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Regulatory Wrap-Up: Minimum wage battles rage on from coast to coast

6/19/2018
Wages

Delaware — A bill to increase the state’s minimum wage to $10.25/hr by 2021 passed a senate committee. Earlier this year, similar legislation was defeated that would have increased the state’s minimum wage to $9.25/hr. The earlier bill failed by only one vote in the full senate due to a member’s concern over the impact on casinos in his district. It remains to be seen if this legislation will advance through the full senate.

Pennsylvania — The Department of Labor and Industry released proposed regulations to raise the state’s overtime salary threshold to $47,892 over a three-year period. The current federal standard is $23,660. The proposed regulations are open to public comment for 30 days, after which the updated regulation will be subject to approval by a five-member board appointed by the governor.

Anaheim, Calif. — The Orange County Registrar of Voters informed the city this week that the local minimum wage measure had sufficient signatures to qualify for the ballot. The initiative, which is designed by unions to force area hotels to the bargaining table, would increase the minimum wage at Disneyland and nearby hotels that receive city subsidies to $15/hr on Jan. 1, 2019 and increase in $1 increments annually, reaching $18/hr on Jan. 1, 2022. After that, it would increase by 2% per year or by the inflation index, whichever is greater. The city council will have the option at its June 19 meeting to approve the measure outright, submit it to voters, or seek an economic analysis. It's likely the council will seek the third option - the economic analysis - which would delay the decision on whether to place it on the ballot until its July 17 meeting. It is still likely the measure ultimately makes it to the ballot in the fall.

Study — An annual report released Wednesday by the National Low Income Housing Coalition found that earnings from a full-time minimum wage job would not allow a worker to afford a modest two-bedroom apartment rental anywhere in the country. That conclusion is based on the budgeting standard that no more than 30 percent of income should be spent on housing. Applying that standard, workers must earn $17.90/hr to afford a modest one-bedroom apartment or $22.10/hr for a two-bedroom rental. The report estimates that renters nationally make an average of $16.88/hr.

 

Paid Leave

Dallas — advocacy group, Working Texans for Paid Sick Time, submitted 110,000 signatures in support of a ballot initiative to mandate employers offer workers paid sick leave. The language mirrors the law in Austin, TX which passed earlier this year and is the subject of litigation. If the signatures are approved, the initiative will appear on the Nov. ballot.

 

Scheduling

Philadelphia — Councilwoman Helen Gym introduced legislation that would institute scheduling mandates on restaurant, retail and hotel employers with operations in the city. The released language applies to businesses with more than 250 employees and 20 locations worldwide (franchisees are considered part of the larger system). The council is set to recess for the summer and the bill will likely be taken up when they reconvene in the fall.

 

Joint Employer

New York City — The city council is considering first-of-its-kind legislation that would hold franchisors liable for the actions of their franchisees under the city’s human rights laws. The proposed language effectively codifies franchisors as joint employers. It also would expand liability across companies and their contractors. The Civil and Human Rights Committee will hear the bill June 18 with further council action expected to follow.

NLRB — Business groups filed a rare joint petition on Wednesday asking the National Labor Relations Board to adopt a rule narrowing the circumstances in which companies can be held liable for labor law violations by their contractors or franchisees. They petitioned the Board to reinstitute the old joint employer standard of direct and immediate control. The Board has already announced that it will begin the rulemaking process on the issue this summer.

The Cheesecake Factory — The state labor department found The Cheesecake Factory to be jointly liable along with their janitorial subcontractors for $4.57 million in underpaid wages. At eight locations, investigators found that workers of a janitorial subcontractor worked without rest or meal breaks and performed additional tasks off-the-clock, sometimes at the direction of Cheesecake Factory managers. The Cheesecake Factory action appears to be the first major application of California’s expanded joint employer standard. According to a UCLA professor, this “was a test case and designed to be an exemplar for employers to make sure they don’t contract or subcontract to unscrupulous actors.”

