Regulatory Wrap-Up: Where state and national policy impact retail

In a new weekly feature, CSA and Align Public Strategies bring you updates on the very latest legislative developments affecting retail, including wages, health care, taxes, security, and more.

Wages

St. Louis, MO - Advocacy groups including Show Me $15 and Missouri Jobs with Justice announced the formation of a “Save the Raise” campaign. The campaign will encourage employers in the city to maintain the $10/hr rate passed by the city prior to the statewide preemption law being enacted.  On Aug. 28, the state wage will revert back to $7.70/hr and employers are entitled to honor that rate. The campaign will negatively highlight those employers that choose to go back to the old rate, or any rate lower than the $10/hr.


Wage Theft

San Diego, CA - The left-leaning Center on Policy Initiatives, partnering with San Diego State University and the Employee Rights Center, released a study questioning the city’s alleged lack of enforcement of the recently passed wage increase. The study urges the mayor to increase funding for targeted investigations at work sites and increase educational outreach to the construction and restaurant industries which, according to other national studies, typically have the highest rates of non-compliance with wage laws.


Paid Leave

Albuquerque, NM - Following a judge’s decision to mandate that the Healthy Workforce Ordinance be placed on the upcoming Oct. 3 ballot, business advocates successfully lobbied the City Council to approve an additional, competing question. The new measure would “signal” to the City Council that voters support a sick leave proposal but would not mandate legislative action. Paid leave proponents argued the city council is attempting to confuse voters. The Council also voted to place the entire language of the HWO on the ballot, as opposed to a short summary of the proposal. If the Healthy Workforce Ordinance was passed by the voters, employers would be obligated to provide sick leave to all employees and be subject to onerous record keeping mandates.


Scheduling

Oregon - The governor signed legislation making Oregon the first state in the nation to enact a restrictive scheduling mandate and it is highly likely the law will become a national model. As previously reported, the mandate applies to “chains” that employ at least 500 employees worldwide. Primary components of the legislation include: seven days advanced notice for the first three years and 14 days beginning in 2020 with one hour of penalty pay for changes; a rest period of at least ten hours between employee shifts; employers may use the “voluntary standby list” to address unanticipated customer needs or unexpected employee absences without penalty pay, and a permanent, statewide preemption of all local government scheduling mandates. The law will be enforced by the state labor department with a narrow private right of action for retaliation.

Labor Policy

Wisconsin - The U.S. Court of Appeals upheld a lower court’s decision refusing to overturn the state’s right-to-work law that passed in 2015. The law allows workers in a unionized shop to opt out of joining the union and paying the requisite dues. Twenty-eight states have right-to-work laws on the books.  

NLRB - The Senate Health, Education, Labor & Pensions committee held a confirmation hearing this week for Marvin Kaplan and William Emanuel, President Trump’s nominees to fill two open seats on the National Labor Relations Board. Aside from the expected pro-labor pushback from Democrats on the committee, the hearing was relatively uneventful and committee approval and full Senate confirmation are expected soon.

Joint Employer - The House Committee on Education and Workforce held a hearing this week exploring the various economic threats imposed by the expanded definition of joint-employer under federal labor laws. The employer community is seeking clarity on the definitions of what is and what is not a joint employer relationship. Legislation seeking to roll back the NLRB’s 2015 Browning-Ferris decision has yet to be introduced this Congress but is likely to be rolled out in the coming weeks. Separately, the House Appropriations Subcommittee passed the Labor, Health and Human services, and Education appropriations bill and included language to defund the joint-employer provision.  

Airport Strike - In its first major, national action in months, the SEIU planned to hold a strike this week at Newark, JFK, and LaGuardia airports over ongoing contract negotiations. That strike was temporarily averted as unions announced they would return to the bargaining table. The episode demonstrates that the SEIU is less committed to the brinkmanship strategy it has pursued in years past through its Fight for $15 campaign.


Pay Equity

San Francisco - City officials passed an ordinance barring employers from asking job candidates about their salary histories. The mayor is expected to sign off. The law aims to close the wage gap between women and men, and applies to both private employers and city agencies and contractors. According to the San Francisco Examiner, women in San Francisco earn 16 cents less on the dollar than men, African-American women earn 60 cents less and Latinas, 55 cents, citing U.S. Census figures. San Francisco is now the tenth jurisdiction to pass a pay equity measure.


Sugar Tax

Chicago - The Illinois appellate court upheld the temporary restraining order issued last month to enjoin the county’s sweetened beverage tax. The tax was supposed to go into effect on July 1. The Illinois Retail Merchants Association, lead plaintiff in the case, is asking the lower court to rule on a preliminary injunction until a final decision is released on the legality of the ordinance. Another hearing is scheduled for next week.


Health Care

Senate ACA Repeal - Senate Republican leadership revealed an updated version of its previously released ‘Better Care Reconciliation Act.’ The tweaks were designed to appeal to conservatives and contain provisions that allow for insurers to offer health plans that do not comply with ACA regulations, as long as they also sell plans that do. The updated bill reinstates the taxes on higher earners that were cut in the previous version and keeps the structure of ACA tax credits. 

