC . ION
From:
Shauna Clark
Subject: Ordinance Amending Section
5.04.525, Subsection E of
Municipal Code - Inclusion of
Temporary Employment Services
Under Wholesalers for Business
Dept:
City Clerk
Date:
August 4, 1988
T.irpn<::.ing
Synopsis of Previous Council action:
None
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Recommended motion:
That further reading of the ordinance be waived and that said
ordinance be laid over for final passage.
cc: Mayor wilcox
City Attorney Penman
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Signature
Contact patlan:
Shauna Clark
5002
Phone:
Supporting data attachad: Ordinance, Legal Opinion Ward: All
88-33, Letter dated February 29, 1988
FUNDING REQUIREMENTS: Amount:
Source: (ACCT. NO.)
(ACCT. DESCRIPTION)
Finance:
Council Notes:
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ORDINANCE NO.
ORDINANCE OF THE CITY OF SAN BERNARDINO AMENDING SECTION
5.04.525 SUBSECTION E OF THE SAN BERNARDINO MUNICIPAL CODE TO
INCLUDE TEMPORARY EMPLOYMENT SERVICES UNDER WHOLESALERS FOR
BUSINESS LICENSE PURPOSES.
THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO
DO ORDAIN AS FOLLOWS:
SECTION 1.
Section 5.04.525 Subsection E of the San
Bernardino Municipal Code is amended to read as follows:
I'E.
Manufacturers/Wholesalers.
Every person, firm or
corporation manufacturing and selling any goods, wares,
merchandise or services at wholesale, and not otherwise
specifically taxed by other provisions of this article, shall pay
an annual license fee of forty dollars or a fee of one-fourth of
one-tenth of one percent (.00025) of annual gross receipts from
sales originating within the boundaries of the City, provided
such goods, wares, merchandise or services are not shipped
outside the State of California, whichever is greater, payable
quarterly in four equal payments.
Temporary employment services
shall be included within this subsection."
I HEREBY CERTIFY that the foregoing ordinance was duly
adopted by the Mayor and Common Council of the City of San
Bernardino at a
meeting thereof, held on
the
day of
, 1988, by the following
vote, to wit:
28 7-11-88
DAB:cm
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AYES:
NAYS:
ABSENT:
The foregoing ordinance is hereby approved this
day
of
1988.
EVLYN WILCOX, Mayor
City of San Bernardino
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11 Approved as to form
12 and legal content:
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Cit Attorne
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DAB:cm
c
BERNARDINO
300 NORTH "0" STREET. SAN BERNAROINO. CALIFORNIA 92418
JAMES F. PENMAN
CITY ATTORNEY
1714) 384.5355
July 27,1988
Opinion No. 88-33
10.38
SHAUNA CLARK
City Clerk
Re: Temporary Employment Services
ISSUE
You have asked two questions: The first relates to whether the
gross receipts of a temporary employment service may be used to
determine the amount of the business license fee when some of the
employment services are performed outside the City limits. You
also question whether you may administratively move the
designation of such temporary services from "employment agencies"
to the designation as wholesalers.
ANALYSIS
Gross Receipts:
The first question
receipts" as used in
business licenses,
services.
relates to the meaning of the term "gross
the Municipal Code provisions relating to
and as applied to temporary employment
Such temporary employment services have been administratively
included under the category of "Employment Agency" in San
Bernardino Municipal Code Section 5.04.525. The license fee is
based on "annual gross receipts or commissions".
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July 27, 1988
Page Two
San Bernardino Municipal Code Section 5.04.055 provides how fees
based on gross receipts are to be applied. "Gross receipts" are
defined in Municipal Code Section 5.05.060 as follows:
"'Gross receipts' as used in this article, except as
otherwise specifically provided, means the total amount
of revenue received as the sale prices of all sales and
the total amount charged or received for the
performance of any action, service or employment of
whatever nature it may be, for which a charge is made
or credit allowed, when such service, or employment is
done as a part of or in connection with the sale of
materials, goods, wares and merchandise, or the
performance of services; 'gross receipts' includes all
receipts, cash, credits and property of any kind or
nature, and any amount for which a credit is allowed by
the seller to the purchaser without any deduction
therefrom on account of the cost of the property sold,
the cost of the materials used, labor or service costs,
interest paid or payable, or losses or other expenses
whatsoever; 'gross receipts' further inc ludes
commissions received for the sale of real property and
the annual gross receipts, fees or commission of every
person, firm or corporation conducting, managing,
carrying on or engaged in any business or profession of
any nature whatsoever, including the providing of
services relating thereto; but 'gross receipts' does
not include cash discounts allowed and taken on sales
and any sales tax paid to the state, a municipality or
public entity."
