Regulatory Wrap-Up: Paid leave initiative in Michigan receives legal challenge
Wages
Federal — The Restaurant Law Center (an adjunct of the National Restaurant Association) filed a lawsuit in U.S. District Court against the Labor Department over Obama-era guidelines regarding an employer’s use of tip credits in states that allow the practice. The case takes issue with the process by which the Obama Labor Department formulated the new rule outside the regular rulemaking process.
Michigan — A group of business interests calling themselves Michigan Opportunity, has initiated a legal challenge to the minimum wage ballot initiative that was recently submitted to the secretary of state for the Nov. ballot. The initiative, if approved, would raise the state’s minimum wage to $12/hr by 2022 and eliminate the tipped wage which is currently $3.52/hr. The legal challenge alleges the proposed language fails to address which parts of the state wage law it seeks to amend which is a technical violation of the initiative process. It also alleges that invalid signatures were submitted to the state for approval. The secretary of state’s office has indicated that the approval process for the gathered signatures will be concluded by the end of the month.
New Jersey — Governor Murphy outlined his top priorities for the remainder of the year and raising the state’s minimum wage to $15/hr is still on his radar. Disagreements remain over details like the treatment of seasonal workers, tipped wage rates and timelines for future increases.
North Dakota — An effort to place a $15/hr minimum wage initiative on the Nov. ballot failed to gain the necessary signatures to appear on the ballot.
Washington, D.C. — DC City Council Chairman Phil Mendelson introduced legislation (co-sponsored by a majority of the council) to roll back the recently-approved ballot measure that would eliminate the cash wage for tipped employees by 2026. The mayor and a majority of the council had opposed the measure citing economic harm to the city. The council is in recess until the fall and will not take up the measure before then. In a related development, Rep. Mark Meadows (R-NC), chairman of the House Freedom Caucus, is exercising Congress’ oversight of Washington, DC and has introduced language to block the city from using any money to implement the new law.
Paid Leave
Michigan — Small Businesses for a Better Michigan, a business interest group, has filed a legal challenge to the “Time to Care” initiative proposal that would mandate employers with more than 10 workers provide at least 72 hours of earned sick time per year, and 40 hours for smaller employers. The challenge alleges invalid signatures were submitted to the state for approval. The secretary of state’s office has indicated that the approval process for the gathered signatures will be concluded by the end of the month.
San Antonio — The state attorney general sent a letter to the city government warning that state law preempts localities from implementing local benefit mandates. The letter came after the city clerk’s office certified that enough signatures had been gathered to place a paid family leave initiative on the Nov. ballot. The AG’s office is currently involved in litigation over the Austin, TX ordinance that passed earlier this year.
Study — The conservative American Action Forum released a study of the Republican paid leave proposal soon to be formally introduced by Sen. Marco Rubio that provides benefits in the form of early withdrawals from social security funds. The study found that the proposal would speed up the insolvency of the social security fund and negatively impact future budgets. The study’s release comes on the heels of a Senate subcommittee hearing on the issue this week.
Pay Equity
California — A senate-passed bill that would require employers with more than 100 workers in the state to submit employee pay data along with race, ethnicity and gender specifications to the state on an annual basis passed its first committee in the assembly. The bill is currently on hold in a second committee and will be considered when the legislature returns from summer recess in August. Similar legislation was vetoed by Governor Brown last year as part of a larger deal with the labor community. It is unclear if the governor will act similarly this time, should the legislation advance to his desk.
Labor Policy
No Poaching Agreements — This week, eleven democratic attorneys general including from the District of Columbia launched an investigation of eight quick service restaurant chains requesting information regarding “no poaching” clauses in their franchise contracts. These clauses restrict managers from hiring away workers from another unit of their chain. Labor advocates - the political force behind these actions - contend that these clauses restrict worker movement and therefore their earning potential. In a related action this week, numerous national chains - including McDonald’s and Arby’s - announced that they were voluntarily removing these provisions from their franchise agreements.
In-N-Out Burger — A U.S. Court of Appeals upheld an earlier NLRB decision that found In-N-Out Burger violated federal labor laws when it forced employees to remove “Fight for $15” buttons from their uniforms. The company had contended that the buttons were in violation of their uniform code and had presented a safety hazard. The judge determined that that argument was moot since the company asks employees to wear other buttons periodically throughout the year.
Trade
China — Following the July 6 initiation of a 25 percent tariff on $34 billion worth of Chinese imports and the immediate retaliatory response from the Chinese, the Trump Administration released a list of $200 billion in Chinese imports that could be subject to a future 10 percent tariff. The new list will be subject to public hearings and comments and could be imposed sometime after Aug 30. Should China retaliate yet again, the U.S. has threatened to place additional tariffs on yet a larger list of products.
