Disneyland and its contractors are not required to follow the guidelines of a 2018 ballot measure that would have increased workers’ pay to at least $18 by 2022, a judge has ruled.
Amid public lobbying for higher pay and better benefits for employees, Disneyland resort-area workers and the unions representing them backed an initiative requiring any businesses that receive subsidies from Anaheim to raise wages to at least $15 an hour in 2019, with $1 annual increases through 2022 and cost-of-living bumps after that; Anaheim voters approved the measure in November 2018.
The workers sued in 2019, contending the new rules applied to Disney, but it had failed to follow them.
In an Oct. 29 decision that became final this week, Orange County Superior Court Judge William D. Claster said while Disney benefited from 1996 agreements with Anaheim that use hotel taxes to pay debt on a parking structure for Disneyland visitors, those agreements don’t constitute a tax rebate or a subsidy as described in the ballot measure.
Randy Renick, an attorney for the workers, said Wednesday that they will likely appeal the ruling.
“Certainly the judge’s hyper-technical decision is contrary to the Anaheim voters’ intent in passing the living wage (measure) in 2018,” Renick said.
Renick said it’s “shameful” that Disney has received millions of dollars worth of benefits at the city’s expense, but still can “refuse to this day to pay tens of thousands of its workers a living wage.”
Through a spokeswoman, Disney emailed a statement that said, “We have always been committed to fair and equitable pay for our cast members, but have always agreed with the Anaheim City Attorney’s conclusion that Measure L does not apply to the Disneyland Resort. We are pleased the court has confirmed that position.”
Wages
Around the time it announced the ballot measure in early 2018, a coalition of unions representing employees at Disneyland parks, resort hotels and related hospitality businesses released a study they had commissioned that said many workers struggled to pay for basic necessities such as food and medical expenses, and some reported living in cars or being homeless.
At the time, Disney officials criticized the study as unscientific and politically motivated, but that June they announced new contracts with more than 8,000 workers that would raise wages to $15 an hour by 2019, three years ahead of the state. A few months later, the company reached a deal that brought most hotel workers to at least $15 and gave them bonuses.
California’s minimum wage for large companies is now $14 an hour, set to go up by $1 in January.
Disneyland is Orange County’s largest employer, with 32,000 people on staff before the pandemic; as of late October, the company had brought nearly 80% of its workforce back.
A 2021 Disneyland employment fact sheet notes the company provides “a starting wage that exceeds California minimum wage,” and it touts child care assistance and a $150 million program that covers tuition for workers seeking a high school diploma, college degree or skills training.
Development
Whether Anaheim should offer subsidies to resort-area businesses has been divisive in recent years, particularly since 2015 when the city offered to let hotel developers keep 70% of guests’ room taxes for up to 20 years to help encourage the construction of luxury lodgings, a void Anaheim leaders saw in the local tourism market.
Supporters say subsidies are a partnership that helps increase tax revenues to pay for city services and programs, but critics argue they’re a giveaway to wealthy corporations that spend money to influence local elections.
Shortly before the 2018 wage measure went up for a vote, Disney officials had pointedly canceled tax incentive agreements toward the construction of a high-end hotel, which also included the city not adding a gate tax for decades.
The lawsuit hinged on agreements Anaheim and Disney made in 1996 that built the Mickey & Friends parking structure and made other improvements to the resort area.
The city’s public finance authority borrowed money to make the improvements, and since then a certain amount of hotel taxes paid by resort visitors have been diverted to repay the debt. That money would have otherwise gone to the city’s general fund to pay for police, parks, street improvements and other services.
In his ruling, Judge Claster notes that no one disputes whether Disney has benefited from the 1996 city agreements (the company has been paying $1 a year to use the parking structure and will own it outright once the debt is paid off around 2036), but the suit appears to boil down to semantics.
The ballot measure defines a subsidy as an agreement in which a business or other party has “a right to receive a rebate” of various kinds of taxes, including hotel and sales tax. Claster concluded that, although the complicated structure of the agreements provides for reimbursement to Disney under certain conditions, the plaintiffs didn’t show that Disney had its taxes reduced or refunded.
Anaheim was not a party to the lawsuit over the ballot measure, but spokesman Mike Lyster said Wednesday in a statement, “While we never want to see a dispute like this play out in court, we appreciate the judge’s determination. It validates what we already knew and have said – the city of Anaheim does not provide any rebate or subsidy to Disney.”
He added that the agreements at issue in the lawsuit were part of a $1.9 billion investment in the resort area that continues to pay dividends to the community.
“The expansion was a public-private partnership reflecting shared interests in Anaheim’s visitor economy,” Lyster said. “It has been a great return on investment for our city, residents and neighborhoods.
“Since the 1990s expansion, Anaheim’s hotel revenue has more than tripled to a pre-pandemic high of $163 million in 2019. That money has gone to public safety, community centers, libraries, parks and meeting city obligations.”