Regulatory Wrap-Up
Market Insights

Regulatory Wrap-Up

BY HBSDealer Staff

Wages

Federal – U.S. House Democrats are still short the needed votes to pass a $15/hr minimum wage. The Congressional Budget Office (CBO) reported this week that the mandate would cost private businesses $48 billion a year.

Hawaii – Lawmakers failed to reach a deal on a bill to raise the minimum wage to $15/hr minimum and deferred the issue to the next legislative cycle.

LouisianaA bill that would allow voters to determine if the state should increase the minimum wage to $9/hr passed a senate committee. The language, if passed, would place the question on the 2020 ballot. A similar bill has moved in this committee in previous sessions but ultimately failed and did not pass into law.

Minnesota – The Republican-led senate is likely to include language in their budget bill prohibiting localities from establishing or enforcing minimum wage requirements above the state rate. The bill is expected to be voted on next week. The inclusion of the language means it will ultimately be part of the end-of-session budget debate with the Democrat-led house next month.

Vermont – A proposed house amendment to the senate-passed legislation establishing a $15/hr minimum wage would increase the state’s cost of compliance by roughly $28 million over the next five years, according to a legislative analysis. The amendment would require Medicaid-funded employers to increase wages not only for those making less than $15/hr but also potentially for those currently making more than $15/hr. The policy is in response to what is commonly referred to as “wage compression” and would ensure those currently making more the $15/hr get a wage increase equal to the percentage increase of other employees. If successful, the amendment could cause the overall legislation to stall.

Paid Leave

Colorado – The bill to establish a statewide paid family leave program was amended to establish a study committee on the matter. Enough concern was raised by several Democratic senators over the sustainability and funding mechanism of the program. The governor had also wanted significant changes to the original legislation.

Maine – The house speaker announced her plan to mandate 12 weeks of parental leave and 24 weeks for medical leave. It would be funded by a tax on wages of .55 percent to .75 percent on wages over $12,000 capping the maximum weekly benefit at 100 percent of Maine’s average weekly wage. A different paid sick leave bill already has bipartisan support and would require employers with more than 10 employees to provide up to 40 hours of earned paid leave.

Dallas, TX – The city council passed an ordinance mandating all employers in the city provide paid sick leave to their employees. The law will likely be preempted by a statewide bill currently under consideration that would prohibit cities and other localities from taking similar action.

Labor Policy

EEOC – A judge approved the Equal Employment Opportunity Commission (EEOC) plan to collect detailed data on employee compensation by September 30, 2019.  The court ordered the agency to collect this data for calendar year 2018. The court also ordered the agency to collect a second year of pay data but gave the EEOC the option of either collecting 2017 data or collecting 2019 compensation data. The EEOC must inform the court by May 3, 2019 if it chooses to collect the 2019 data. Additionally, the court held that approval of the revised form was extended through April 2021. Finally, it also ordered the EEOC to begin immediately implementing steps to collect the data, notify employers of these requirements and report to the court on its status on a continuing basis.

NLRB – In a recently-released National Labor Relations Board (NLRB) memo, the agency evaluated a case where a company maintained a policy that prohibited employees from speaking to the media at any time. The NLRB found this rule to be unlawful, finding that employees have a protected right to speak publicly about their terms and conditions of employment, including to the press, without employer authorization. More narrow prohibitions that don’t conflict with that right may still be lawful.

U.S. Supreme Court – The Supreme Court has again affirmed the use of arbitration clauses in employment contracts. Citing the 1925 Federal Arbitration Act, the court found that mandatory arbitration clauses in employment contracts may bar workers from arbitrating collectively with their employer unless the contract expressly allows it.

Colorado – The senate-approved equal pay measure is now working its way through the house, passing its first committee this week. The house and senate bills differ and those differences must be reconciled before final passage in the house or in a conference committee before the fast-approaching conclusion of the legislative session.

Illinois – A bill mandating corporate board diversity, similar to California’s, was approved by the house and is now under consideration in the senate. It would mandate that corporate boards include at least one female, one African-American as well as one Latino member. Like California, the Illinois law if enacted, will face legal challenges.

