CSA Regulatory Wrap-Up
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Regulatory Wrap-Up: Weekly recap of retail-related judicial, legislative developments

BY CSA Staff

Wages

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.

Paid Leave

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.

Scheduling

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 Policy

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.

Joint Employer

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

Health Care

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.

Taxes

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.

CaliforniaThe 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.

Trade

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.

Privacy

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.

Key Takeaways

  • 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

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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CSA Regulatory Wrap-Up
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Regulatory Watch: Weekly recap of retail-related legislative, judicial developments

BY CSA Staff

Wages

New Jersey – Several local mayors and other policymakers, citing the recent entry-level pay raise announcement from Amazon, are calling on the state to move ahead with plans to raise the minimum wage to $15/hr.

Washington – The state labor department released a draft rule this week that if finalized, amends the rules relating to overtime pay for workers in the state. The proposal calls for increasing the salary threshold to as much as $75,000/yr and is open for public comment until Oct. 26.

Anaheim, CA – This week Disneyland Resort announced that it is canceling its Anaheim luxury hotel, blaming the city’s unstable business environment. Months ago, local hotel unions threatened to place a $15/hr measure on the ballot targeting the hotel (limited to tax subsidy recipients) in an effort to gain concessions from the theme park. When Disneyland held firm, the union advanced the measure to the ballot. In response, the theme park announced it would not accept city subsidies but a debate continued over the applicability of the requirement.

Jackson, MS – The Magnolia Mothers Trust, a local non-profit group, will administer a guaranteed income program (often referred to as a universal basic income) on a trial basis for a limited number of low-income families in the city. Funding for the program comes from private donors as well as the Economic Security Project and will provide $1,000/mo for a year with no strings attached. The program will begin in December and will target low-income African-American mothers in the community. A lottery will determine participants. The Magnolia Mothers Trust will study qualitative data such as spending patterns and increased community engagement.

St Paul, MN – The city council released an initial draft of a $15/hr minimum wage ordinance they plan to consider before the year’s end. The proposal would mandate increases for large businesses with 100 workers or more to begin gradually increasing wages in 2020 arriving at $15/hr by 2023. Smaller businesses would have six years and “micro-businesses” with five or fewer workers would have ten years to comply. The current draft does not allow an exemption for tipped workers but does contain a 90-day exemption for both youth (14-17 year olds) and training programs. Franchises with ten or more locations nationwide are considered large businesses under the proposed law.

Amazon – The company faced backlash from many of its long-term employees after the recent elevation of its hourly starting wage rate to $15/hr. One of the chief concerns was that they would receive less total compensation when accounting for a subsequent reduction of benefits and stock options. Amazon responded by raising the wage rate and instituting a cash bonus schedule for long-term employees as they reach certain milestones.

Scheduling

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.

Philadelphia, PA – The city council will hold a hearing on Oct. 30 to review the restrictive scheduling legislation.  The bill is expected to be amended to address some of the business community concerns prior to a vote, but the details of such amendments have not been released.

Labor Policy

U.S. Supreme Court – This week the U.S. Chamber of Commerce urged the U.S. Supreme Court to take up a California school district’s challenge to a ruling that found that employers violate federal equal pay law when they factor workers’ prior pay into salary offers. The case could undermine salary history bans which have been enacted by many states over the past few years.

New York – The Cuomo Administration released finalized guidance materials describing employer obligations under the state’s new sexual harassment policies. Businesses in the state must adopt written sexual harassment prevention policies within a year and implement mandatory anti-harassment training.

Starbucks – The coffee retailer announced an expanded benefit plan for employees that subsidizes child care services. The company will subsidize up to ten days a year of child care and care for elderly family members in instances where an employee’s plan for such care has fallen through. The backup care plan is offered through a partnership with Care.com, a provider of a wide range of care and in-home services.

Activism

Purple Pig – Ten protesters affiliated with various workers rights organizations entered the Purple Pig restaurant in Chicago and disrupted business operations. The protesters were calling on the restaurant’s management team to better enforce their sexual harassment policies after an alleged incident.Taxes

New Jersey – The governor signed legislation mandating out-of-state sellers with at least 200 transactions or $100,000 worth of sales into the state per year register with the state and begin collecting sales taxes. The language also includes a mandate that online marketplace providers collect and remit on behalf of third-party sellers using their platform. The signing follows the governor’s conditional veto of similar legislation which was attached to the state budget earlier this year.