 

Labor Policy

NLRB — The National Labor Relations Board Division of Advice found that a South Carolina Papa John’s franchisee unlawfully discharged an employee who failed to report to work after being denied a request for time off to participate in a Fight for $15 convention. Company policy required employees to give seven days notice for time off and the employee failed to meet that requirement. The worker who took time off to participate in the Fight for $15 convention and protests was found to have been protected by federal labor law because they engaged in a “solo strike.”

 

Taxes

Alabama — The Alabama Tax Tribunal ruled against the state Department of Revenue, finding that the complainant, Newegg Inc., was not subject to the 2016 law requiring out-of-state retailers to collect the state’s sales tax. The tribunal, which is unique to Alabama, found that the state did not prove that Newegg engaged in any of the activity required by the law. Similar to the court case that began in South Dakota and is now before the U.S. Supreme Court, the state could appeal the decision in an effort to force the question to a higher court. The state is not likely to take any further action until the South Dakota verdict is announced which is expected before the end of June.

Connecticut — The governor signed into law a bill that would expand sales tax collection obligations to sellers with more than $250,000 in sales or more than 200 sales into the state.

Louisiana — The governor signed a tax package that included language to expand sales tax collection obligations to sellers with more than $100,000 in sales or more than 200 sales into the state annually.

Seattle — The city council repealed the recently-enacted “head tax” on businesses making at least $20 million a year. The repeal comes just over a month after a unanimous city council vote to institute the  $275/employee tax to fund services for the homeless. Many observers note that the voter disapproval of the city council’s mismanagement of resources had as much to do with the council vote as the investment the business community made in a ballot initiative to repeal the law.

 

Trade

China — The Office of the United States Trade Representative (USTR) released the list of imports from China that will be subject to a 25 percent tariff effective July 6, 2018. The list includes 818 product categories covering about $34 billion in imports, down from the Administration’s initial announced list covering over 1,300 products. Notable consumer items were left off the initial list such as televisions, cell phones, furniture, dishwashers and general apparel. USTR also proposed a second list which includes 284 additional product categories covering $16 billion in imports. Similar to the previous process, USTR will receive public comments which are due on Friday, July 20, and will hold a public hearing on July 24. After completion of this process, USTR will issue a final determination on the list of products. The U.S. Treasury Department is also expected to issue recommendations on Chinese investment restrictions by June 30.

 

Miscellaneous

Walgreens — Kentucky Attorney General Andy Beshear initiated a lawsuit against Walgreens Boots Alliance Inc. (the parent company of Walgreens) alleging that the company contributed to the opioid epidemic in the state by fulfilling large pharmaceutical orders for opioid medications. The state circuit court case specifically accuses the company of fulfilling orders at “such an alarming rate and volume that there could be no legitimate medical purpose associated to their use.” General Beshear has led multiple cases against various players in the pharmaceutical industry from manufacturers to distributors for their roles in the epidemic.

 

Key Takeaways

  • The actions by both the California Labor Commissioner and the New York City Council demonstrate that the labor community is successfully leveraging state and local policy makers to pursue their agenda on joint employer – one which is otherwise stalled in Washington, DC.  Both jurisdictions are actively expanding joint employer liability not only across the franchisor/franchisee relationship but also across companies and their contractors.

  • The repeal of the Seattle “head tax” is a definitive win for the business community. However, the issue is not dead in other localities across the country. The city of Mountain View, Calif. (home to Google), is pursuing potential employment taxes on large corporations domiciled there and New Jersey is considering legislation to allow localities to impose payroll taxes. The life cycle of the issue is still in the early stages but operators should watch for proposals spreading at the local level that increase the business tax burden.


 

Legislature Status for Week of 6/18/18

  • The United States Senate is in session this week

  • The United States House is in session this week

  • Ten state legislatures are meeting actively this week: California, Delaware, Louisiana, Massachusetts, Maine, New Jersey, New York, Ohio, Pennsylvania and Rhode Island.


 

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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