Regulatory Wrap-Up: Weekly recap of retail-related judicial, legislative developments
Federal – The labor department again delayed the timeline for the new overtime threshold regulations. The department is now planning to propose the new rule and open it for public comment in March 2019.
Arkansas – The state supreme court ruled that the proposed minimum wage increase will remain on the Nov. ballot. The minimum wage initiative, if passed, would gradually increase the state’s minimum wage to $11/hr by 2021.
Washington – The state labor department released a draft overtime rule last week. If finalized, it would amend the rules relating to overtime pay for workers in the state and increase the salary threshold to as much as $75,000/yr. The rule is open for public comment until Oct. 26.
St Paul, MN – Legislation to raise the city’s minimum wage to $15/hr phased-in over several years was formally introduced in the city council. The proposal mandates increases to $15/hr over different time periods dependent on the size of the business and does not allow an exemption for tipped workers. The council is expected to consider several amendments but five of seven members already co-sponsor the existing proposal so it is likely to move forward in the next four to six weeks. The next council meeting on this issue will occur on Nov. 7.
Washington D.C. – As expected, the council took its second and final vote to repeal the initiative that would have raised the city’s tipped wage to $15/hr over a period of time. The mayor is expected to sign the bill into law.
New Jersey – Ahead of the statewide paid sick leave law’s Oct. 29 implementation date, the state labor department released final regulations as well as the official notice poster that employers are required to display.
New Jersey – A senate committee did not vote on an expansion to the state’s paid family leave law, as was expected. The bill was held in committee but could still be acted upon at any time.
Cisco Systems – The technology conglomerate announced a new and innovative family-friendly benefit package for employees. The company will reimburse employees up to $20,000 for a group of family-oriented benefits such as embryonic storage, adoption, surrogacy and genetic testing.
Washington – A house committee heard testimony regarding a potential statewide restrictive scheduling mandate that may be considered during the next legislative session. Seattle is one of a few localities across the country with a scheduling mandate already in place.
Labor Department – A proposed department rule that would expand access to association retirement plans has cleared the White House Office of Management and Budget (OMB) review process, the last stage before proposed rules are published and opened for public comment. The rule would allow small businesses to pool resources to offer retirement plans for employees.
NLRB – A recent NLRB judgment against In-N-Out Burger declared the company’s policy against employees wearing political buttons to be an unfair labor practice. The Fifth Circuit Court of Appeals subsequently affirmed that decision. This week, a conservative legal advocacy group, the Washington Legal Foundation, requested the Supreme Court take up the case on appeal.
EEOC – A case brought by the Equal Employment Opportunity Commission against Costco on behalf of an employee could extend workplace harassment liability to third parties. The Seventh Circuit Court of Appeals recently found in favor of the employee who was subject to unwanted advances and persistent harassment from a customer at a Costco store in Illinois. The store’s management as well as local law enforcement both intervened but the harassment continued to the point that the employee took a year of unpaid leave. A jury awarded the employee $250,000 in damages.
No-Poaching Agreements – Washington State Attorney General Ferguson announced a potential expansion of his office’s investigation into the use of no-poaching agreements in franchise contracts. To date, the AG has reached agreements with dozens of national restaurant chains to remove no-poach clauses from their standard U.S. franchise contracts. The recent announcement highlights expanded investigations into hotels, convenience stores, cleaning services and several other businesses.
Labor Department – The Trump Administration’s semiannual Unified Agenda outlines the Labor Department’s intent to propose a new rule regarding joint employer liability as soon as December. The long-awaited rule has the potential to provide the business community much-needed clarity on the issue.
McDonald’s – The Ninth Circuit Court of Appeals determined that McDonald’s USA is not a joint employer of a California franchisee’s workers in the appeal of a 2017 lower court judgment on the matter. The case centered on whether or not a joint employer relationship existed under California’s wage and hour laws
Seattle, WA – The business-backed ERISA Industry Committee (ERIC) brought a suit against the city over the health care benefit mandate included in the voter-approved Initiative 124. The measure passed in 2016 and went into effect July 1, 2018. The lawsuit focuses on Section 3 of the initiative which mandates that hotels with more than 60 employees offer gold standard health care benefits or the cash equivalent to all employees. ERIC argues that this specific provision precludes uniform plan administration as required under federal ERISA preemption law.
