Regulatory Wrap-Up: Wages, benefits and ballots

Wages

Massachusetts: A house committee is considering a revision to a 2004 law that explicitly denied managers the ability to share in tip pools. The law’s wide-ranging definition of manager has caused operational challenges for employers. Some employers wary of class action lawsuits have removed the risk by banning tip jars from their premises, resulting in lower take home pay for employees. The legislative fix has been debated in prior years and was defeated by one vote in the Senate in 2014.

Vermont: The Minimum Wage Study Committee, commissioned by the legislature to study the impact of a statewide increase, held an open hearing Oct. 2. The committee is considering several proposals that would raise the wage, ranging from $12.50/hr to $15/hr over various periods of time.

Birmingham, Ala.: Progressive Democrat Randall Woodfin bested two-term incumbent Democrat William Bell in Tuesday’s election. Among other issues in Woodfin’s platform is support of a $15/hr minimum wage. The city attempted to raise its wage in 2014 but was blocked by state law. The mayor-elect has promised to take that fight back to the state capitol.

Calumet City, Ill.: For the second time in a year, the city council chose to opt out of Cook County’s $13/hr minimum wage requirement. The mayor requested that the council revisit the issue on the heels of an April nonbinding $15/hr ballot measure that earned over 80% support from local voters.

Paid Leave

New Hampshire: A bipartisan paid leave bill passed 5-0 out of a house subcommittee and moves to the full committee for consideration. The bill, as currently constructed, would establish a paid leave program financed by a 0.5% payroll tax on employees. It would provide up to 12 weeks of paid leave, parental or sick time off, per year at 60% of the employee’s current salary.

Albuquerque, N.M.: The local paid sick leave ballot initiative failed by less that 1% this week. It would have mandated that large employers offer seven days of paid leave per year. Businesses with less than forty employees would have been required to offer five days per year. Representatives of the advocacy group Strong Families New Mexico have indicated they will pursue a recount given the close margin.

Washington, D.C.: The city council is slated to revisit the paid leave law in the coming weeks. The 2016 law guarantees district workers up to eight weeks of paid family leave through a program funded by a 0.62% payroll tax on district employers. There are several proposals under consideration intended to lessen the burden on the business community but maintain the benefits for employees. Proposal details range from a reduced tax rate to an opt-out for employers with their own qualifying paid leave program.

Taxes

South Dakota: The state officially filed a petition for certiorari to the U.S. Supreme Court in its landmark case seeking to force out-of-state sellers to collect the state’s sales tax from in state consumers. The state’s supreme court recently ruled for plaintiffs in the case – Wayfair, Overstock, and NewEgg – finding that the state cannot force collection on out-of-state sellers. The cert petition starts the official process for potential Supreme Court review, which could eventually overturn the outdated 1992 physical nexus precedent.

Wyoming: Newegg, Wayfair and Overstock, in response to the state’s litigation against them, called into question the constitutionality of the state’s recently passed economic nexus law. The law, similar to a South Dakota law mentioned above, mandates sales tax collection from out-of-state merchants with over $100,000 in sales (or 200 transactions) per year into the state.

Soda Taxes

Cook County, Ill.: Last week Commissioner John Daley announced his support for the repeal of the controversial soda tax. Daley previously supported the effort to tax sugary beverages, and his reversal ensures a majority of commissioners will vote for a repeal. However, two more votes are needed to secure a veto-proof majority.

Food

Chicago, Ill.: A bill under consideration by the city council would set new standards for the city’s food purchasing processes. If passed, Chicago would become the first locality outside of California to implement “good food” purchasing standards that would require the city to purchase food from suppliers that meet certain health, environmental and fair labor standards.

Labor Activism

Ben & Jerry’s: The Vermont-based ice cream maker, owned by Unilever, announced an agreement with a farmworker advocacy group that establishes labor standards for the company’s in-state milk suppliers. Some 90 dairy farms across the state will eventually be subject to a new code of conduct agreement, which includes wage requirements, mandatory breaks and living condition standards for farmworkers. For its part, the company agreed to pay an undisclosed premium to help cover the costs of enforcing the increased standards.

Joint Employer

U.S. House: The Save Local Business Act, which would rescind the 2015 NLRB ruling that redefined the joint-employer relationship, passed out of committee on a 23-17 vote and now moves to the House floor. Leadership has not yet calendared the bill but is expected to do so in the coming weeks in light of widespread business community and House Republican support. It remains to be seen if the legislation can garner enough Democratic support in the Senate to reach the President’s desk.

Immigration

Federal: The Trump Administration announced new immigration principles setting the stage for negotiations with Congress over the expiration of the Obama era “Dreamers” program. The principles include increased border security, a crackdown on sanctuary cities, funding for a border wall, a revamping of the political asylum process and of particular note for operators, a mandatory E-Verify program for employers.

California: Governor Brown signed into law a bill that prevents companies from voluntarily allowing federal immigration agents on private property without a judicial warrant. The law also requires employers to notify workers of ICE enforcement activity within 72 hours of receiving notice of an inspection.

Product Safety

Rhode Island: The governor signed a bill into law that bans the manufacturing and sale of mattresses, electronics and children’s products that exceed the established safety level of the chemical bromide. The law goes into effect on July 1, 2019.

Trade

KORUS: The South Korean government has reversed its stance and announced its willingness to renegotiate their bilateral free trade agreement with the United States. The switch comes after months of pressure from President Trump and the administration who seek to renegotiate the deal which began in 2007 and was revamped by the Obama Administration in 2012.

NAFTA: Reports indicate that the Trump administration is considering requesting a carve out for cross- border trucking services under a renegotiated NAFTA agreement. If the Administration proceeds, it will be a victory for the Teamsters and other advocates who have long complained that the operations of the Mexican long-haul truckers are not fairly competitive. Advocates highlight that Mexican truck companies are not subject to the same safety restrictions as U.S. operators and there are no realistic reciprocal opportunities due to the deteriorating security situation in Mexico.

Innovation

Autonomous Vehicles: A Senate committee advanced legislation related to self-driving cars which had been stalled over proposed regulations dealing with autonomous trucks and trucking fleets. Removal of that language has allowed the bill to proceed. The legislation still must pass the Senate and would need to be reconciled with the recently passed House bill before it could advance to the President’s desk.

Key Takeaways

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  The labor-friendly incumbent mayor and city council president in Birmingham lost elections this week to democratic candidates that ran as progressive outsiders. The organization Our Revolution (which is run by former Bernie Sanders campaign staff) was heavily involved in the mayor’s race. Similar dynamics played out in Albuquerque and Los Angeles races as well, demonstrating that the progressive wing of the Democratic party is alive and well and that the national campaigns for higher wages and benefits are not going away anytime soon. Brands need to understand that the political climate at the local level in urban markets – where they have significant operational footprints and employee bases – is very different than at the national level. Companies must remain sensitive to that dichotomy.


• 
  The agreement announced this week by Ben & Jerry’s and the “good food” policy under consideration in Chicago are big advances for the activist community as it continues to focus on supply chains in an effort to force corporate behavior. Supply chain activists are making progress via local food campaigns, sustainability efforts and shared liability issues to force wage and hour, benefits and other concessions from employers. Brands should pay attention to this strategy and ensure that their suppliers do not present them with potential legal or reputational challenges.

Legislature Status for Week of 10/9/17

• 
  The United States Senate is out of session this week 


• 
  The United States House is in session this week


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


• 
  The following additional states are currently in session: Michigan, North Carolina and Rhode Island.


• 
  Oklahoma is in a special session convened on Sept. 25.

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