News

Regulatory Wrap-Up: Wage, paid leave ballot measures in spotlight

BY CSA STAFF

Wages

Massachusetts: The attorney general’s office certified a $15/hr. minimum wage initiative for the 2018 ballot. The language calls for a gradual increase from the current $11/hr. to $15/hr. by 2022 as well as a raise in the hourly tip wage from the current $3.75/hr. to $9/hr. by 2022. Proponents have until Dec. 6 to collect 64,750 signatures. The legislature can then choose to pass and enact the measure, or if no action is taken, proponents must collect additional signatures (roughly 11,000) before July 2018 in order to qualify for the Nov. 2018 ballot.

Michigan: A ballot initiative to increase the minimum wage to $12/hr. by 2022 and also incrementally increase the minimum wage for tipped workers until they reach the full minimum wage by 2024 was officially approved by the Board of State Canvassers. Proponents will begin collecting the roughly 252,000 valid voter signatures necessary to place the measure on the 2018 ballot.


Paid Leave

Massachusetts: The attorney general’s office certified a paid leave initiative that could appear on the 2018 ballot. The language allows for employees to take up to 16 weeks of family leave or 26 weeks of medical leave, but cannot exceed 26 weeks total in one year. Employees would receive 90% of their average weekly earnings, up to $1,000 per week with adjustments based on inflation beginning in 2021. The initiative would create a trust fund into which employers would pay 0.63% of employee’s annual wages, up to half of which can be deducted from employee salaries. The contribution rate would be subject to review beginning in 2021. As with the minimum wage ballot initiative, proponents have until Dec. 6 to collect 64,750 signatures. The legislature can then choose to pass and enact the measure, or if no action is taken, proponents must collect additional signatures (roughly 11,000) before July 2018 in order to qualify for the Nov. 2018 ballot.

Austin, TX: Advocates announced plans to push for a paid family leave ordinance this week. Council Member Greg Casar joined proponents in calling for the ordinance to move forward and said he hoped the council could complete legislation by February 2018.

Portland, ME: The mayor has proposed a paid leave ordinance which would require all businesses in the city to offer one hour of sick leave for every 30 hours worked. Employees could accrue no more than six full days of paid leave in a calendar year. The ordinance will be voted on by a city council committee on Sept. 16, although it is unclear if the full council will vote on the language prior to the conclusion of their 2017 term in November.

Washington D.C.: The D.C. Council may review the paid leave law that was passed last year that requires employers to offer eight weeks of paid family leave. Under the law, the program is funded by a 0.62% payroll tax paid for by employers. The funding mechanism has been hotly debated since the law passed. The mayor has publicly expressed serious concerns with the payment mechanism, although she did not veto the legislation. Several council members have proposed replacement legislation, supported by the business community, that decreases the financial burden on employers. The council is set to meet over the next month and is expected to revisit the issue.


Scheduling

New York: Governor Cuomo announced that the state labor department will hold public hearings on employee scheduling regulations. The long-awaited regulations are expected to apply to a wider range of businesses than the New York City law and will likely preempt the city regulations.


ADA Reform

U.S. House: Legislation passed the House Judiciary Committee 15-9 this week that is designed to protect businesses from excessive litigation for alleged violations of the Americans with Disabilities Act. The bill passed the same committee during the last Congress but failed to advance further. The bill has yet to be scheduled for floor action.


Labor Policy

Labor Department: President Trump announced the appointment of Cheryl Stanton to head the Department of Labor’s Wage and Hour Division. Stanton currently heads the South Carolina Department of Employment and Workforce. The Wage and Hour Division enforces federal minimum wage and overtime laws and drew criticism during the Obama Administration for its positions on joint employer liability.

Overtime: The Trump Administration officially ended its defense of the controversial overtime rule following a judge’s decision to block the regulation from going into effect.


Innovation

Autonomous Vehicles: The U.S. House passed legislation to create a regulatory framework for self-driving cars. The legislation would empower the Department of Transportation to promulgate rules within a year that allow driverless cars to share roads and require performance standards related to software, sensors and the interaction between passengers and cars. The U.S. Senate has yet to take up the legislation and safety concerns related to cargo trucks may take center stage in that debate.