California – An initiative to tax commercial property at a higher-rate, commonly known as “split roll” reform, has qualified for the 2020 ballot. The initiative would exempt commercial property from Proposition 13, a 40-year-old law that limits state property tax increases for both commercial and residential property.
California – The Department of Tax and Fee Administration told lawmakers they plan to issue a notice directing out-of-state sellers that sell above $100,000 worth of sales or 200 transactions per year to begin collecting and remitting the state’s sales tax in early 2019. The department will hold a public discussion of the notice on Oct. 24. Legislators indicated they may introduce legislation next session to raise the threshold and the agency suggested they also may consider language that would mandate online marketplaces collect sales taxes on behalf of third-party sellers.
Ohio – A state lawmaker recently indicated that he would replace the state’s existing state law that governs out-of-state sellers’ sales tax collection responsibilities with an economic nexus bill similar to South Dakota’s. Ohio has implemented what is known as “cookie nexus,” which extended collection authority by establishing a physical connection to an out-of-state retailer through cookies placed on an in-state shoppers’ computers. The “cookie nexus” provision has been subject to litigation in other states.
Texas – The comptroller’s office is recommending the legislature create a single statewide 1.75% local sales tax for out-of-state sellers in reaction to the Supreme Court verdict in South Dakota v. Wayfair. The court acknowledged South Dakota’s relatively simple sales tax regime as a key factor in reducing the undue burden on out-of-state sellers. States with more complex systems must simplify in order to avoid future litigation when expanding their collection authority to out-of-state sellers. The comptroller’s office also distributed updated draft regulations that include a $500,000 annual sales threshold for remote sellers.
Vermont – The governor is proposing that revenue from expanded sales tax collection to out-of-state sellers be used to increase the state’s spending on child care subsidies.
USTR – The U.S. Trade Representative’s office officially notified Congress of the administration’s intent to negotiate trade deals with European Union, United Kingdom and Japan.
UPU – The Trump administration has threatened to pull out of a relatively obscure international treaty on global shipping rates called the Universal Postal Union (UPU). The treaty establishes heavily discounted shipping rates for developing countries. China is considered a developing country under the terms of the treaty and the administration is looking to leverage additional pressure on the Chinese economy with this action.
China – A bipartisan group of 167 House members urged U.S. Trade Representative Robert Lighthizer to establish a process for companies to request exclusions from tariffs that the administration recently imposed on $200 billion worth of Chinese goods. The USTR had an exclusion process for the first two tranches of tariffs earlier this year but has not established one for the third (and largest) batch that went into effect on Sept. 24.
New York City, NY – A city councilmember is set to introduce legislation which would require businesses that use facial-recognition software to disclose its use. Companies would also be required to inform the public what data they collect and share and how long they store the information. Illinois and Texas currently have laws on the books that require consent from customers before using such technology.
- The drumbeat on the no-poaching issue continues to grow louder. This week Washington Attorney General Ferguson, who has driven the national conversation on the issue, announced an expanded focus beyond the restaurant industry to other sectors, including hotel, retail and convenience stores. The few remaining national chains that utilize these provisions will find themselves in the crosshairs sooner rather than later and need to take action immediately to address the issue.
- Washington state’s effort to significantly raise their overtime threshold should alarm operators for a number of reasons. If there is some level of blue wave in this November’s election, look for many states with new democratic majorities to pursue a similar path. Additionally, if the Democrats are successful in retaking the U.S. House of Representatives, there will be numerous procedural and budgetary tools at their disposal to impact the administration’s efforts on rewriting the federal overtime rule. Operators need to pay attention to these electoral ramifications with regard to overtime and related issues.
Legislature Status for Week of 10/22/18
- The United States Senate is on recess this week
- The United States House is on recess this week
- Two state legislatures are meeting actively this week:
- MA & NJ
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.
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