CSA Regulatory Wrap-Up
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Regulatory Wrap-Up: Weekly review of retail-related judicial, legislative developments – Sept. 10

BY CSA Staff

Wages

Arkansas – A business-backed group, Arkansans for a Strong Economy, initiated a lawsuit challenging the validity of the signatures submitted to place an $11/hr minimum wage initiative on the Nov. ballot.

Michigan – The Michigan legislature considered and approved the ballot initiatives that would raise the minimum wage and require businesses in the state to provide paid leave. The action is a procedural move designed to give lawmakers the flexibility to amend the laws later. If the legislature rejected the bills then the measures would have proceeded to the ballot. If they had been approved by voters (as expected), the legislature would have needed a supermajority to amend the language; whereas, now lawmakers only need a simple majority. The minimum wage bill, as currently written, will increase the state minimum wage to $12/hr by 2022, eliminate the tip credit by 2024, introduce a youth wage as well as time and a half for work done beyond 40 hours per week.

Missouri – The Sixteen Thirty Fund, a DC-based non-profit, committed three million dollars to promoting passage of the minimum wage ballot initiative. The so-called dark money group has already provided a million dollars in funding to Raise Up Missouri.

San Jose, CA – The 9th Circuit Court of Appeals revived an employee’s suit against Marriott Inc. for unpaid wages.  The case could impact several localities in California that have similar laws. At issue is a union opt-out provision that allows employers with union contracts that include benefits such as health care to pay less than the city’s minimum wage. The suit is filed as a potential class action seeking back pay for servers that were paid less than the established minimum wage.

St. Paul, MN – Following several months of study, the Citizen’s League submitted a 400+ page report to the city council outlining three recommendations for an ordinance to increase the city’s minimum wage to $15/hr. The three plans all arrive at $15/hr but over different time periods. Minnesota currently has no tip credit and two of the plans do not alter that. The third potential plan would install a tip credit at full-service restaurants that serve liquor, but only for a probationary period. The mayor, who opposes any exemptions and a tip credit, has asked the city council to work quickly so that he can sign the measure into law before the end of the year. The city council will meet Sept.12 to determine next steps.

Study – A UC-Berkeley study analyzed the effects of minimum wage policies on food-service workers in Chicago, DC, Oakland, San Francisco, San Jose and Seattle. It found that cities which raised their hourly minimum wage above $10 enjoyed stronger economic growth.

Wage Theft

Connecticut – The state labor department announced that it collected $4.9 million in fees and wage violations from employers during the course of the last fiscal year.

Paid Leave

Michigan – As stated above, the Michigan legislature considered and approved the ballot initiatives that would raise the minimum wage and require businesses in the state to provide paid leave. The action is a procedural move designed to give lawmakers the flexibility to amend the laws later. If the legislature rejected the bills then the measures would have proceeded to the ballot. If they had been approved by voters (as expected), the legislature would have needed a supermajority to amend the language; whereas, now lawmakers only need a simple majority. The paid leave bill would require companies with ten or more employees to provide 72 hours of annual sick leave effective April 1, 2019.

New York – The governor announced his support for a bill, which has been approved by the legislature and awaits his signature, that would expand the existing paid family leave requirements to include up to ten weeks of bereavement leave. The leave could be used in the event of the death of a spouse, domestic partner, child, stepchild, parent, parent-in-law, stepparent, grandparent or grandchild and is funded by a 0.126 percent payroll deduction from the employee.

General Mills – The manufacturer announced an expansion to its existing paid leave program for salaried and non-union U.S. production workers. Effective Jan. 2019, the company will offer up to twenty weeks of maternity leave, twelve weeks of paternity leave, two weeks of caregiving leave and four weeks of bereavement leave.

Labor Policy

Federal – Senator Bernie Sanders introduced a bill requiring employers with at least 500 employees to cover the cost of government assistance programs (food stamps, public housing, etc.) on which their workers may rely. The bill has little chance of advancing but will provide an election-year platform on various wealth disparity issues. Senator Sanders named the bill the “Stop BEZOS Act” which stands for Stop Bad Employers by Zeroing Out Subsidies Act and also attacks his latest symbol of corporate greed, Amazon CEO Jeff Bezos.

NLRB – The National Labor Relations Board extended the deadline to Oct. 5 for public feedback on whether it should keep or revise the standard set forth in the 2014 ruling Purple Communications. The ruling opened the door for workers to use their employers’ email systems for union business.

Soda Taxes

WashingtonYes to Affordable Groceries (a coalition of retailers, unions and manufacturers) has successfully placed an initiative to preempt local sugar taxes on the Nov. ballot. If passed, the initiative would prevent future localities from taxing sugary beverages but would not nullify the existing Seattle ordinance.

Activism

Whole Foods – Several Whole Foods employees, backed by the Retail, Wholesale and Department Store Union (RWDSU), sent an email to workers at 490 stores urging them to support an effort to unionize the grocer’s workforce. Whole Foods, once renowned for worker wages and benefit offerings above industry norms, has eliminated some policies such as offering stock options for entry-level employees since Amazon bought the company in 2017.

Taxes

Federal – The Internal Revenue Service clarified that the general deductibility rule for businesses is unaffected by the proposed rulemaking regarding state and local tax deductions. The proposed rulemaking is in response to efforts of high income tax states to create charitable donation “work arounds” to the $10,000 limit on state and local tax deductions for individuals. The IRS’s clarifying statement allows businesses to continue to deduct charitable donations above the $10,000 limit as allowed under existing state or local tax credit programs.

