Regulatory Wrap-Up: Wages, paid leave take center stage

Wages

Montgomery County, Md.: The county council held a public hearing Sept. 26 on the recently introduced $15/hr minimum wage bill. A similar bill was vetoed earlier this year by County Executive Ike Leggett, with a veto override failing by a single vote. The county executive has publicly offered to negotiate on specific aspects of the current bill, indicating that the issue may have more support than it did earlier this year. The bill will likely head to a vote in late October or early November.

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.

Target: Target Corporation announced this week their intention to raise hourly worker's pay to $11/hr next month and to $15/hr by 2020. The wage increase would apply to all of their 300,000 workers nationwide and the immediate $11/hr rate would also apply to the 100,000 seasonal workers the retailer plans to hire during the holiday season.

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 twelve weeks of paid leave, parental or sick time off, per year at 60% of the employee’s current salary.

Rhode Island: As expected, the governor signed the paid leave bill into law this week. The law mandates that companies with more than 18 employees provide three days of sick leave starting next year, four days in 2019 and five days from 2020 onward. One hour of paid leave is accrued for every 35 hours worked under the new requirement.

Albuquerque, N.M.: After several failed attempts by the business community to remove an initiative to mandate paid sick leave for all employees in the city, voters will head to the polls next week to vote on the measure.

Berkeley, Calif.: The city is holding a town hall Sept. 30 to discuss a paid family leave proposal that would mandate 100% wage coverage for six weeks for employees to care for a new child or sick family member.

Tacoma, Wash.: The city passed a law to bring its existing paid leave regulations in line with the state standard passed earlier this year. The city elected to maintain its unique enforcement provisions which allow agencies to investigate employer-wide practices when a single employee brings a complaint as opposed to limiting the investigation to the single case. A study by city staff of the first 18 months following enactment found that the city recovered $169,000 in leave and wages for 595 workers, stemming from just 20 employee complaints. City officials are encouraging the state to apply similar enforcement provisions statewide.  

Scheduling

New York: The first of four New York State Department of Labor public hearings was held to solicit input related to new employer mandates for scheduling practices. The hearings are being described as listening sessions and the specific regulations have yet to be released. It is expected that once the sessions conclude, the regulations will be released in late October and will be subject to an open comment period prior to going into effect. The regulations will likely impact more businesses than the recently-passed New York City ordinances which are primarily focused on restaurants.

Labor Policy

NLRB: The U.S. Senate confirmed William Emanuel, President Trump’s nominee to the National Labor Relations Board, by a 49-47 vote. As a result, there is now a 3-2 Republican majority on the board for the first time in a decade and the stage is set for the potential overturn of previous anti-employer decisions on joint employer, micro-unions and ambush union elections.

CEO Pay: The Securities and Exchange Commission recently released a guidance document for publicly-traded companies that must comply with the pay ratio rule going into effect in early 2018. Impacted companies must publish in their proxy statements a comparison of the compensation of their chief executive officer to the median compensation of their other employees.

No-Hire Clauses: A report on the inclusion of no-hire clauses in restaurant franchisee contracts highlights the practice of prohibiting employees of one franchised unit from moving to a unit owned by a different franchisee of the same brand. The report links the practice to preventing worker mobility and suppressing wages.

Soda Tax

Subway: Subway restaurants requested that a federal court remove a class action case alleging the franchisor was responsible for the misapplication of the Cook County tax on sugary beverages. The company is taking issue with plaintiff claims that they were charged the tax on unsweetened tea from a self-serve station, as well as challenging the franchisor’s liability in the case.

Taxes

Federal: Congressional Republican leadership and the administration released a blueprint for federal tax reform this week. The plan includes, among other details, a cut in the corporate tax rate to 20% as well as a 25% tax rate for pass-through businesses. Several other adjustments to different income rates are included in addition to the doubling of the standard deductions. The draft lacks key details on other deductions that may be eliminated and has a significant uphill climb before it can become a viable legislative vehicle.

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 that is currently moving through the courts, mandates sales tax collection from out-of-state merchants with over $100,000 in sales (or 200 transactions) per year into the state. South Dakota is seeking review of its case by the U.S. Supreme Court. Should the South Dakota case fail to gain traction, Wyoming will look to advance their case.  

Health Care

U.S. Senate: The Republican effort to repeal the Affordable Care Act (ACA) failed yet again in the U.S. Senate when four key Republicans announced their opposition to the proposal to replace the ACA with a program that provides block grant Medicare funding to the states. The previous budget deal which allowed for Republicans to repeal parts of the ACA with a simple majority vote expires Sept. 30, further complicating any future efforts to repeal the law this year.

Trade

NAFTA: U.S. labor interests are pressuring the administration and congress to renegotiate issues related to open border access for Mexican long-haul truckers, who potentially compete with U.S. truckers. Union representatives want lawmakers to tighten border access for truckers without risk of trade retaliations from partner countries. The issue has not yet been part of the ongoing negotiations during the three country North American Free Trade Agreement (NAFTA) discussions.

Privacy

Illinois: Governor Rauner (R) vetoed a bill that would have limited the collection and use of geolocation information obtained through smartphones. The bill would have required apps to first receive consent from device users before collecting and utilizing geolocation information.

Innovation

Autonomous Vehicles: Senators John Thune (R-SD) and Gary Peters (D-MI) announced bipartisan agreement on legislation to regulate self-driving cars. This agreement opens a potential path forward for the legislation which will be considered in committee on Oct. 4. Similar legislation recently passed out of the U.S. House.

Key Takeaways

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  The announcement this week that Target is aggressively raising its base pay rates and committing to a minimum wage of $15/hr by 2020 could have significant ripple effects on the entry-level labor market. While the move will attract some favorable press coverage and improve the company’s political standing in the short term, the decision was really an acknowledgement that to attract and retain the kind of workforce they need to operate and more importantly grow, they had to make significant changes to their business model. Three years ago, this might have been viewed as more of a political decision and had little impact for other employers in the space. In the current labor environment, this is a business decision and as such, could cause other employers to follow and thereby alter the market.


• 
  The New York Times reported this week on a new study claiming that the restaurant industry is unique in that it includes no-hire provisions in their franchise agreements that prevent one franchisee from hiring away the workers of another franchisee. The article indicated that these clauses, due to their uncompetitive nature, were artificially depressing wages. Regardless of the merits, the criticism will continue to feed a negative narrative of the industry. For that reason, brands should prepare for this new line of attack, keeping in mind internal and external considerations.

Legislature Status for Week of 10/2/17

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  The United States Senate is in session this week


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  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.


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


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  Oklahoma is in a special session convened on Sept. 25

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