Regulatory Wrap-Up: Insider’s weekly recap of retail-related legislative developments – July 2
Federal – The U.S. Supreme Court declined to review a decision that upheld a now-defunct Obama-era rule that had restricted employers’ authority to pool workers’ tips, sending the case back to the lower courts. The rule is no longer in effect due to language that was included in the omnibus spending bill earlier this year. The issue raised in this lawsuit covers the time period during which the Obama-era rule was in effect and the outcome could impact other employers. Meanwhile, the Labor Department is rewriting the tip pool rule and plans to release it later this year.
Delaware – Due to last minute negotiations, a bill to increase the state’s minimum wage to $9.25/hr over the next two years passed both chambers prior to the June 30 adjournment. Earlier this year, similar legislation was defeated by only one vote in the full senate due to a member’s concern over the impact on casinos in his district. That issue was resolved in the latest version of the bill. The legislation allows for younger workers (under 18) as well as new employees (first 90 days of employment) to be paid $8.75/hr.
Massachusetts – Raise Up Massachusetts announced that it would pull both its minimum wage and paid leave mandates from the Nov. ballot. In response, the governor signed into law the so-called grand bargain passed by the legislature. It raises the state’s minimum wage to $15/hr over a five-year period and raises the tipped wage to $6.75/hr by 2023. It also establishes both a medical and family paid leave program.
New York – The state labor department concluded its series of regional hearings on the elimination of the tipped wage in the state. The department is now expected to begin the rulemaking process. However, no timeline has been announced.
Massachusetts – As reported above, the so-called grand bargain was signed into law by the governor. The paid family and medical paid leave program requires businesses with 25 or more employees to provide up to 12 weeks of family leave and 20 weeks of medical leave with a maximum of 26 weeks total per year. Workers will be paid a percentage of their salary up to $850/wk. The medical leave provision will be funded by a 0.63 percent payroll tax split between employers and employees. Businesses with fewer than 25 employees do not have to pay into this fund. The family leave program will be employee-financed.
Austin, TX – A judge denied a request for an injunction of the city’s paid leave law. The paid leave mandate was approved by the city in Feb. and has been subject to litigation by various business groups. The decision allows the city to move forward with an Oct. 1 enactment date. The complainants will likely appeal the decision in an effort to delay implementation. A state legislator has already pre-filed a bill for the 2019 session that would preempt local ordinances on employee benefits.
Federal – In a major loss for the retail community, the U.S. Supreme Court ruled in favor of American Express in Ohio v. American Express. The court upheld a lower court decision that American Express can prohibit merchants from encouraging customers to use lower-fee cards, stating that the practice is not anti-competitive as retailers argued.
U.S. Supreme Court – The U.S. Supreme Court decided a landmark case, Janus v. AFSCME, this week. The case centered on the issue of whether or not public employees can be forced to pay so-called agency fees to fund public sector unions. The court ruled for Mark Janus who argued that he shouldn’t have to pay union dues. The ruling does not directly impact entry-level employers but is notable because it is expected to dramatically impact the revenues of a number of major unions.
Labor Department – The Labor Department will revoke the controversial Obama-era persuader rule. The regulation, which was enjoined by the courts, sought to expand disclosure requirements for employers that contract outside consultants to advise on union organizing campaigns.
NLRB – Following a successful organizing campaign by the International Association of Machinists and Aerospace Workers (IAM), Boeing has asked the National Labor Relations Board to clarify how its regional officials should apply the Board’s recently-revised micro-union test. The company asserts that the newly-unionized IAM bargaining unit at its South Carolina facility is not valid under the new test.
No-Poaching Agreements – A federal judge allowed an antitrust claim by a former employee of a McDonald’s franchisee to proceed. The class action focuses on the company’s no-poaching policy which prohibits one franchise from hiring employees of another franchise for a six-month period. The proposed class action seeks damages for alleged antitrust violations.
Jimmy John’s – A federal judge ruled that Jimmy John’s does not jointly employ, along with its franchisees, a group of former assistant store managers. The managers alleged that they were unfairly exempted from overtime requirements.
Immigration Protests – Immigration activists, in reaction to family separation at the border, have organized 130 rallies in 48 states to occur on June 30. While there is no indication that hospitality or retail locations will be targeted, some employers may experience call outs or workplace disruptions.
New Jersey – Following a contentious negotiation, the governor and legislative leaders reached a budget deal that involves a temporary increase in corporate taxes and an increased levy on higher incomes. Corporations will see a 2.5% surtax in the first two years with a reduction to 1.5% the following two years before phasing out entirely. Higher earners will pay 10.75% on income over $5 million.