Portland, OR – An initiative qualified for the Nov. ballot that would impose a one percent gross receipts tax on businesses with more than $1 billion in national revenue and over $500,000 of revenue in the city. If passed, the initiative is expected to raise approximately $30 million per year to be spent as directed by a newly established committee to fund clean energy infrastructure projects and green jobs training for underserved communities. The initiative has yet to be given an official number as the city council could choose to enact the measure directly rather than sending it to the ballot.

Data Privacy

California – The legislature advanced a technical corrections bill to the governor’s desk making changes to the landmark privacy law that was signed earlier this summer. Among other minor changes, the bill extends the effective date of the law from Jan. 1, 2020 to July 1, 2020 or six months after the attorney general adopts enforcement regulations, whichever occurs first. The governor is expected to sign the bill but industry advocates are likely to pursue additional changes during the next legislative session beginning in 2019.

Key Takeaways

  • This week’s announcement by the CEOs of the major hotel chains regarding sexual harassment and worker safety – “The Five Star Promise” – is a landmark inflection point in the ongoing national narrative around the business community’s response to the #MeToo movement as well as employee protections in the workplace. As employers in and around the entry-level employment marketplace, especially in retail and now in lodging, make similar commitments to their employees, the restaurant industry will increasingly be isolated in the court of public opinion and employee relations.
  • Congress has only a few legislative days remaining in the year in which to confirm a supreme court justice as well as finalize the budget process. In spite of that short window, a lot can still happen affecting operators. The budget process alone affords opportunities for riders affecting labor department regulations, technical corrections regarding tax depreciation and even potential action on joint employer. While long shots, anything and everything can happen in the final days of a budget resolution process and we need to stay vigilant to ensure our priorities can be addressed.

Legislature Status for Week of 9/10/18

  • The United States Senate is in session this week
  • The United States House is in session this week
  • Three state legislatures are meeting actively this week:
    • MA, NJ & PA

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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Nike’s controversial partnership not so polarizing after all?

BY Marianne Wilson

Nike Inc. appears to have dodged the bullet when it comes to featuring Colin Kaepernick in its new ad campaign—at least based on some early results.

According to advertising analytics company Ace Metrix, Nike’s partnership with Kaepernick in the ad “Dream Crazy” was well received by viewers, suggesting the social media backlash comes from a small minority. The polarity score for “Dream Crazy” fell within the 10th percentile of all ads, with a majority of the general population pop viewers finding the ad agreeable, Ace Metrix said.

“The fact the ad was less polarizing than average proves Nike pulled off quite a creative feat given the disagreement on both Kaepernick and the NFL kneeling controversy in this country,” said Peter Daboll, CEO, Ace Metrix. “Nike’s partnership with Kaepernick was highly strategic and they demonstrated a clear understanding of their target audience.”

“Dream Crazy” saw strong resonance among Gen Z and Millennial audiences (on average, Ace Scores were 33% above norm). Older viewers, those among Gen X, positively regarded the ad as well, but to a lesser degree than those younger than them. A few verbatim comments from viewers exhibited some distaste towards Colin Kaepernick’s role as spokesperson, with most coming from those ages 36-49.

Racial inequality is the driving force behind all the controversy that surrounds Kaepernick’s personal brand. African Americans, who rated the ad’s performance 42% above advertising norms, found the ad especially likeable (29% above norm) and relevant (33% above norm).

A look at Nike and Kaepernick trending on social media suggests consumers were outraged and ready to boycott. However, only 13% of survey respondents reported they were less likely to purchase from Nike after viewing the ad. That dropped to 10% among Millennials and just 6% among the Gen Z audience. On the other hand, 56% of general population viewers reported they were more likely to purchase, which is comparable to Nike’s recent, noncontroversial ad that pays tribute to Serena Williams.

“These results show once again that oftentimes, social media backlash can be amplified by media attention while representing only a small minority of haters,” Daboll said. “Most objections to such a polarizing figure as Kaepernick were tempered by the very strong likeability of that message across age, gender and ethnicity.”

The ad also received strong signals for “inspiring,” “powerful” and “love-it” emotions, demonstrating viewers’ positive regard towards the message and creative execution as a whole.

In related news, despite reported boycotts, Nike’s online sales actually rose in the days after the advertisement debuted.

Between the Sunday before Labor Day and the following Wednesday, product orders increased 27%, according to Edison Trends, reported CNBC. In the same period last year, product orders fell 2%.

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EV1
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Walmart’s partnership with Ellen generating lots of attention

BY Marianne Wilson

An exclusive clothing collection developed in partnership between the nation’s larger retailer and one of its most popular celebrities is already paying off — and the goods haven’t even hit the stores yet.

Ever since Walmart announced plans to release a new clothing line in partnership with TV personality Ellen DeGeneres, the public’s general impression of the retailer has climbed to an all-time high, according to research from YouGov. (DeGeneres placed first on YouGov’s list of America’s most popular contemporary TV personalities.)

Also, as news of the partnership between Walmart and Ellen began spreading, so did talk of the retailer. Just-released numbers from YouGov’s Plan & Track platform show that:

• Following the announcement, which was made on Aug. 15, Walmart’s Impression score rose from 27 to 35, an all-time high since YouGov began tracking the retailer in 2008.

• The day of the announcement, Walmart’s “word of mouth” score, which asks U.S. adults if they recall discussing a specific brand with friends or family members in the past two weeks, was 35%. By August 28, however, it had increased to 40%.

• 24% of U.S. women who have a positive opinion of Ellen say they spend a lot on clothes, compared to 17% of U.S. women who have a negative view of the TV personality.

• 41% of women who like Ellen report keeping up to date with current fashion trends.

The exclusive collection, called EV1, is scheduled to hit store shelves on Sept. 10. It will feature nearly 60 items, including jeans, T-shirts, footwear and accessories, with each item selling for $30 or less.

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