The sections is silent on whether it relates to services provided
outside the city or billed from outside the city. The general
rule is stated as follows:
" [M]unicipal licensing under the police
power is confined to businesses, activities and
privileges conducted or exercised within the municipal
limits. "(McQuillin, Municipal Corporations,
Section 16.09)
The California Supreme Court case of City of Los Angeles v.
Belridge Oil Co. (1954) 42 Cal.2d 823, discussed a business
license tax on the sale of an oil company. The challenge to the
tax was based on the fact that the oil was produced in Kern
County and delivered to the purchasers without ever entering the
City of Los Angeles. The court concluded:
Shauna Clark
July 27, 1988
Page Three
"In the case at bar defendant company, being a corporation,
is a person as defined in Section 2l.08(p) of the Los
Angeles tax ordinance. The petroleum products with which it
deals are considered in the nature of merchandise . . . and
the gross receipts of defendant company are derived from the
sale of such merchandise. Most negotiations for these sales
were conducted through the defendant's Los Angeles office
and all contracts were signed by defendant in Los Angeles.
Also payment for all sales is received from purchasers at
the Los Angeles office . . .
"The mere fact that the products sold never entered the
City of Los Angeles does not prevent the selling
activi ties from taking place in Los Angeles . the
business license tax in question here, is based on the
fact that the selling activity is carried on within the
city and it is immaterial where the products are
produced or delivered. '" In the case at bar it is
true that some of the gross receipts are attributable
to extraterritorial elements such as the production and
delivery of the goods. However, there is no
constitutional objection to resorting to
extraterritorial elements in determining the rate of
tax." (Los Angeles v. Belridge Oil Co., (1954) 42
Cal.2d 823, 830-831)
The court warned, however, that although extraterritorial
elements cold be resorted to in determining the rate of the tax,
they would not be relied upon to determine the fact of the tax
(at 832). -
In the present situation, if the offices of the temporary
agencies in question are located within the City and
solicitations are made and individuals are sent out from that
location, the fact that the temporary services are actually
performed outside the City is immaterial. On the other and, if
the offices are located elsewhere, and the services occur within
the city, this would not be sufficient to impose a tax on the
gross receipts.
The second question relates to whether, since the temporary
services were placed within the employment agency category, your
office can make an administrative decision to move them to
another category. It is our opinion that due to the length of
time involved that you cannot. We have prepared an ordinance
(see attached) which would accomplish this objective.
Shauna Clark
July 27, 1988
Page Four
CONCLUSION
A business license fee based on gross receipts for a temporary
employment service may be based on services solicited and sent
from a San Bernardino office, even though performed elsewhere.
Your office may not administratively move the designation of
temporary services from employment agencies to wholesalers.
Respectively submitted,
BARLOW
City Attorney
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Enclosure
cc: Mayor
City Administrator
Approved:
I ~.. i'~ t L",-
ct'ty Attorney
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CITY OF SAN BERNARDINO - MEMORANDUM
To
James F. Penman, City Attorney
From
SHAUNA CLARK
City Clerk
February 29, 1988
Subject
Temporary Services/Business License
Date
Approved
Date
In the process of auditing businesses,
ing the determination of gross receipts
agencies have arisen.
two
for
issues concern-
temporary help
Please see the attached letter dated February 17, 1988,
from Remedy and the letter dated February 16, 1988, from
Mayday. Both help agencies question whether gross receipts
for services provided outside the City of San Bernardino must
be included for computation of business license. Remedy goes
a little farther and questions whether services inside San
Bernardino, but billed from their main office, must be
included.