Data Privacy

California: A ballot initiative proposed by the Californians for Consumer Privacy, would, if passed, allow consumers to opt out of personal data collection by all businesses in the state. The language would mandate that consumers be allowed to demand disclosures of any individual personal information that has been collected and whether or not that information was transferred or sold to another entity. The language also allows for consumers to demand that their personal information not be collected or resold without fear of discrimination. The proposed initiative comes as legislation seeking to create an opt-in system for consumer data collection by telecommunications companies remains stalled in the state senate.


Taxes

Massachusetts: The attorney general certified a ballot initiative establishing an additional 4% state income tax on portions of annual taxable income over $1 million. As with the minimum wage and paid leave initiatives, proponents have until Dec. 6 to collect 64,750 signatures. The legislature can then choose to pass and enact the measure, or if no action is taken, proponents must collect additional signatures (roughly 11,000) before July 2018 in order to qualify for the Nov. 2018 ballot.

Massachusetts:The attorney general certified a ballot initiative seeking to lower the state sales tax rate from 6.25% to either 5% or 4.5% and make permanent an annual sales tax holiday. As with the other ballot initiatives once the first round of signatures has been collected, the legislature can then choose to legislate on the issue.


Trade

NAFTA: The second round of NAFTA trade negotiations between the U.S., Mexico and Canada concluded last week. No significant developments on any of the controversial issues have been reported and the third round of talks are scheduled for Sept. 23 in Canada.

Key Takeaways

Expect immigration to remain in the headlines over the coming weeks and months. The emotionally-charged DACA issue will drive much of the coverage. Many employers have publicly advocated for the program’s continuation, arguing that its elimination will have a sharp, negative economic impact. Some employers clearly view this issue as an opportunity to support their employees and customers.

The ongoing feud between President Trump and Republican congressional leaders escalated this week when Trump unexpectedly cut a deal with Democratic leadership on raising the debt limit and continuing to fund the government through December. The ongoing mistrust and rancor between the White House and Senate Majority Leader Mitch McConnell in particular, coupled with the quickly shrinking congressional calendar, continues to threaten key industry priorities – namely comprehensive tax reform.

Legislature Status for Week of 9/11/17

The United States Senate is in session

The United States House is in session

Ten state legislatures are currently in regular session

o CA, IL, MA, MI, NJ, NC, NY. OH, PA, WI

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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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REAL ESTATE

Report: ‘Mall mix must change’

BY Al Urbanski

Three-quarters of gross leasable area in American malls are inhabited by stores representing the slowest-growing retail categories.

That’s the basis of a report from CBRE advising mall owners to seriously consider diversifying their tenant mixes. Department stores sales are declining by around 4%, yet they take up 49% of mall space. Apparel stores that form 30% of mall makeup are growing at a 12%, but that’s well below restaurants at 32% and furniture, personal care, and health care stores at above 20%.

“The American mall itself isn’t anywhere close to dead; It’s the old mall model that is dying,” said Melina Cordero, CBRE’s head of retail research for the Americas. “It is a necessary evolution for the mall industry to maintain its place as a cornerstone of American retail.”

That means more restaurants and entertainment centers, concludes CBRE. Super-regional malls that have been able to convert more department store and out-parcel GLA to those categories have seen net operating incomes rise from about $5.50 per square foot in 2013 to more than $9 in 2016. Regional malls stayed flat at approximately $5.50 over the same period.

Even with the super-regionals aggressively altering their mixes, restaurants account for only 4.6% of GLA at American malls. Home furnishings, health care, and personal care stores inhabit less than 2%.

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FINANCE

rue 21’s reorganization plan gets court OK

BY Marianne Wilson

rue21 has cleared a significant hurdle in its effort to move forward after declaring bankruptcy.

The teen apparel retailer announced that the U.S. Bankruptcy Court for the Western District of Pennsylvania confirmed the company's plan of reorganization, which clears the way for rue21 to emerge from the bankruptcy process after less than four months. Rue 21 filed for Chapter 11 protection in May 2017, listing $307 million in pre-petition assets. It filed a month after it said it would close 400 stores.

"We are very pleased to have moved through the restructuring process in a relatively short period," said Melanie Cox, CEO of rue21. "With the support of our lenders, our landlords, all of our business partners and the hard work of our team, the company has performed consistently well ahead of its liquidity plan, and exceeded its second quarter target for Adjusted EBITDA by over 200%."

The retailer expects its reorganization to become effective by September 15, 2017, once all closing conditions have been met.

Rue 21 currently operates 758 stores in 45 states in shopping malls, outlets and strip center.

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