Regulatory Wrap-Up
Market Insights

Regulatory Wrap-Up

BY HBSDealer Staff


Arkansas – A bill to roll back the minimum wage increase recently approved by the voters has stalled. It’s unclear if there’s an appetite among legislative leadership to consider the legislation.

Illinois – A bill to raise the minimum wage from $8.25 to $15/hr is facing little direct opposition given the new partisan makeup in the state capitol. Business groups that have opposed an increase in the past are instead arguing for extended phase-in periods, regional wage rates based on cost-of-living and protection of the tipped wage. Stronger wage theft protections are also likely to be included in the bill.

Maine – A bill was introduced in the house that incrementally increases the state’s overtime threshold, which determines which employees are exempt for overtime pay, to $55,224 by 2022.

New Jersey – The negotiated legislation to raise the state’s minimum wage to $15/hr by 2024 passed both chambers and advanced to the governor’s desk for his approval. The bill currently calls for the first increase to occur on July 1, 2019. It also incrementally increases the state’s tipped wage to $5.13/hr by 2024 and establishes a training wage of 90% of the minimum wage for the first 120 days of employment.

Pennsylvania – Governor Wolf unveiled his proposal to raise the minimum wage to $12/hr on July 1, 2019 with annual increases to $15/hr by 2025.  His proposal would also eliminate the tipped wage which is currently $2.83/hr. As in past years, the concept will face stiff opposition in the Republican-controlled legislature.

Paid Leave

Maine – A bill was introduced to establish a paid sick leave program for businesses with more than five employees. Previous versions of the bill, as introduced by the sponsor, established a much higher threshold of 50 employees. This legislation is separate from a bill introduced by the Speaker of the House that would establish a paid family leave program.

Massachusetts – The newly-established Department of Family and Medical Leave issued draft regulations related to the recently-passed paid leave legislation. The proposed rules are open for public comment through March 31.

Minnesota – A paid family leave bill that would provide twelve weeks of partial wage replacement for medical leave (including pregnancy) and an additional twelve weeks to care for a newborn or family member passed out of the House Labor Committee 10-5. The state-run insurance program would be funded by a 0.31 percent payroll tax on both employers and employees. The bill faces a steeper climb in the Republican-controlled Senate.

New Hampshire – Senate Democrats offered their counter proposal to the governor’s plan for implementing a statewide paid leave program. A senate committee debated a bill that would establish a paid family leave program paid for by a 0.5 percent income tax on employees.

North Dakota – A bipartisan bill was debated in committee that would impose a paid leave mandate on businesses in the state. The bill would apply to companies with more than 50 employees and be funded by both employer and employee contributions.

Los Angeles, CA – City council members introduced legislation that would offer up to 18 weeks of paid family leave for employees in the city. Further details have yet to be developed but the original bill would guarantee full salary to employees while on leave. A specific funding mechanism has yet to be determined.

Gates Foundation – The philanthropic non-profit announced a reduction to their paid family leave benefit for new parents from a full year to six months. New parents are still eligible for a $20,000 stipend to defray childcare costs. While the plan remains one of most generous benefit plans in the country, it demonstrates the steep costs associated with robust paid leave plans.

Joint Employer

NLRB – The comment period for the National Labor Relations Board’s joint employer rulemaking finally closed on Jan. 28. The proposed rule would roll back the standard established by the Obama-era Board. The International Franchise Association, the leading trade group on the issue, submitted comments and released a report which detailed that confusion around the existing standard has cost franchise operators an average of $142,000 a year in legal fees (or $33.3 billion industry-wide). The rule received more than 26,000 comments in total and will now be considered by the full board.

Labor Policy

NLRB – The National Labor Relations Board overturned a 2014 Obama-era decision in Supershuttle DFW, reverting back to the traditional independent contractor standard. It revised its employment classification test with the aim of clarifying “the role entrepreneurial opportunity plays” in deciding whether workers are employees who can unionize or independent contractors who can’t.

OSHA – This week watchdog groups sued the Labor Department in an attempt to block the rolling back of an Obama administration rule that requires large employers to file detailed injury data over the internet. OSHA has cited concerns over worker privacy.

New Jersey – Lawmakers are considering legislation that would increase penalties on wage and hour violations. Existing law calls for a $100 fine for the first nonpayment of wages but proposed legislation would increase the penalties up to $1,000 and three months in jail. Business groups are pushing back arguing for a distinction to be made between unintentional accounting errors versus intentional acts of denying payment.

No-Poach Agreements – To date, 50 franchised brands have settled with the Washington Attorney General and removed no-poach agreements from their franchise contracts nationwide. Jersey Mike’s is the only chain refusing to settle which led to the attorney general filing a lawsuit against the chain. This week, a judge denied a motion to dismiss filed by Jersey Mike’s. Meanwhile, the federal Justice Department may strengthen Jersey Mike’s case as well as others as it intends to file briefs in support of chains in a number of franchise no-poach cases.


North Dakota – The senate passed a bill that would require online marketplace facilitators to collect sales taxes on behalf of third-party sellers on their platform.

Virginia – The senate passed a bill that would require online marketplace facilitators to collect sales taxes on behalf of third-party sellers on their platform. The bill will be heard in the house finance committee this week.

Wyoming – Legislation has overwhelmingly passed the House that imposes a 7 percent corporate income tax on publicly-traded companies with at least 100 shareholders. It appears that units of franchise brands would be included but the tax would be paid by the franchisor. The bill has strong bipartisan support in the Senate including the Senate President, Vice President and the relevant committee chairs.


Federal – Bipartisan legislation has been introduced in the U.S. Senate that would give Congress veto power over some tariffs imposed by the executive branch. The legislation is intended to hamper the Trump administration’s strategy of imposing additional taxes on imported products by citing national security concerns. Vocal support from several leading Republicans in both chambers increases the chances of the bill gaining traction.

China – Chinese and U.S. trade negotiators concluded a second round of meetings last week. News reports indicate that no deal was achieved ahead of the pending March 2 deadline for the Trump Administration to increase tariffs on $200 billion of imported Chinese goods. However, President Trump has tweeted that a “deal is in the works.”

Key Takeaways

  • The legislation flying through the Wyoming legislature should deeply concern brands. It demonstrates anti-corporate sentiments are not restricted to blue enclaves on the coasts and that sentiment could translate to a number of public policy-related challenges in the future. A dynamic where the moderate middle is narrowing and the wings of both parties are adhering to some anti-chain biases creates very little room for companies to build allies to advocate for their agenda. For this reason, the conversation in Wyoming – which could move in some shape or fashion to other jurisdictions – is important to watch.
  • The actions by the Gates Foundation this week to trim back their paid leave benefits is an acknowledgement by even the strongest proponents of the policy that there is a tremendous cost associated with it. As jurisdictions like Los Angeles move forward with robust leave proposals, the industry needs to do a better job of incorporating these data points into their arguments.

Legislature Status for Week of 2/4/19

  • The United States Senate is in session this week
  • The United States House is in session this week
  • Forty-one state legislatures are in regular session:
    • AK, AZ, AR, CA, CO, CT, GA, HI, IL, IN, IA, KS, ME, MD, MN, MS, MO, MT, NE, NJ, NM, NC, NV, NY, ND, OH, OK, OR, PA, RI, SC, SD, TN, TX, UT, VT, VA, WA, WI, WV, WY


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.

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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