Regulatory Wrap-Up
Market Insights

Regulatory Wrap-Up

BY HBSDealer Staff

Wages

Alameda, CA – The city council voted to raise the local minimum wage to $13.50/hr effective July 2019 and to $15/hr by July 2020 over the objections of the mayor and some small businesses. The California statewide rate is set to reach $15/hr by 2022.

Washington D.C. – The city council repealed an initiative to eliminate the city’s tip credit. Voters approved the initiative with a 56 percent majority vote in June. The council voted 8-5 to overturn the law that would have gradually eliminated the tipped wage by raising it to the city-wide minimum wage level of $15/hr by 2026. Procedurally, the council needs to vote again at their next meeting but no votes are expected to change. The council also voted to delay enforcement until the second (and final) vote.

Amazon – The online retail giant announced they would increase their company-wide minimum wage to $15/hr impacting roughly 350,000 U.S. workers. The announcement won immediate praise from Sen. Bernie Sanders and others. Subsequently, the company experienced some backlash after reports indicated workers were frustrated about the simultaneous elimination of bonuses and stock grants.

Paid Leave

IRS – The Internal Revenue Service issued an updated guidance notice for employers regarding the paid family and medical leave tax credits that passed in the 2017 tax reform law.

Westchester County, NY – The county approved a paid sick leave mandate modeled off of New York City’s law.  The measure requires companies with five or more employees to grant 40 hours of annual leave, accruing at a rate of one hour per 30 hours worked with carryover allowed. The law takes effect 90 days after adoption.

Labor Policy

Supreme Court – The high court heard oral arguments on Oct. 3 in the case New Prime Inc. v. Oliveira. The case will determine whether independent contractors are exempt from arbitration requirements under the Federal Arbitration Act. The decision could have a wide-ranging impact on the trucking industry in particular, which relies on independent contractor status for the majority of its workforce. A shift in that model would impact costs up and down the national supply chain.

California – The governor signed into law a bill requiring employers with five or more employees to provide at least two hours of sexual harassment training to all supervisors and one hour of similar training to all nonsupervisory employees.

California – The governor vetoed a bill that would have required large employers to keep records of sexual harassment incidents for five years.

Joint Employer

Labor Department – Mixed signals came out of the Labor Department this week regarding rulemaking on the joint employer issue. An internal memo leaked indicating the agency would issue guidance documents (a less stringent approach) rather than go through the rulemaking process. Secretary Acosta had previously stated in public forums that the agency will engage in rulemaking and distanced himself from the memo.

NLRB – The NLRB recently ruled on a case involving picketing and secondary boycotts that could have far-reaching impacts. In that case, a subcontractor’s janitorial workers protested the prime contractor, a building management company, in an attempt to put pressure on their employer. In response, the janitorial subcontractor fired the workers. The Board found the firings justifiable, ruling that secondary boycotts or picketing are unlawful and not protected activities. The Board found that only activity related to the worker’s primary employer, in this case the janitorial subcontractor, was protected.

Activism

Burgerville – Burgerville workers have gone on strike and are calling for a boycott of all locations due to a corporate policy barring employees from wearing political buttons on their work uniforms. Complicating matters is the fact that the chain and union officials are in the midst of contract negotiations for the recently-unionized locations.

Fight for $15 – Fight for $15 held protests in markets across the country this week. While protests were not widespread, activists in a number of locations engaged in acts of civil disobedience, resulting in arrests and in some instances the temporary closure of restaurant locations.

Whole Foods – Whole Foods employees are continuing to advocate for union representation, despite the announcement from parent company Amazon that the entry-level wage would increase to $15/hr. Some detractors have argued that when factoring in recent cuts to bonuses and other benefits, Amazon employees will actually receive less total compensation even with the new commitment to a $15/hr entry wage.

Data Security

California – The governor signed a law that mandates manufacturers of internet-connected devices, such as thermostats and refrigerators, must equip such devices with unique passwords or require the user to set their own. The original draft of the law put the onus on the retailer to ensure the security of the devices and similar legislation has been introduced in other states. The shift to manufacturer responsibility as the preferred model for “internet of things” security is notable for sellers.

Key Takeaways

  • Amazon’s announcement increasing the company-wide starting salary to $15/hr will impact the distribution center labor market heading into the holiday season. While the company may notch a political win in neutralizing some of the recent rhetoric against their labor policies, the decision comes as Amazon and other retailers compete for labor in an extremely tight market.
  • Two weeks ago, a new law was signed in California that holds retailers jointly responsible for labor violations by port trucking companies is a notable inflection point on the issue. For decades the short-haul trucking industry was accused of rampant labor violations and wage theft by independent truckers. A major three-part expose by the USA Today exposed many of the abuses. Now the state has effectively made consumer-facing retailers the “enforcer of record” which could become a model for other supply chain-related issues where criminal activity can occur.

Legislature Status for Week of 10/8/18

  • The United States Senate is in session this week
  • The United States House is in session this week

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 Aligncan provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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The latest Quikrete Industry Dashboard includes an update of the Conference Board’s Consumer Confidence Index, which now stands at 138.4, up from 134.7 in the previous month. The confidence metric is hovering at an 18-year high. Gas prices are holding stable, and the latest tally of stocks shows a widening gap between the gainers and decliners.

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