Mallory said Thursday a determination on contractors’ wage rates will come by year’s end. (D.C. Department of Employment Services)

The city’s top employment official said Thursday a law intended to guarantee a “living wage” to employees of District government contractors has been confusing and unevenly implemented, amid questions about whether the District has even bothered to comply with one of its key provisions.

The Living Wage Act of 2006 requires companies doing at least $100,000 of business with the city to pay a super-minimum wage that is supposed to be reset each year according to cost-of-living estimates. But the city hasn’t updated the rates since 2010, before Mayor Vincent C. Gray took office, raising the ire of worker advocates.

Lisa M. Mallory, director of the Department of Employment Services, said at a D.C. Council hearing that her department will determine by year’s end how it intends to comply with the law. The 2010 rate was set at $12.50 an hour, and city economists estimate the wage should now be $13.40.

But Mallory said issues with the law go beyond the overdue rate increase to an inability to enforce its provisions and basic disputes about who the law should apply to. “While the law continues to have a laudable goal,” she said in prepared testimony, “”the law’s application remains broad, difficult to track, and many interpretations exist.”

The most contentious determination is over whether the law should apply to home health care workers — particularly those employed by contractors hired by the city to take care of the District’s most vulnerable residents, those with intellectual or developmental disabilities. The city official in charge of that care, Disability Services Director Laura Nuss, said mandating living wage rates could destabilize the city’s system of care. The rates, she testified, would push up wages not only for new employees, but old employees, raising costs for contractors that could not be supported by the city’s current Medicaid reimbursement rates.

“Ultimately, agencies would close or be closed due to the inability to maintain quality services and create a real crisis in the service system,” Nuss said.

Wayne Turnage, the city’s director of health care finance, said that should the city next year mandate the expected living-wage rate of $13.70 for home health workers it would cost an additional $32.4 million. Most of that would be covered by the federal government under Medicaid, but local taxpayers would be on the hook for $9.7 million, Turnage said, and there are no guarantees the federal government would agree to pay the yearly wage increases indefinitely into the future.

Federal Medicaid regulations, he also added, make it impossible for the District to get reimbursed for any retroactive living-wage hikes — meaning if the city were to provide workers with back pay, as worker advocates have suggested it should, the money would come purely out of  local funds, totaling many tens of millions of dollars.

Council member Vincent B. Orange (D-At Large), who convened the hearing, floated setting separate rates for medical and non-medical employees, calling it a proposal that merited “serious discussion.” Mallory said dual rates are possible, but declined to hint in what direction the Gray administration might come down. “We are still working on it,” she said. “We are very close, though.”

“I’m not saying folks on the medical side shouldn’t be making a living wage as well,” Orange said. “But now is the time for a dialogue on these issues so we once and for all can put it to bed.”