The problems arose on Aug. 11 when the sorters, drivers and equipment handlers from the SMaRT station went on strike over their wages and benefits, asking Green Team/Zanker to pay them the prevailing wage for the area.

A section in the city's contract with Green Team/Zanker requires the company to pay workers the prevailing wage if there is one for the area. At the time the contract was signed four years ago, there was no prevailing wage set, but in July the state government released the information, establishing a prevailing wage in the Bay Area.

The contract states that "if the Department of Industrial Relations subsequently establishes formal wage determinations for job categories for which they are not currently available, Contractor shall pay employees in those job categories wages and benefits equivalent thereto."

On Aug. 13, the city sent a letter to Green Team, asking it to provide a plan to deal with the prevailing wage problem by Aug. 20, but granted an extension to the company after it said it needed more time.

On Aug. 30, the city received a response.

According to a letter sent to the city by Green Team's attorneys, the company feels it is not violating the contract. But to satisfy the labor union's demands, Green Team has proposed a physical and organizational restructuring of the station to make it more productive and allow the company to meet the union's demands.

Because the restructuring involves "trade secret information," the new proposal is being kept confidential.

Green Team also said that the wages the union is asking for could mean nearly a 50 percent increase for some employees, which it says is "well in excess of the amount that could be funded under the terms of the current Sunnyvale­Green Team agreement."

The letter asked the city to respond as soon as possible—to begin negotiations—but at press time, no action had been taken.