Federal — The U.S. Senate voted 88-11 on a non-binding resolution to instruct negotiators on a government funding bill to include language “providing a role for Congress” in the president’s decisions to implement tariffs for national security reasons. The symbolic vote does not ensure that such language would be included in future legislation, but the number of yes votes indicates the proposal could have a veto-proof majority. However, the ambiguous nature of the “role of Congress,” the lack of a similar level of support in the House, and the politics of an election year all indicate that forceful language limiting the president’s authority on trade is unlikely to move forward in the near future.
Taxes
Nebraska — A state senator has taken the first step to summon the legislature back into a special session in an effort to pass legislation that would allow the state to collect sales taxes from online retailers in the wake of the recent SCOTUS decision. He may not have enough support to call the legislators back early, but the effort shows the importance of the issue to the state and indicates that the legislature will act next session, if not before.
New Hampshire — The governor has called a special session of the legislature for July 25 in an effort to shield New Hampshire retailers from recent activity in other states that force out-of-state sellers to collect sales taxes on behalf of in-state consumers. The action comes in the wake of the landmark South Dakota v. Wayfair Supreme Court decision. New Hampshire is among five states that do not levy a sales tax and has long opposed any efforts to mandate collection of other state’s taxes by in-state businesses. It is unclear what legislation, if passed, would not be subject to future litigation given the breadth of new authority granted to states in the SCOTUS decision.
North Dakota — The state tax commissioner announced that certain out-of-state retailers would need to begin collecting the state’s sales taxes effective Oct. 1, 2018. The state has recommended that sellers register with the Streamlined Sales Tax Registration System, a centralized electronic registration system for all 24 states that are members of the simplified system.
Key Takeaways
Legislature Status for Week of 7/16/18
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.
Federal — The Restaurant Law Center (an adjunct of the National Restaurant Association) filed a lawsuit in U.S. District Court against the Labor Department over Obama-era guidelines regarding an employer’s use of tip credits in states that allow the practice. The case takes issue with the process by which the Obama Labor Department formulated the new rule outside the regular rulemaking process.
Michigan — A group of business interests calling themselves Michigan Opportunity, has initiated a legal challenge to the minimum wage ballot initiative that was recently submitted to the secretary of state for the Nov. ballot. The initiative, if approved, would raise the state’s minimum wage to $12/hr by 2022 and eliminate the tipped wage which is currently $3.52/hr. The legal challenge alleges the proposed language fails to address which parts of the state wage law it seeks to amend which is a technical violation of the initiative process. It also alleges that invalid signatures were submitted to the state for approval. The secretary of state’s office has indicated that the approval process for the gathered signatures will be concluded by the end of the month.
New Jersey — Governor Murphy outlined his top priorities for the remainder of the year and raising the state’s minimum wage to $15/hr is still on his radar. Disagreements remain over details like the treatment of seasonal workers, tipped wage rates and timelines for future increases.
North Dakota — An effort to place a $15/hr minimum wage initiative on the Nov. ballot failed to gain the necessary signatures to appear on the ballot.
Washington, D.C. — DC City Council Chairman Phil Mendelson introduced legislation (co-sponsored by a majority of the council) to roll back the recently-approved ballot measure that would eliminate the cash wage for tipped employees by 2026. The mayor and a majority of the council had opposed the measure citing economic harm to the city. The council is in recess until the fall and will not take up the measure before then. In a related development, Rep. Mark Meadows (R-NC), chairman of the House Freedom Caucus, is exercising Congress’ oversight of Washington, DC and has introduced language to block the city from using any money to implement the new law.
Paid Leave
Michigan — Small Businesses for a Better Michigan, a business interest group, has filed a legal challenge to the “Time to Care” initiative proposal that would mandate employers with more than 10 workers provide at least 72 hours of earned sick time per year, and 40 hours for smaller employers. The challenge alleges invalid signatures were submitted to the state for approval. The secretary of state’s office has indicated that the approval process for the gathered signatures will be concluded by the end of the month.
San Antonio — The state attorney general sent a letter to the city government warning that state law preempts localities from implementing local benefit mandates. The letter came after the city clerk’s office certified that enough signatures had been gathered to place a paid family leave initiative on the Nov. ballot. The AG’s office is currently involved in litigation over the Austin, TX ordinance that passed earlier this year.
Study — The conservative American Action Forum released a study of the Republican paid leave proposal soon to be formally introduced by Sen. Marco Rubio that provides benefits in the form of early withdrawals from social security funds. The study found that the proposal would speed up the insolvency of the social security fund and negatively impact future budgets. The study’s release comes on the heels of a Senate subcommittee hearing on the issue this week.
