Regulatory Wrap-Up

BY HBSDealer Staff September 26, 2018

Wages

Arkansas – A state supreme court-appointed magistrate heard oral arguments this week challenging the minimum wage initiative that would gradually increase the state’s minimum wage to $11/hr by 2021. The lawsuit alleges that proper canvassing procedures were not followed as well as challenges the validity of the submitted signatures. A decision is expected quickly given that ballots must be printed in a matter of weeks.

New Hampshire – The SEIU-backed group Raise Up New Hampshire announced a campaign to raise the state’s minimum wage during the 2019 legislative cycle. Earlier this year, the state senate defeated a proposal to raise the wage to $12/hr.

Washington D.C. – The city council held their much-anticipated hearing on legislation to repeal the ballot initiative that voters approved in June. It gradually eliminates the tipped wage and raises the minimum wage to $15/hr by 2026. The council heard from over 250 witnesses, the vast majority of whom support repeal of the law. Some council members who support the initiative hinted at a possible compromise involving a longer phase-in period, up to fifteen years. A vote on the repeal bill has yet to be scheduled but the council chair indicated a vote would happen prior to the initiative going into effect in early Oct.

Tipped Wage – The 9th Circuit Court of Appeals upheld a federal regulation, commonly referred to as the 80/20 rule. It outlines what percentage of time servers and bartenders can be involved in tasks that do not offer tips, such as cleaning or prepping the restaurant for service. This issue continues to face scrutiny in courts across the country.

Paid Leave

New Jersey – The state Department of Labor and Workforce Development released proposed regulations implementing the recently-passed paid sick leave law. The law goes into effect on Oct. 29. The proposed regulations are subject to an open comment period and a public hearing will be held on Nov. 13.

Noodles & Co. – The restaurant chain announced a new maternity leave policy offering new mothers with the title of assistant manager or above a “phase-out/phase-in” program. The program allows mothers to work 80 percent of their schedules for 100 percent of pay for four weeks before and after maternity leave. The company already offers six weeks of paid maternity leave.

Labor Policy

Federal – The U.S. Senate passed funding legislation for the Labor Department and the National Labor Relations Board for the first time in more than a decade. Previously, the agencies have been funded through stop gap measures such as continuing resolutions. Several controversial policy riders were removed from the bill including a provision that would have reversed the Obama-era NLRB decision on joint employer liability. The bill is expected to advance to the president’s desk for signature.

Wisconsin – In a 2-1 ruling, the 7th Circuit Court of Appeals determined that a provision in the state’s right to work law is preempted by federal law. The provision in question allows workers to revoke their authorization to have union fees deducted from their pay with only 30 days notice. Federal labor law establishes that workers be given a chance to revoke dues payments only once a year.

Activism

Fight for $15 – Fight for $15 held another round of protests, alleging systematic sexual harassment at McDonald’s restaurants. The SEIU-backed protests earned headlines in major outlets across the country and the union has begun to expand its criticisms to other restaurant brands. Sens. Bernie Sanders and Elizabeth Warren voiced their support of the protests.

Swipe Fees

Mastercard & Visa – Both Mastercard Inc. and Visa Inc. have proposed a settlement offer of as much as $6.2 billion affecting millions of U.S. merchants across the country. The long-running class action was brought by merchants against the credit card companies for alleged violations of antitrust laws and price fixing of interchange fees paid on every transaction. The proposed settlement, which is subject to court approval, would not alter the business practices in question. Several major merchants opted out of a similar proposed settlement in 2013 and may do so again.

Transportation

Federal – The U.S. Senate and U.S. House continue negotiations of the Federal Aviation Authority’s budget bill which may be considered by the full House this week. A controversial provision in the bill that would have established nationwide uniformity for trucker meal and rest breaks is likely to be pulled from the final product.

Taxes

Federal – A group of U.S. House lawmakers introduced a bill to slow down states’ rush to capture more legally-owed sales taxes from their in-state consumers in the wake of the Supreme Court decision in Wayfair. The proposed federal bill would delay implementation of any state effort to Jan. 1, 2019 and bar retroactive taxation among other provisions. State government groups have come out in opposition to the bill citing inaction in Congress over the last several decades on the issue and the intrusion upon the new state authority granted by the recent U.S. Supreme Court decision.

South Carolina – The department of revenue announced a one-month delay to Nov. 1 of its deadline for out-of-state sellers to begin collecting the state’s sales taxes for sales to in-state consumers. The state also lowered the threshold for businesses that must begin collecting from the original level of $200,000 worth of sales into the state to $100,000 worth of annual sales.

Trade

China – The Trump Administration finalized and published a list of products that will be subject to the third tranche of tariffs on imported goods from China. The list comprises approximately $200 billion worth of goods that will be subject to a 10 percent tariff beginning on Sept. 24, escalating to 25 percent by the end of 2018. China reaffirmed previously announced retaliatory tariffs of 5-10 percent on $60 billion worth of U.S. goods on top of the $50 billion already subject to import tariffs. President Trump also threatened an additional $267 billion worth of chinese imports to be subjected to tariffs which would bring the total to roughly $517 billion.

Federal – President Trump signed the Miscellaneous Tariff Bill into law. The law temporarily reduces or suspends tariffs on roughly 1,700 imported products that are not produced in the U.S. Signing of the legislation is a counter-intuitive move for the President who has used tariffs to engage in a much larger scale trade war with China and other nations. The law focuses on raw materials and is supported by several manufacturing and business groups.

Key Takeaways

Last week, Fight for $15 enjoyed its best day of earned media in many years, attacking McDonald’s on the issue of sexual harassment. Realizing success, expect that the SEIU will continue to expand these criticisms to other brands and to the restaurant industry more broadly.

Attorney general races could dramatically impact the post-election environment. This week, Letitia Adams, the current New York City Public Advocate, secured the Democratic nomination for New York Attorney General. She has been an outspoken ally of the SEIU and some would argue an adjunct of the Fight for $15 campaign in New York City. She may join a new crop of activist attorneys general across the country that place a primary focus on pursuing enforcement actions against corporate brands.

Podcast

Check out our Working Lunch podcast each week that includes further analysis into these legislative issues, policy, politics and much more. You can find Working Lunch on the Nation’s Restaurant News website, or by clicking here, and when you download the podcast and subscribe on iTunes here.

Legislature Status for Week of 9/24/18

The United States Senate is in session this week
The United States House is in session this week
Five state legislatures are meeting actively this week:
- MA, MI, NJ, PA & OH

The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Aligncan provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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