Regulatory Wrap-Up
Market Insights

Regulatory Wrap-Up

BY HBSDealer Staff

Wages

Federal – With the newly-elected U.S. Congress set to take office in January, a House committee plans to hold a hearing entitled, “Mandating a $15 Minimum Wage: Consequences for Workers and Small Businesses.” The committee is currently controlled by Republicans and the Democrats who are set to take over in 2019 have stated they will hold hearings and advance a $15/hr minimum wage mandate early in the next Congress.

Michigan – The Republican-controlled senate passed new legislation to delay the state’s scheduled minimum wage increase and reestablish the tipped wage. The bill extends the phase-in period to 2030, increasing at a rate of 23 cents annually until it hits $12. The phase-in could be stretched out even later if the unemployment rate is 8.5 percent or higher. The tipped wage would be capped at $4.00/hr under the new language. The new bill now moves to the house for consideration where it is likely to pass. Should that happen prior to the newly-elected Democratic governor taking office, advocates for the increase may initiate litigation or could refile the issue for the 2020 ballot.

New Jersey In an opinion piece, Assembly Speaker Coughlin announced that a bill to raise the state’s minimum wage to $15/hr will be introduced in the coming weeks. Legislative leaders and the governor have called for the legislature to advance an increase but negotiations around the tip credit and other issues have hampered movement to date.

Wilmette Village, IL – The suburban Chicago village board reversed their decision to opt out of Cook County’s $13/hr minimum wage ordinance. A nonbinding resolution appeared on the Nov. ballot and passed by wide margins, indicating public support for the increase. Several other local jurisdictions in Cook County could follow suit. The state is also likely to pick up the issue in 2019.

Paid Leave

Kansas The outgoing Republican governor signed an executive order providing paid parental leave to all government employees under the authority of the executive office. The move comes as a Democratic governor-elect is set to take over in 2019 and could serve to enable a broader conversation on paid leave mandates for private employers.

Michigan – The Republican-controlled senate passed new legislation that adjusts the paid sick leave provisions passed prior to Election Day. It lowers the required number of annual accrued hours that employers must provide from 72 to 36 and creates an exemption for businesses with fewer than 50 employees. The new bill now moves to the house for consideration. Advocates for the initiative have already pledged to put the issue back on the 2020 ballot if the law is substantially changed.

Washington – The state paid family leave law goes into effect Jan. 1, 2019. Companies must participate in the state-run program or create their own program, provided it meets certain criterion.

Albany County, NY – The county legislature postponed action on the much-debated paid sick leave ordinance until 2019.

Wilmette Village, IL – The suburban Chicago village board reversed their decision to opt out of Cook County’s paid sick leave ordinance. A nonbinding resolution appeared on the Nov. ballot and passed by wide margins, indicating public support for the proposal. Several other local jurisdictions in Cook County could follow suit. The state is also likely to pick up the issue in 2019.

Rick Santorum – Former U.S. Senator, presidential contender and current conservative political pundit, Rick Santorum, authored an opinion editorial calling on Republicans to work with Democrats to establish a national paid leave program for working families.

Scheduling

Boston, MA – The city council heard testimony from business groups and some advocates regarding the proposed “fair workweek” legislation that would apply to city contractors. However, the language defines city contractors broadly and much of it mirrors other laws passed in localities across the country.

Philadelphia, PA – The city council continued debate on the proposed “fair workweek” legislation and made some amendments to the language. It remains to be seen whether there is enough support on the council to pass the bill on to the mayor. The council’s next meeting is scheduled for Dec. 6.

H&M – The fashion retailer announced an update to their benefits package for part-time workers to include paid leave and a guaranteed minimum number of hours per week.

Labor Policy

California – A business group has initiated a legal challenge over the state’s decade-old Private Attorney General Act (PAGA) which allows individuals to bring suit against employers for labor code violations.

Taxes

U.S. House U.S. House Republicans introduced a tax package that addresses some technical changes to the Tax Cuts and Jobs Act that passed earlier this year. Most notable for many operators is correction of the drafting error related to the Qualified Improvement Property (QIP) provision. While the package may see some action in the House, it is unlikely to move in its entirety in the Senate prior to adjournment for the year.

Trade

China – President Trump announced a tentative truce with China in the ongoing trade war between the two countries. The two leaders met during the G20 in Argentina and reached an agreement that lacks specific details beyond the United States not implementing the scheduled increase of tariffs on $200 billion worth of Chinese goods. The tariffs on those goods will remain at 10 percent and in return China has agreed to increase imports from the United States. The agreement reportedly is set to expire on March 1, 2019 and discussions between the two countries will continue during that time.

NAFTA – The Presidents from Canada, Mexico and the United States signed off on the renegotiated North American Free Trade Agreement late last week while all three leaders were attending the G20 summit. The proposal still needs approval by the U.S. Congress (as well as the legislatures in Mexico and Canada) and also faces considerable opposition from some in Canada’s agricultural community. The continued imposition of aluminum and steel tariffs by the United States on both trading partners also hangs over the ongoing discussions.

