Regulatory Wrap-Up: Swipe fees, wage theft back in the spotlight

Wages

Ohio: A Cuyahoga County judge ruled that a state preemption bill passed last year is unconstitutional on the grounds that the law violates the single-subject rule of the Ohio Constitution. The current law, passed in 2016, prevents localities from implementing wage, leave and scheduling ordinances. This ruling follows a similar opinion issued by a Cincinnati judge in September. The state is expected to appeal, and the legal process will likely take many months. In response, two ballot initiatives brought by community groups were certified by the attorney general’s office, affirming municipalities’ constitutional right to local governance. The two initiatives will be reviewed by the Ohio Ballot Board and if approved, supporters would need to collect roughly 300,000 signatures from half the state’s counties to qualify for the statewide ballot.

Miami Beach, FL: The Third District Court of Appeals upheld a circuit court ruling that the citywide minimum wage scheduled to take effect in early 2018 violates the state preemption law. The law would have set a minimum wage of $10.31 per hour with annual increases slated through 2021.

Minneapolis, MN: A county judge ruled against the Minnesota Chamber of Commerce’s request for a temporary injunction of the city’s new minimum wage law. The chamber has indicated that it plans to continue its legal challenge. As of today, the minimum wage will rise to $10 per hour on Jan. 1, 2018, for businesses with more than 100 workers. Smaller businesses will have to comply by July 2018.

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Wage Theft

New Jersey: A bill that strengthens enforcement procedures and criminal sanctions against employers who fail to pay wages, compensation or benefits to their employees passed the senate this week after house passage earlier this year. Term-limited Gov. Chris Christie will leave office in a few weeks, and it’s unclear if he will veto the bill before then. Incoming Gov. Phil Murphy will likely support the legislation if passed again next year.

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Labor Policy

Labor Department: The Labor Department extended the public comment period by 30 days (to Feb 5, 2018) for the proposed tip-pooling rule change. Under the proposed rule, employers could establish tip-pooling policies that include all employees. A final rule will likely not be issued for many months.

NLRB: The National Labor Relations Board overturned the Browning-Ferris decision, returning to the pre-2015 joint employer standard. In future cases, an entity will be deemed a joint employer if there is proof that “one entity has exercised control over essential employment terms of another entity’s employees and has done so directly and immediately.” The decision brings to conclusion, for now, a long-fought battle for the industry and provides clarity for the franchisor/franchisee business model.

NLRB: The National Labor Relations Board overturned the Specialty Healthcare decision, erasing the controversial concept of “micro-unions” established by the Obama-era board in 2011. Under the micro-union standard, bargaining units could consist of a smaller subset of employees within a single enterprise such as the shoe department within a department store, creating a myriad of challenges for employers. The reversal reinstates the traditional ‘community of interest’ test, such as common supervision, for determining appropriate bargaining units in representation cases.

NLRB: The National Labor Relations Board issued a request for information (RFI) regarding the Obama-era “ambush election” rule which established a shorter time period for union elections benefiting labor interests. The rule also mandated that businesses provide personal phone numbers and email addresses to unions who have petitioned to represent a workplace. The RFI is the first step in a lengthy process, but notable in that the Board is moving quickly to initiate the rule process before the impending retirement of one of the Republican board members. That retirement will temporarily revert the board to a 2-2 partisan stalemate until President Trump’s nominee is confirmed by the Senate.

Wisconsin: A bill that would preempt local governments from enacting laws dealing with right to work, wage theft enforcement, employment benefits and salary history questions was introduced in the senate. The state already preempts localities from enacting local minimum wage and paid leave mandates.

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Taxes

U.S. Congress: Conferees agreed on a tax reform proposal that combines the Senate and House-passed language. Republican leaders have approved a few key changes to appease some senators who had expressed concerns with the package. The bill will likely be taken up early this week by both chambers with a goal of advancing it to the President’s desk prior to Congress adjourning for the year.

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Health Care

Maryland: Prior to a rally with Senator Bernie Sanders, Democratic gubernatorial candidate Ben Jealous announced his intent to push for a single payer healthcare program for the state should he get elected. Jealous did not release details of how the plan would be funded and is one of eight primary candidates seeking the Democratic Party nomination to run against Republican incumbent Larry Hogan.

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Swipe Fees

Supreme Court: Seven merchant trade associations, led by the National Association of Convenience Stores and the Retail Industry Leaders Association, have joined in an amicus brief laying out the industries’ concerns with American Express rules that bar retailers from offering discounts to consumers who use cards with lower interchange fees. The case, now pending before the United States Supreme Court, could result in more transparency for consumers and more choice for merchants at the point-of-sale.

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Ports

Los Angeles, Calif.: The City Council voted unanimously to explore potentially banning companies that classify their port truck drivers as independent contractors from doing business at the ports. The city attorney must now produce a report to determine the usefulness of the city’s land use laws in denying access to port property for companies that are found in repeated violations of employment laws. The council is also directing the Harbor Department to review lease agreements with trucking and warehouse companies to determine if those agreements can be leveraged to block access to proven violators.

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Key Takeaways

• The election results this week in Alabama are the latest indications of an energized Democratic base, particularly among African-American and suburban women. It remains to be seen what impact, if any, this may have on the Republican agenda in Congress, particularly with regard to traditional “women’s issues” like paid leave. Rising frustration by women with the tone and tenor of the current political discourse could have significant electoral ramifications for Republicans next November.


• The fallout from the sexual harassment issue continues unabated and appears to be picking up momentum. This issue has the potential to re-frame many other industry issues like benefits, wages and even scheduling under the guise of “protecting workers.” Brands will likely find themselves under increased internal and external scrutiny and need to prepare accordingly.


• In a victory for the employer community, the NLRB overturned several challenging precedents established by the Obama board. While the outcome isn’t a surprise, the timing of the ruling was somewhat unexpected and Democrat members of the board argued in their dissent that Republican members overreached. While the rulings are a win for employers, it demonstrates that the NLRB, like other agencies, has become increasingly political. That volatility worked in favor of the employer community this time, but future elections could impact this and other issues yet again. As a result, companies should continue to work toward long term solutions through the legislative process.

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Legislature Status for Week of 12/18/17

• The United States Senate is in session this week


• The United States House is in session this week


• The following state legislatures are in session year round: Illinois, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Wisconsin.

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