Regulatory Wrap-Up
Market Insights

Regulatory Wrap-Up

BY HBSDealer Staff

Wages

Federal – Disagreement within the Democratic caucus on a $15/hr federal minimum wage spilled into the open recently. Democrats in rural swing districts voiced concerns over the current bill and are advocating for a more moderate increase. Although the bill may reach the floor and even pass, it will not move in the Republican-controlled senate.

Labor Department – The Labor Department proposed regulations related to overtime rate requirements that define what forms of payment employers can consider when determining workers’ overtime rates. The proposed rule clarifies that employers may exclude, or include, certain kinds of perks or benefits, such as wellness programs, unused leave and tuition programs.

Hawaii – A house-passed bill was amended in a senate committee to increase the state’s minimum wage to $15/hr at a faster rate than the original language provided. The amended version increases the level to $12/hr by 2020 and to $15/hr by 2023, and eliminates a lower rate for businesses that provide health insurance.

Maryland – The legislature overrode the governor’s veto of legislation to raise the minimum wage to $15/hr by 2025. The cash wage for tipped employees will remain at its current $3.63/hr. Maryland becomes the sixth state to pass a $15/hr wage.

Michigan – Despite ongoing litigation, the minimum wage increase and paid leave mandate approved by the voters last November will take effect April 1. Voters originally passed an increase to $12/hr by 2024 but in the lame duck session following the election, outgoing Republican leaders quickly passed legislation to stretch out the compliance date until 2030.

Nevada – A bill to raise the minimum wage was introduced prior to a legislative deadline in the assembly. The legislature passed similar legislation last cycle which was then vetoed by the previous governor. The current governor, a Democrat, is supportive of a wage increase making passage more than likely this session.

McDonald’s – The nation’s largest quick-service chain announced that it would no longer lobby on minimum wage legislation at the state, local or federal levels of government. The announcement comes as Democratic U.S. House members debate the details of a federal increase, and states and localities across the country continue to consider varying levels of increases.

Paid Leave

Federal – Several Republicans in both the U.S. House and Senate filed companion legislation that would establish a federal paid leave program allowing participants to draw off their future social security payments. This new legislation expands on concepts in a bill introduced several weeks ago by Senators Mike Lee and Joni Ernst allowing participants to either delay their benefits at retirement or have the sum reduced over five years. Parents could also choose to use the funds for childcare expenses while continuing to work.

Michigan – Despite ongoing litigation, the minimum wage increase and paid leave mandate approved by the voters last November will take effect April 1. The legislature amended the paid leave mandate to exempt businesses with fewer than 50 workers.

Minnesota – The senate budget committee released a cost estimate report on legislation establishing a paid family leave program that Democrats have supported. The report estimates the program would cost $450 million in its first year and up to $900 million/year thereafter. Leaders in the Republican-controlled senate have shown no interest in taking up the proposal, while Democrats have pledged to pass a bill in the assembly and negotiate it into any final legislative package. The program would require a 0.65 percent income tax shared equally by employers and employees.

Oregon – A hearing was held on legislation to mandate a family and medical leave insurance fund to give employees up to twelve weeks of paid leave for themselves or caring for a family member that is ill, fourteen weeks for the birth of a newborn and six weeks for pregnancy. Because this would function as a payroll tax, it requires a three-fifths majority to pass which is very uncertain at this point.

Scheduling

Maine – “Fair Work Week” legislation was introduced ahead of a legislative deadline. Similar to bills in other jurisdictions, the language would require employers to compensate hourly employees with additional pay if schedule changes are made within two weeks of the change.

Chicago – Hearings are expected to be held in the coming weeks on a restrictive scheduling proposal. The sponsor of the bill is in a tough reelection runoff next week but regardless of the outcome, he has pledged to move forward with the proposal.

Wage Theft

Minnesota – As bipartisan legislation to enhance wage theft penalties moves through the legislative process, Attorney General Keith Ellison is creating a new labor division to broaden the office’s prosecutorial power to address “economic crimes.”

New Jersey – A bill that increases penalties on employers who underpay employees and extends the time in which an employee can file a wage grievance passed the senate. The bill would also give the state’s labor department enhanced authorization to audit employers. A similar bill passed both chambers last cycle but was vetoed by then-Governor Christie. Current Governor Murphy is likely to support the bill. The legislation moves to the general assembly for consideration.

Pay Equity

Federal – U.S. House Democrats passed their first major labor priority this week, the Paycheck Fairness Act, which would strengthen current law (the Equal Pay Act). The U.S. Senate is unlikely to advance the bill, providing Democrats a point of distinction heading into 2020.

Health Care

Labor Department – A federal judge struck down a key piece of the Trump administration’s association health plan rule. The judge targeted the provision that allows small businesses and the self-employed to buy health insurance on the large-group market, stating that it was intended as an unlawful “end run” around the Affordable Care Act.

Taxes

GeorgiaThe legislature passed two bills dealing with out-of-state internet sellers. The first bill establishes that certain marketplace providers must collect sales taxes on sales made by third-party vendors on their site. The second bill lowers the economic threshold for out-of-state retailers from $250,000 to $100,000 in sales per year. Sellers above that threshold must collect and remit the sales tax for all sales made to in-state consumers. The bills now move to the governor’s desk for his expected signature.

Maryland – The senate passed legislation establishing that marketplace providers must collect sales taxes on sales made by third-party vendors on their site.

New York – The legislature passed a $175 billion budget package following negotiations with the Cuomo administration. The package includes language establishing that marketplace providers must collect sales taxes on sales made by third-party vendors on their site.

Rhode Island – The governor signed a bill into law establishing that out-of-state sellers with more than $100,000 in annual sales or more than 200 transactions per year must begin collecting and remitting sales taxes on all sales made to in-state consumers. The law also mandates that online marketplace providers must collect sales taxes on sales made by third-party vendors on their site.

Key Takeaways

  • The decision by McDonald’s this week to no longer lobby against increases in the minimum wage is a significant tipping point in the life cycle of the issue. Not only did the company pivot in a very deliberate and public way, it also went out of its way to call into question the restaurant industry’s current positioning on the issue. All brands should be prepared for pressure by employees, customers, shareholders, elected officials and opinion leaders to follow suit.

 

  • By passing gender wage equity legislation, the U.S. House provided a sneak preview of what the 2020 election cycle may look like. House leaders know the bill has almost no chance of passage in the U.S. Senate but raising the profile of the issue for political purposes was the real intention. Look for numerous other bills, such as an increase to the federal minimum wage, to symbolically pass the house in order to feed the narrative for 2020.

 

  • Paid leave continues to gain momentum at the federal level and Republicans have added additional high profile cosponsors in both chambers. Democrats have their own proposal but a compromise is unlikely this Congress. Despite the current stalemate on approach, the conversation around the issue continues to advance and earn support on both sides of the aisle.

Legislature Status for Week of 4/1/19

  • The United States Senate is in session this week
  • The United States House is in session this week
  • Thirty-nine state legislatures are in regular session:
    • AK, AZ, AR, CA, CO, CT, DE, FL, GA, HI, ID, IL, IN, IA, KS, ME, MD, MA, MN, MS, MO, MT, NE, NV, NH, NJ, NY, NC, ND, OK, OR, PA, RI, SC, TN, TX, VT, WA, WV

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.

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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