Key Takeaways

  • Washington state’s new paid leave program, effective Jan. 1, is significant and should be watched closely. The program is an important test of paid leave as a government-sponsored program or “insurance” fund. The monies – paid in part by employers and deducted from employees’ paychecks – are deposited into the state fund to be distributed to employees when they become eligible. If the mechanics of the program work, expect other states to adopt the model. And, perhaps more importantly, a functional program lays the groundwork for a future portable benefits program. 
  • The scheduling issue continues to heat up. What was largely a west coast issue has now migrated east, first to New York City and now to more blue-collar cities like Boston and Philadelphia. Concurrently, major retail brands are deploying technology solutions that undermine many of the industry’s political arguments and at the same time, there is continued disagreement within the industry on what is an acceptable compromise – especially between large companies and independents. With more cities – and states – tackling this in 2019, the industry needs to aggressively work toward palatable solutions.

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 12/3/18

  • 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, OH & UT

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

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Quikrete Industry Dashboard

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The latest version of the Quikrete Industry Dashboard is updated to include a slight downturn for November in Consumer confidence, which is still running at an exceptionally high reading of 135.7. On a monthly basis, all 10 hardware and building supply stocks are in positive territory. Elsewhere on the dashboard, the SAAR of total housing starts edged up in October, while single-family starts declined slightly.

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Regulatory Wrap-Up
Market Insights

Regulatory Wrap-Up

BY HBSDealer Staff

Wages

Connecticut – Governor-elect Ned Lamont reiterated his support for a $15/hr minimum wage. Other supporters note that with Democrats in full control of the legislature, the likelihood for a wage increase has significantly increased.

Florida – The state supreme court set a date of March 6 for oral arguments related to Miami Beach’s effort to raise their local minimum wage beyond the state level. Last year, the city passed a minimum wage increase to $15/hr knowing that they were violating the state’s preemption law but hoping subsequent court action would find preemption unconstitutional.

Louisiana – The governor called for a modest increase to the state minimum wage, citing neighboring Missouri and Arkansas as “conservative leaning states [that] approved a minimum wage increase” at the ballot recently. The Democratic governor acknowledges advancing a law through the Republican- controlled legislature will be a challenge.

Minnesota – Following the passage of a $15/hr minimum wage increase in St. Paul, which mirrors a similar law in neighboring Minneapolis, advocates are focusing on a statewide effort next session. The state senate is still controlled by Republicans, many of whom have registered their opposition to a statewide increase, but the issue will likely progress further than in previous legislative sessions.

Washington – The state Department of Labor and Industries released draft rules for increasing the state’s overtime threshold for salaried employees. The department also announced three public listening sessions throughout the state that run through the end of November.

Cook County, IL – Earlier this month, voters approved a non-binding ballot initiative supporting a $13/hr minimum wage. The county passed an ordinance in 2016 but the vast majorities of townships opted out of the provision. The recent initiative passed with over 80 percent support and advocates are increasing pressure for a new countywide mandate.

Sonoma County, CA – Advocates are pressuring local governments in the county to raise their minimum wages to $15/hr ahead of the scheduled statewide phase-in, as dictated by state law.

St. Paul, MN – As the dust settles following the contentious debate around the recently-passed $15/hr law, specific provisions are becoming increasingly clear. Notably, language that exempted restaurant workers subject to a collective bargaining agreement was removed from the final ordinance. Many other jurisdictions that have passed similar laws regularly exempt unionized workers.

JP Morgan Chase – The company announced its entry-level wage would increase to $18/hr for bank tellers and other positions in the Washington, DC area. The announcement comes as the company plans to increase its brick and mortar presence across the country.

Paid Leave

Leave Optimization Group – Dozens of companies with operations in multiple states have partnered with the National Business Group on Health to help employers manage paid leave programs. The group will exchange best practices and compliance concerns that result from the patchwork of state and local laws mandating paid leave for employees.

Massachusetts – The newly created agency, the Department of Family and Medical Leave, launched a new website and issued initial guidance for implementing the recently-passed paid leave law.

Austin, TX – The U.S Court of Appeals for the Third Circuit ruled against the city, overturning a paid sick leave ordinance that became law earlier this year. The court found that the city law violated a state law preempting localities from raising the minimum wage, basically extending existing minimum wage preemption to other labor-related issues. The case could eventually impact other local labor laws.

Cook County, IL – Earlier this month, as they did with minimum wage, voters approved a non-binding ballot initiative that showcases support for a mandated employer-provided paid leave program. The county passed a similar ordinance in 2016, but the vast majority of townships opted out of the provision. The initiative passed with over 80 percent support and advocates are beginning to pressure for a new countywide mandate.

Taxes 

Seattle, WA – A state Superior Court judge ruled that a case against the city over the repeal of the city’s “head tax” law could proceed. The case alleges procedural violations occurred when the city abruptly repealed a per employee head tax in the face of business opposition earlier this year.

Health Care 

Florida – The state attorney general announced the addition of Walgreens and CVS to the state’s case against pharmaceutical companies over the opioid crisis. The state case alleges the companies were complicit in making opioid based pharmaceuticals too readily available.

Key Takeaways

  • Labor advocates are increasingly looking for opportunities to push back on state preemption laws through the courts. Anytime they can get the issue into a courtroom, they have a chance. Pay close attention to the legal battles in Florida and Texas as the state constitutionality of preemption is tested.
  • With Congress soon to return for their lame-duck session, one of the top priorities will be a tax bill that will in part, include some technical corrections to last year’s landmark legislation. Included in that debate will be correcting an error in the new law forcing retailers and restaurants to depreciate some renovations over 39 years instead of taking the immediate deduction Congress intended. There is little, if any, dispute that Congress should fix the language. But it isn’t clear exactly when that might happen. This is the time for brands to vigorously engage with their elected representatives and political allies to push for reinstatement of the previous depreciation language.

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 11/26/18

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

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

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