By Jorge Casuso

January 27, 2026 -- A proposed ordinance that originally required businesses on City-owned properties to sign labor peace agreements will return to the Council Tuesday in a dramatically scaled-back version.

The ordinance the Council will take up after a four-month delay only provides for the "recall of laid-off hotel workers on City-owned property and hospitality workers on the Pier."

The staff report from the City Attorney's Office cites "the City’s financial and economic outlook" for the decision "to prioritize ordinances related to the Recall of Workers and Retention of Workers at this time."

"The City has faced challenges achieving its revenue, expenditures, and General Fund reserve targets during the past several years," staff wrote. "The recent financial forecasts anticipate that the City will continue to operate a structural deficit for the next two years."

The move to scale back the initial measure comes six months after the Council voted on July 8 to direct staff to draft an ordinance that would pave the way for unionizing businesses that lease space from the City.

On August 21, nearly three dozen local businesses sent a letter to City officials warning the ordinance was "unnecessary and harmful" and comes at "the worst possible time" ("Businesses Warn Pro-Union Ordinance Could 'Destroy' Pier's Character," August 22, 2025).

"Santa Monica restaurants, hotels and local businesses are struggling with rising costs and customer decline," the letter stated. "We have not rebounded since the pandemic and in fact, 2025 has been the hardest year yet."

The letter noted that the Council directed staff to draft the ordinance "without public discussion, stakeholder engagement, any data supporting this issue as a systemic problem or an independent economic analysis."

Two weeks before the Council was scheduled to vote on the mandated Labor Peace Agreement (LPA) on October 14, a report warned the measure would increase business costs, "leading to more closures, longer vacancies, and reduced city revenues."

Commissioned by a coalition of local business and the California Restaurant Association, the report was based on a review of "a decade of financial data and confidential profit-and-loss statements from a cross-section of affected businesses."

It found that local businesses with City leases are still in the red after seeing profits plummet during the coronavirus shutdown ("Proposed Labor Ordinance Could Drive Out Local Businesses, Study Warns," October 2, 2025).

The decision by the staunchly pro-labor Council to scale back the ordinance is a major blow to UNITE HERE Local 11, the hospitality workers union that organized demonstrations pushing for the measure.

The ordinance the Council will take up Tuesday requires "the operators of hotels on City-owned property and hospitality businesses on the Pier with five or more workers to offer positions that become available" to laid off workers.

"Given that tourism is one of the largest industries in the City and in the entire region, establishing the worker recall and retention standards in the proposed Ordinance were crafted in an attempt to improve worker working conditions while also providing benefits to the local and regional economy overall," staff wrote.

The original ordinance was proposed by Mayor Caroline Torosis and Councilmembers Jesse Zwick and Ellis Raskin and was sent to staff on a 6 to 1 vote with then mayor Lana Negrete dissenting.