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Regulatory Wrap-Up: Insider’s weekly guide to retail-related legislative developments – July 9

BY CSA Staff

Wages

Alaska – The state labor department announced, effective June 29, that mandatory tip pooling policies are now banned in restaurants across the state. Employees can still voluntarily join tip pooling arrangements; however, the new regulation requires written notice of any such policy. The action comes in response to reports that the Trump administration is considering rewriting federal rules related to tip pooling.

Arkansas – Supporters of a ballot initiative to raise the state’s minimum wage to $11/hr by 2021 turned in over 69,000 signatures to the secretary of state’s office for review. The initiative must have at least 67,887 verified signatures to qualify for the Nov ballot. The state will process the submitted signatures within 30 days.

Maine – Governor LePage vetoed over a dozen bills on a variety of issues in the final days of the most- recent special session. He also repeated his call to roll back the 2017 voter-approved minimum wage increase. As the legislature reconvenes next week to consider potential veto overrides, there are indications that the minimum wage roll back is still potentially in play.

Paid Leave

Federal – A U.S. Senate Subcommittee will hold a hearing on the issue of paid family leave on July 11. The subcommittee will hear from Senators Gillibrand and Ernst, along with some academics, who are supporting numerous legislative solutions. Senator Gillibrand, along with several other Democrats, supports legislation that would provide up to 12 weeks of annual paid leave funded by an increase in the payroll tax. Senator Ernst is expected to discuss a yet-to-be-introduced proposal that would provide paid leave benefits in the form of early withdrawals from social security funds, which is supported by a handful of other Republicans as well as Ivanka Trump.

New York – Legislation passed both houses extending 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. The legislation is under review by the governor’s office.

Scheduling

Chicago – The city council’s proposed scheduling ordinance was amended to apply to businesses with more than 50 employees. It remains to be seen if the focus on larger businesses will create more momentum for a bill that has been stalled since it’s introduction in June of 2017.

Labor Policy

Amazon – A delivery driver who was a subcontractor for the online retailer has filed a potential class action case alleging nonpayment of overtime wages for drivers that worked more than 40 hrs/wk. The case also alleges that Amazon is a joint employer of the Florida-based delivery company.

Right To WorkIn response to the recent ruling by the U.S. Supreme Court in the Janus vs AFSCME case allowing public sector employees to stop paying union dues, the National Right to Work Legal Defense Foundation has filed a petition with the NLRB to make it easier for workers to decertify their unions. In particular, they hope to have the Board review the 2011 Lamons Gasket decision which blocks workers from voting out their unions for a certain time period.

Trade

China – The Trump Administration’s 25 percent tariffs on $34 Billion worth of Chinese imports went into effect on July 6. As expected, China responded with a nearly equivalent amount of retaliatory tariffs.

Health Care

Federal – The Trump Administration announced the temporary freeze of billions of dollars in “risk- adjustment” payments to health insurance companies that participate in “Obamacare” markets across the country. The payments were used to reduce insurers’ risks as they entered new markets and have been the subject of multiple litigation efforts. The Administration is responding to a recent federal district court case that found that the payments were based on flawed rules, despite other federal litigation that has upheld the payments. The action could cause increases in future premium payments as insurers are currently setting rates for 2019.

Taxes

Iowa – The Department of Revenue issued a notice informing online sellers with sales above a certain amount into the state that they will need to begin collecting sales taxes for in-state consumers on Jan 1, 2019. The notice referenced the recently-passed state law which mirrors the South Dakota law that was recently upheld by SCOTUS. The notice details the specific requirements for registration and collection obligations.

Louisiana – The Revenue Secretary established Jan 1, 2019 as a target date for implementing collection obligations on out-of-state sellers above a certain threshold in compliance with the recent SCOTUS decision.

Vermont – The Department of Taxes issued a notice establishing July 1, 2018 as the effective date for a 2016 law that was triggered in the wake of the recent SCOTUS decision. Out-of-state retailers with sales above a certain threshold must register and begin collecting sales taxes on behalf of in-state consumers.

Wisconsin – Governor Walker announced that the state could begin collecting online sales taxes from in-state consumers as early as Oct 1 as a result of the recent SCOTUS decision. He cited a 2013 state law that would apply any additional revenues to an income tax reduction and instructed the Department of Revenue to commence a revue of existing statutes to determine if further legislation is necessary.