I feel that gross receipts should include fees for ser-
vices provided within the City of San Bernardino and a per-
centage of what comes through the San Bernardino office but is
placed outside the City limits.
The second issue concerns the classification of the
temporary services businesses. Prior to 1983, temporary help
businesses were charged $40 per year. The business license
ordinance was amended to convert most flat rate licenses to
pay on gross receipts. There were several gross receipts
categories that already existed in the code so converted
licenses were placed in existing categories \dth like busi-
nesses. Employment Agencies were in the professional rate
category so temporary help services were added.
There is a difference between an employment agency and a
temporary help agency in terms of gross receipts. The employ-
ment agency gets a percentage of flat fee, usually on a one
time basis, for placing an employee. A temporary help agency
acts like a labor retailer. For example, a temporary place-
ment is made and a fee of $15.130 per hour is charged for the
service, the employee receives $10.00 per hour, and the
temporary agency nets $5.130 per hour. According to the
professional rate the business license computation would be
based on the $15.313 per hour; the $11"-00 per hour paid the
employee is a cost of doing business to the temporary service
provider. As you can see, the volume of gross receipts is
much higher to a temporary agency than it is for an employment
agency.
Jim Penman
Page 2
2/29/88
I would like to have temporary agencies classed as whole-
salers which is a lower rate category. The business license
for one of our temporary agencies went from $40 in 1983 to
$4600 per year in 1988. The wholesale rate category would be
lower than the professional rate category. I feel the whole-
sale rate would be more equitable but need a legal inter-
pretation as to whether or not I can change categories for
this type of business. If you determine that a code change is
necessary, I feel comfortable in taking it before the Council.
As the audits for these temporary agencies are being held
in suspense pending legal clarification, a prompt reply would
be appreciated.
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cc: Mayor wilcox
SCire
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February 17, 1988
Mr. Lee Gagnon
Business License Supervisor
City of San Bernardino
P.O. Box 1318
San Bernardino, CA 92402
Dear Mr. Gagnon,
As per our telephone conversation, I am confirming in writ-
ing our request for a legal ruling on the issue of your
gross receipts/business license tax. I am specifically con-
cerned that "gross receipts" has been defined by your office
to include sales to clients whether they reside within the
city limits or not. I find nothing in the materials sent to
us thus far/which includes code section 5.04.060, that con-
veys that legally sales to those outside the city limits
must be included in gross receipts.
Our business involves the temporary placement of our employ-
ees on assignments to meet our clients needs. The orders
are received, a suitable employee matched to the order, and
then dispatched to the client location. All paperwork is
forwarded to our corporate office in San Juan Capistrano.
All paychecks and billings are sent from the corporate
office. All payments are received at the corporate office
as well. As you can see, much of the activity takes place
outside the city limits of San Bernardino.
We would appreciate receiving the above requested ruling at
your earliest convenience. I am assuming that the extension
granted to February 19, 1988 will be further extended until
we receive and have time to review this ruling.
As a reminder, you were also going to send me a copy of your
rate schedules and classifications. Thank you for your
assistance and cooperation in this matter.
Yours truly,
~~~
Controller
dv/jrnm
3521252 Camino Copistrano. San Juan Capistrano, CalifornlO 92675
P.O. Box 699. Son Juan Capistrano, Colifornia 92693
(714) 661-1011
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'S8 F~8 lY p~ :~3
TEMPORARY PERSONNEL
.:'-ebt"'UBt",! ,( b~ i '386
t2itv o~ San BernardIno
!::'.D. Bel'\{ 1:~1.s
San Bernardino, C() g~:4'_)1
i'-lttl"l: Lee l3al;3Y'iOY"1
Re: Business LIcense I"ax AIJOlt
1Je2."r"' ITlf'''~ ("iaqnOY'I:
i aM responding to your letter oated Februarv 8 in wnicn we were
advised of the dis~repancy between our 1987 tax a0011cation and
financial statEments provided to your office for auditing.
T~\e discrepancy results from revenue qenerated bv customers
locatea in other Municipalities such as Uoland, Rancho Cucamonga,
Fontana, etc., which are serviced by our San Bernardino office, out to
wnom we nay bUSiness licensing taxes as reqUired.. l'herefore~ our
apolicatlon reflects only that revenue which is qeneraterl oy cus~omers
In the clty of San Bernardino ana in other ffiUY11ClpaJIties to wnOffi a
buslness tax lIcense IS not reqUIred.