The Medicaid cuts that were previously contemplated largely remained intact as well as the increases in opioid prevention funding. Two Republican senators, Susan Collins (ME) and Rand Paul (KY), quickly announced their opposition and intent to block the bill from consideration. Republican Senator John McCain (AZ) announced his intent to offer amendments and still others reportedly expressed concerns with the updated legislation. 

With Democrats united in their opposition, Republicans can only lose two votes to maintain the 51 vote threshold needed to pass legislation. The bill maintains the employer-focused language which zeroes out the employer mandate penalties and allows more options for reporting information to employees. The bill still does not address the 30-hour work week nor the IRS reporting requirements.


Taxes

Indiana - NetChoice and the American Catalog Mailers Association, two trade associations representing online retailers, filed a complaint asking a trial court to strike the state’s recently passed ‘economic nexus’ legislation. Several other states have passed similar laws in an effort to overturn the existing ‘physical nexus’ precedence. 

Wyoming - Attorney General Peter Michael (R) filed litigation seeking a declaratory judgment requiring five vendors with no physical presence in Wyoming to collect sales taxes. The action follows recently enacted legislation that establishes an economic nexus threshold for sales tax collection compliance. 

The defendant companies are notable online retailers; Newegg Inc., Overstock.com Inc., Wayfair LLC, Systemax Inc., and Fanatics Inc.. The action mimics South Dakota which has a similar case currently before the state’s Supreme Court. Both states are seeking a Supreme Court decision that would overturn the current physical nexus standard. 


Data Privacy

Illinois: The legislature passed a bill limiting the collection and use of geolocation information obtained through smartphones. The bill mandates that apps collecting geolocation information must first receive consent from the device user. The notice itself must be in writing and detail the specific purposes for which the information will be collected, used or disclosed. Violations would only be enforced by the state’s attorney general and there is a 15-day right to cure provision. The bill now heads to the governor.  

International Trade

South Korea - U.S. Trade Representative Robert Lighthizer officially conveyed to South Korea the Trump administration's request for a special session of a U.S.-Korea Free Trade Agreement joint committee, calling for the deal to be modified rather than renegotiated. Following the official statement, President Trump spoke to reporters and restated his intent to fully renegotiate the deal, creating an important, and confusing, distinction within the administration. South Korea has repeatedly stated its openness to a modified update, but has objected to the need for a wholesale renegotiation. Following Lighthizer’s communication, the two countries will likely begin holding official talks next month. 

G20 - Following challenging negotiations at the G20 Summit in Hamburg, all members of the G20, including the United States, finally agreed on language for a trade communiqué that calls for ‘collective solutions’ to tackle the global steel overcapacity issue and included a call to fight protectionism. The announcement established a November deadline for a ‘substantive report’ with ‘concrete policy solutions.’ This development is a notable response to the ongoing discussions with the U.S. Administration regarding their threat of bilateral action to counter the steel dumping issue. Several countries have registered their concern, and the European Union recently stated its intent to ‘react within days’ should the U.S. take action. 


Transportation and Logistics

California - Advocates successfully blocked an effort to include statewide freight facility emission caps (Indirect Source Rules or ISRs), which could include warehouses and distribution centers, in the cap-and-trade and air quality legislation championed by the governor and key democrats. The legislation contains new air quality initiatives but specific ISR language was not included in the bill language. The vote on the overall package has been delayed until this week, and ISR language could be reinserted in response to pushback that the bill does not go far enough to improve air quality. 


Energy

 
North Carolina: Compromise legislation regarding solar energy procurement moved through the House but was temporarily derailed in the Senate by an effort to impose an 18-month moratorium on permitting new wind energy projects. The amended bill was ultimately passed despite wind advocate objections and now heads to the governor. 
 

Key Takeaways

• The situation for entry-level employers in St. Louis presents some of the same challenges employers encountered when the overtime regulations were enjoined. Employers wishing to revert to a lower minimum wage rate face a communications challenge internally - with employees - and externally - with customers, elected officials and other community stakeholders. The situation in St. Louis also demonstrates the risk of over-reliance on preemption as a strategy to address local, P&L issues.
 
• While the industry’s legislative agenda in chaos on Capitol Hill, the administration has been subtly making progress filling notable posts within key agencies. Numerous media reports this week have noted that many posts have been filled by experienced hands with a particular focus on deregulation, especially in the DOL and HHS. While progress on the agency front can be slow, it can proceed largely immune from the logjam in the Capitol. Companies should take advantage of this and exploring opportunities to make regulatory changes.
 
• The growing trend toward localities enacting beverage taxes is beginning to attract national media attention and thus momentum. In fact, former Mayor Bloomberg is currently coordinating meetings with national mayors to talk about this and other issues, encouraging them to take similar action in their cities. Companies and industry associations should endeavor to work with other retailers and their supplier partners to develop a comprehensive national strategy on this issue.
 

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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