New Jersey – The legislature advanced a bill to the governor’s desk that would allow municipalities with more than 200,000 residents to impose a payroll tax on employers. If a given municipality also has a median income above $55,000/yr, the funds collected must be used for school purposes. Currently only Jersey City qualifies for both parameters. However, there are several jurisdictions across the state that have the required number of residents to impose the tax.
New Jersey – The legislature added language in the budget package that forces out-of-state sellers with more than $100,000 in sales into the state or more than 200 transactions to collect sales taxes. The language mimics the South Dakota law which was upheld by the U.S. Supreme Court. The legislation also mandates that marketplace operators collect sales taxes on transactions that occur through third-party sellers on their platform, regardless of the amount or value of transactions.
California – The legislature passed a bill that prohibits municipalities from imposing new taxes on groceries through 2030. The language does not overturn existing sugary beverage taxes in Albany, Berkeley, San Francisco and Oakland but prevents new or pending efforts across the state. The governor’s office has indicated support for the proposal.
California – A bill was signed into law by the governor that would offer a pathway forward on data privacy issues and potentially avoid a costly and problematic voter initiative that was slated for the Nov. ballot. The bill guarantees consumers the right to know what personal data has been collected by any company. It would also allow them to opt-out of future collection and hold companies directly liable in the event of a data breach. In a nod to some business concerns, the bill would allow the attorney general to levy fines for data breaches, only after which consumers could sue. The ballot measure exposed companies to litigation regardless of the state attorney general’s action. Privacy advocates have withdrawn the more onerous ballot initiative.
- The passage of the California legislation addressing consumer data privacy is likely to have a significant impact on business operations across the country. While the law prevents the issue from going to the ballot (which would likely result in voters approving a much more onerous law), operators who collect certain personal information from consumers will need to update their processes and policies once the law goes into effect. The expectation is that companies will not establish California-specific data privacy policies but rather change their policies nationwide.
- The bartender-turned-Socialist-Congressional-candidate Alexandria Ocasio-Cortez‘s stunning defeat of longtime Congressman Joe Crowley is being characterized as the political upset of the year. It reaffirms that the same anger and frustration that Donald Trump and others have tapped in Republican primaries is alive and well on the other side of the aisle for Bernie Sanders-like candidates to harness. Extreme ideologues’ continued success on either side of the partisan divide presents serious challenges for future bipartisan efforts to tackle pressing issues important to the employer community.
Legislature Status for Week of 7/2/1
- The United States Senate is in recess this week
- The United States House is in recess this week
- Four state legislatures are meeting actively this week:
- CA, ME, NC, NJ
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EnsembleIQ acquires media brands from Lebhar-Friedman
EnsembleIQ announced Thursday that it has purchased substantially all of the media, digital and event assets from New York City-based Lebhar-Friedman. Launched in 1925, the third-generation family business produces several leading retail brands, including Drug Store News, Chain Store Age, and Hardware and Building Supply Dealer.
The transaction also includes Chain Store Age’s SPECS and X/SPECS, two strategic events focused on physical retail that bring together the nation’s top retailers and suppliers to learn, share ideas, develop business partnerships and solve problems.
The Lebhar-Friedman brands will operate under the EnsembleIQ umbrella, and will continue to be led by senior VP John Kenlon and his management team including Gary Esposito, Eric Savitch and Seth Mendelson. President and CEO, Randall Friedman will serve in an advisory role during the transition, and chairman Roger Friedman will devote his time to new ventures.
“We’re thrilled to have these iconic brands and talented employees join the EnsembleIQ family,” said David Shanker, CEO of EnsembleIQ. “Adding chain drug, hardware and store operations reach and expertise provides our collective subscribers and customers with a comprehensive view of retail insights and information throughout the United States and Canada.”
“The company that my grandfather Arnold founded and my father Roger ran for many years has always been focused on the retail industry,” said Randall Friedman. “The fact that EIQ also has great brands and deep expertise in retail makes me very optimistic that the LF roots will continue to grow and bear fruit in the years to come under EIQ’s stewardship.”
EnsembleIQ is a premier business intelligence resource that exists to help people and their organizations succeed. It is structured to serve the business-to-business needs of retailers, consumer goods manufacturers, technology providers, hospitality and healthcare professionals, marketing agencies and retail service providers by using its integrated network of media and information resources designed to inform, connect and provide actionable marketplace intelligence.
EnsembleIQ is a portfolio company of RFE Investment Partners, a private equity investor with more than 30 years of experience investing in growth companies in partnership with strong management teams. Information on RFE can be found at http://rfeip.com/.
Berkery Noyes served as the exclusive financial advisor to Lebhar-Friedman.
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