If VCIU feel that an additional audit inn elf ou~~ records IS
wary'anted. please c~ontact me ~~ the number below. ~s all n~cessary
IYrformatlon will be avaIlable to you at 0l\r Coroorate o~fire In
(;J.E.~ndale.
a~
ShaYle Wi Ihoite
Accounting ManaDer
(818) 'co: 4'3-c:d8,~
8665 Wilshire Boulevard, Suite #300 . P.O. Box 5527 . Beverly Hills, California 90210 . (213) 658-8400
City Attorney Advisory Memorandum
(Public Document)
To: Mayor and Common Council
From: JAMES F. PENMAN
City Attorney
Subject: POTENTIAL CONFLICTS ON SEPTEMBER 19, 1988 AGENDA
Date: September 16, 1988
1. Mayor Wilcox, item #52 - Final reading of ordinance amending
section 5.04.525 of the Municipal Code to include temporary
employment services under wholesale business license
purposes.
Mayor has a financial interest in a business that will be
effected by this ordinance.
If ordinance is discussed or voted on separately from the
other two ordinances listed on the agenda for final reading
(items #53 & 54) Mayor should state the potential conflict
on the record and turn the gavel over to the Mayor Pro
Tempore.
If ordinance is not discussed or voted on separately, Mayor
need not disqualify herself from presiding.
2. Councilwoman Valerie Pope-Ludlam, 7th Ward, item #17 -
Resolution from the Board of Building Commissioners.
Councilwoman has been identified by preliminary title search
as owner of subject property located at 1791 Mallory Street.
Councilwoman believes report is in error as she no longer
owns subject property.
Councilwoman should state potential conflict on record and
abstain from voting on item #17.
spectful)i submitted,
:] &~
,~~/,
AMES F. PENMAN
City Attorney
jp 17
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TEMPORARY RELIEF SURVEY
ANAHEIM
CERRITOS
COLTON
Flat rate of $4.00 each for first 4 employees; $3.00 each
for next 7 employees; $2.00 for 11 and after.
Flate rate of $86. 00 per year. per Nancy.
Gross receipts $25,000. is $25.; $25,001. to $50,000. is
$25.00 plus $1. 00 for each $1,009.00.
'<<;.*
Gross receipts $0 to $30,000 = $55,8&81 $30,001. to $40,000
will go up $10.00 and so on.
Gross receipts $1,001. to $25,000. = $25.00; $25,001 to
to $50,000. $35.00; $50,001. to $75,000 = $45.00 and so
on. $500,000 and over $200. per Jody
Gross receipts $0 to $25,000 = $25.00; $25,001. to
$100,000 = $1.00 per $1,000; $100,001 to $500,000 50C per $1,000.
CORONA
COSTA t1ESA
l'DNI'ANA
GARDEN GROVE
Flat fee of $30.00 plus $3.00 per employee. per Sue.
Flat fee of $151. 94 plus $7.88 per employee in field and in
the office. per Karen.
IDNG BEACH
ONI'A'UO
Flat fee of $22.58 up to $6,000. after that, $3.50 per
thousand. per Curtis
Flat fee of $35.00 plus .60C for every thousand they gross. per Becky
Flat fee of $35.00 per year. per Ranona
Gross receipts-Up to $100,000 = $60.00; $100,001 to $250,000=
$91.00; $250,001 to $500,000 = $151.00; $500,00 to $750,000 $226.00
IDS ANGELES
H::lNTCLAIR
PAL":! DESERT
PAlM SPRINGS
Flat fee - 1 to 2 employees $67.00; 3 to 6 employees $133.00;
7 to 10 $200.00; 11 to 14 $266.00; 15 to 20 $333.00. per Dawn
PASADENA
Per employee - All pay basic tax of $83.77 plus $16.75 per
employee.
$10,000. and under $56.50, over $10,000. is 50C for every $1,000.
30% surcharge for anything over $10,000.00. per Carol
PCMlNA
RIVERSIDE
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