Pay Equity
California — A senate-passed bill that would require employers with more than 100 workers in the state to submit employee pay data along with race, ethnicity and gender specifications to the state on an annual basis passed its first committee in the assembly. The bill is currently on hold in a second committee and will be considered when the legislature returns from summer recess in August. Similar legislation was vetoed by Governor Brown last year as part of a larger deal with the labor community. It is unclear if the governor will act similarly this time, should the legislation advance to his desk.
Labor Policy
No Poaching Agreements — This week, eleven democratic attorneys general including from the District of Columbia launched an investigation of eight quick service restaurant chains requesting information regarding “no poaching” clauses in their franchise contracts. These clauses restrict managers from hiring away workers from another unit of their chain. Labor advocates - the political force behind these actions - contend that these clauses restrict worker movement and therefore their earning potential. In a related action this week, numerous national chains - including McDonald’s and Arby’s - announced that they were voluntarily removing these provisions from their franchise agreements.
In-N-Out Burger — A U.S. Court of Appeals upheld an earlier NLRB decision that found In-N-Out Burger violated federal labor laws when it forced employees to remove “Fight for $15” buttons from their uniforms. The company had contended that the buttons were in violation of their uniform code and had presented a safety hazard. The judge determined that that argument was moot since the company asks employees to wear other buttons periodically throughout the year.
Trade
China — Following the July 6 initiation of a 25 percent tariff on $34 billion worth of Chinese imports and the immediate retaliatory response from the Chinese, the Trump Administration released a list of $200 billion in Chinese imports that could be subject to a future 10 percent tariff. The new list will be subject to public hearings and comments and could be imposed sometime after Aug 30. Should China retaliate yet again, the U.S. has threatened to place additional tariffs on yet a larger list of products.
Federal — The U.S. Senate voted 88-11 on a non-binding resolution to instruct negotiators on a government funding bill to include language “providing a role for Congress” in the president’s decisions to implement tariffs for national security reasons. The symbolic vote does not ensure that such language would be included in future legislation, but the number of yes votes indicates the proposal could have a veto-proof majority. However, the ambiguous nature of the “role of Congress,” the lack of a similar level of support in the House, and the politics of an election year all indicate that forceful language limiting the president’s authority on trade is unlikely to move forward in the near future.
Taxes
Nebraska — A state senator has taken the first step to summon the legislature back into a special session in an effort to pass legislation that would allow the state to collect sales taxes from online retailers in the wake of the recent SCOTUS decision. He may not have enough support to call the legislators back early, but the effort shows the importance of the issue to the state and indicates that the legislature will act next session, if not before.
New Hampshire — The governor has called a special session of the legislature for July 25 in an effort to shield New Hampshire retailers from recent activity in other states that force out-of-state sellers to collect sales taxes on behalf of in-state consumers. The action comes in the wake of the landmark South Dakota v. Wayfair Supreme Court decision. New Hampshire is among five states that do not levy a sales tax and has long opposed any efforts to mandate collection of other state’s taxes by in-state businesses. It is unclear what legislation, if passed, would not be subject to future litigation given the breadth of new authority granted to states in the SCOTUS decision.
North Dakota — The state tax commissioner announced that certain out-of-state retailers would need to begin collecting the state’s sales taxes effective Oct. 1, 2018. The state has recommended that sellers register with the Streamlined Sales Tax Registration System, a centralized electronic registration system for all 24 states that are members of the simplified system.
Key Takeaways
- The nomination of federal appellate judge Brett Kavanaugh to be an associate justice of the Supreme Court has been welcomed by a majority of business groups and industry trade associations. However, from the perspective of business issues only, his nomination does not really signify a marked shift in the court’s philosophy. Justice Kennedy, whom Kavanaugh is replacing and ironically clerked for, was a reliable “pro-business” vote on the court - his role as an important swing vote was usually reserved for social issues. Kavanaugh is expected to significantly mirror Kennedy’s approach on business issues.
- The anticipated introduction of Republican paid leave legislation is a mixed bag. While Republicans may score some political points and business groups may have a proposal to be “for,” the conversation will put our business models back into the spotlight. Detractors will contend that the voluntary program will get little participation from the business community and will not address the issue. Expect paid leave advocates to seek out and highlight employees from well-known brands to further their negative narrative around our industry.
Legislature Status for Week of 7/16/18
- The United States Senate is in recess this week
- The United States House is in recess this week
- Two state legislatures are meeting actively this week: Massachusetts and Maine.
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.
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