Key Takeaways

  • The increasing reality that we are commencing a trade war with not only China but also many of our closest Western allies is beginning to be felt. Markets are nervous, the Dow is softening and oil prices are creeping upward. As pricing pressure on commodities grows, business models and bottom lines will be pinched. Not only could this impact restaurant and retail brands, but could also impact election outcomes this November. Although much of Trump’s base could be among those impacted the most, his support remains high among that group. The question is whether those impacts will dampen their enthusiasm in turning out for congressional candidates in a midterm election when Trump is not on the ballot.
  • Several states are taking immediate action in the wake of the Supreme Court decision overturning the physical presence standard for sales tax collection obligations. Many are referencing existing state authorizing legislation that was passed in preparation for the potential win in the courts. In the coming months, many more states will continue to review their existing statutes and should be expected to issue public notifications of various compliance and registration dates. Retailers will need to pay close attention to those developments.
  • The debate around plastic straws has quickly gone from fringe to mainstream. Communities from California to Florida are passing restrictions or outright bans with many more pushing voluntary bans – often with the assistance of the local restaurant community. Brands need to understand that the industry will not be able to put the genie back in the bottle on this issue and should be preparing accordingly. The bigger question is how quickly the environmental community can pivot and renew their focus on plastic cutlery, bags and other packaging materials – especially at a time when most brands are becoming increasingly reliant on carry-out and delivery. The industry cannot sit on the sidelines in this issue area and must proactively engage so we can be part of the solution and not viewed as part of the problem.

Legislature Status for Week of 7/9/18

  • The United States Senate is in session this week
  • The United States House is in session this week
  • Four state legislatures are meeting actively this week:
    • MA, ME, NJ, OH

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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Kroger partners with Club Monaco founder on new apparel brand

BY Marianne Wilson

The Kroger Co. is overhauling its apparel strategy by launching a family apparel brand developed by the man responsible for Club Monaco and Joe Fresh.

Created by retail veteran and designer Joe Mimran and called Dip, the new brand will include men’s, women’s, juniors, kids and baby collections. It will launch this fall in more than 300 Fred Meyer and Kroger Marketplace stores. The brand will replace more than a dozen of Kroger’s existing private-label clothing brands, giving the company a more streamlined approach to apparel.

“Dip enables Kroger to provide a meaningfully better clothing experience, and ultimately, expand on the products and experiences that you can only get at our stores,” said Robert Clark, Kroger’s senior VP of merchandising. “We’ve worked closely with Joe and his team to develop a line of clothing that works for today’s times – easy to buy, easy to wear, and easy to love. Dip will transform our apparel business, further redefining the customer experience through Restock Kroger.”

In partnering with Mimran, Kroger is linking up with a designer who has forged a successful track record in both upscale and budget-friendly apparel. In addition to founding specialty fashion retailer Club Monaco, Mimran is the creator of Joe Fresh, an affordable, fast-fashion family apparel brand which is sold in Canada through Loblaw’s supermarkets and freestanding Joe Fresh stores. (Joe Fresh, however failed to gain traction in the United States. After opening a handful of U.S. stores and also in-store shops at J.C. Penny, the brand ultimately exited the market.)

“Dip is simple, fresh, and goes great with everything,” said Mimran. “Style should be fun. We believe good design can be affordable. It should fit into your life, not the other way around.”

As to the brand’s name, the designer said it is in sync with Kroger’s heritage in food.

“We looked at Kroger’s unmatched heritage in food,” Mimran explained. “We thought about the fun, easy energy of the clothes. We thought about what makes every gathering. And it just kind of clicked – Dip.”

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Build-A-Bear Workshop in first-ever birthday ‘pay’ event

BY Marianne Wilson

Build-A-Bear Workshop is taking birthday celebrations to a new level.

The specialty retailer will host its first-ever “Pay Your Age Day” event in all U.S., Canada and U.K. stores on Thursday, July 12. As part of the promotion, customers who visit a store in person on July 12 can pay their current age to make a stuffed animal of their choice. To participate, parents or guardians over age 18 must enroll in the retailer’s complimentary rewards program or provide a valid email address and name.

The one-day event is being held to celebrate the launch of the retailer’s new year-round “Count Your Candles” birthday experience, where customers 14 and under who visit Build-A-Bear store with a rewards member can pay their age for a special “birthday treat bear” during the month of their birthday. Birthday guests will also receive a party hat, special sticker and fun photo props if they want to capture the moment.

“We have overwhelming data that indicates Build-A-Bear is synonymous with childhood, and nearly one-third of our sales are associated with birthdays,” said Sharon Price John, president and CEO, Build-A-Bear Workshop. “We ‘heart’ birthdays at Build-A-Bear, so we’re hosting the Pay Your Age Day to launch our year-round ‘Count Your Candles’ offer for Guests celebrating a birthday with us in stores — an experience we designed especially to commemorate birthdays in a memorable way.”

Build-A-Bear Workshop has over 400 stores worldwide, including corporately-managed stores in the United States, Canada, China, Denmark, Ireland, Puerto Rico, and the United Kingdom, and franchise stores in Africa, Asia, Australia, Europe, Mexico and the Middle East.

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