Michigan – The attorney general is fulfilling a campaign promise and making wage theft a top focus of her administration. She announced the establishment of a Payroll Fraud Enforcement Unit to investigate wage theft, including the misclassification of workers as independent contractors and the nonpayment of overtime.

Stop & Shop – The 10-day strike ended with the initial approval of a three-year labor agreement. The strike has been characterized as a success for the UFCW. It cost the company around $100 million as stores struggled to stay open. It also gained national attention as workers were bolstered by visits from presidential contenders Joe Biden, Pete Buttigieg, Bernie Sanders and Elizabeth Warren.

McDonald’s – The company announced a partnership this week with AARP in an effort to attract more seniors into its workforce.

SEIU – The Service Employees International Union (SEIU) will host the National Forum on Wages and Working People this weekend. Many of the announced presidential candidates are scheduled to participate.

Data Privacy

California – An assembly committee passed eight industry-backed bills to amend the landmark data privacy law that passed last year and is set to go into effect in 2020. Among other provisions, the various bills would allow businesses to collect personal information in association with loyalty programs as well as maintain records on their own employees. The package will advance to the full assembly and if passed, head to the senate for consideration. The attorney general sponsored a separate bill in the senate that does not adjust the underlying law but does expand a consumer’s authority to sue companies for violations.

Taxes

California – Legislation to enact a statewide soda tax was withdrawn due to lack of support. Last year, facing the threat of a ballot initiative to limit their taxing authority, the state reluctantly passed legislation preventing localities from enacting their own soda taxes until 2030, thereby making it the purview of the state. This was the first effort since that new law was enacted and though unsuccessful, sponsors promised to try again next year.

CaliforniaThe governor signed legislation to raise the economic threshold for out-of-state retailers from $100,000 to $500,000 in sales per year, above which retailers are obliged to collect and remit sales taxes for in-state sales. The new law also establishes that certain marketplace providers must collect sales taxes on sales made by third-party vendors on their site.

IndianaBoth chambers agreed in conference on legislation which would force online marketplace providers to collect sales taxes on sales made by third-party vendors on their site. The bill now advances to the governor’s desk for his expected signature.

South Carolina – Language clarifying the state’s sales tax collection law was signed by the governor and goes into effect immediately. The law ensures that online marketplace facilitators must collect and remit sales taxes on sales made by third-party sellers on their website. The law comes as litigation between the state and Amazon.com over the collection obligation is ongoing.

Key Takeaways

  • The recent announcement by the U.S. Chamber that they intend to become “less aligned” with the Republican Party is important. The party under its current leadership has become less supportive of traditional business imperatives like immigration, free trade and the Chamber views their platform as “economic isolationism.” The business community is finding itself increasingly at odds with the party platform. The Chamber stressed that it is not looking to align more with Democrats but instead trying to lead the redevelopment of a political center that, in theory, would include members of both major parties. Look for other large players to potentially follow suit, putting pressure on traditional industry trade associations.
  • The “win” last week by the UFCW with regard to the Stop & Shop strike is important. First, it creates an environment where any labor unrest, either real or manufactured, will get presidential candidate-level attention. Secondly, it increases the possibility of some type of high-profile problem for national brands in the restaurant industry – particularly QSRs – in the form of a long period of protest, walkouts or an outright corporate campaign. And it creates the opportunity – or in the case of Stop & Shop, the necessity – for the leading Democratic candidates to jump onto the bandwagon and join the cause. We have gotten used to young people with bullhorns protesting at McDonald’s and other leading brands but we don’t have much experience with sitting U.S. Senators and former Vice Presidents doing the same. It’s not a big leap to see that happening. Brands need to pay attention.

Legislature Status for Week of 4/29/19

  • The United States Senate is in session this week
  • The United States House is in session this week
  • Thirty-two state legislatures are in regular session:
    • AL, AK, AZ, CA, CO, CT, FL, HI, IL, KS, LA, ME, MA, MI, MN, MO, NE, NV, NH, NJ, NY, NC, OH, OK, OR, PA, RI, SC, TN, TX, VT, 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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