West Virginia – The state tax department announced that out-of-state sellers with at least 200 transactions or $100,000 worth of sales into the state per year must register with the state and begin collecting taxes by Jan. 1, 2019. The governor had previously stated he wanted to see the legislature act on the issue and not pursue additional collection authority through regulation. The state could still look to address the collection responsibilities of online marketplaces during the next legislative session.

Washington D.C. – The city council held a public hearing to review legislation expanding the city’s authority over sales tax collection from out-of-state sellers. The bill mirrors other state activity on the issue and establishes a threshold of $100,000 worth of sales or 200 transactions per year. Companies with sales above the threshold must register with the city and begin collection.

Privacy

California – A group of Walmart customers has initiated a class action lawsuit in state court alleging that the retailer illegally shared their personal information with Facebook.

Menu Labeling

California – The judge who earlier this year determined that coffee sellers must display cancer warnings under the state’s Proposition 65 law, rejected separate bids by Dunkin’ and Starbucks to dismiss a pending case regarding civil penalties against the companies. The companies, along with other coffee merchants, have pointed to an ongoing rulemaking process in the state to exempt coffee from Proposition 65 labeling requirements as well as a recent FDA endorsement of that state rulemaking effort.

Key Takeaways

  • The announcement by Starbucks this week related to the subsidization of child care as an additional benefit for workers is significant. Not only are they now even more competitive in the contest to attract and retain the best workers, they have successfully pulled together a comprehensive benefit package that essentially creates a “cocoon of support” around their employees. From healthcare, paid leave, stock options, tuition support and now child care support, the company has essentially created an infrastructure of support around their employees that will set them apart. It sets a new bar in the benefits conversation.
  • Reports this week indicate that the business community may not be as united on the overtime rule this go-around. Many companies, including Walmart and White Castle, increased their base wages for some managers in anticipation of the Obama-era overtime rule going into effect. After the rule was enjoined, they never reverted back. These companies are going to be less likely to oppose a steep increase and expect proponents to cite these case studies as evidence that claims of diminished opportunities are overblown.

Legislature Status for Week of 10/15/18

  • The United States Senate is on recess this week
  • The United States House is on recess this week
  • Five state legislatures are meeting actively this week:
    • MA, MI, NC, 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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Walgreens expanding in-store healthcare services

BY Marianne Wilson

Walgreens and diagnostic testing company LabCorp are expanding their collaboration.

The two companies have agreed to open at least 600 LabCorp patient service centers at Walgreens stores across the U.S. during the next four years. The total is inclusive of the 17 locations the companies opened since the initiative was launched in June 2017.

LabCorp at Walgreens locations are currently open in Florida, Colorado, North Carolina and Deerfield, Illinois. The sites, which offer which offer specimen collection services for LabCorp testing, are located near the pharmacy department area inside the Walgreens store.

“LabCorp’s strong partnership on this joint initiative, coupled with the enthusiastic consumer feedback we’ve received, allows us to undertake an exciting expansion of our collaboration together,” said Stefano Pessina, executive vice chairman and CEO of Walgreens Boots Alliance, Inc. “This reflects our commitment to transform our stores into neighborhood health destinations that provide a differentiated, consumer-focused experience, while providing access to a broad range of affordable health care services at a trusted and convenient setting.”

In addition, Walgreens and LabCorp are pursuing other collaboration opportunities, to take advantage of LabCorp’s unique combination of diagnostics and drug development expertise, and Walgreens experience in pharmacy, retail health and consumer engagement. The companies said they are exploring novel approaches to clinical research, helping consumers take a greater role in their own health and well-being, and expanding the health-related services available at LabCorp at Walgreens.

As of June 28, 2018, Walgreens operates approximately 9,800 drugstores with a presence in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands, along with its omnichannel business. Approximately 400 Walgreens stores offer Healthcare Clinic or other provider retail clinic services.

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