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Regulatory Wrap-Up: Weekly recap of retail-related legislative developments—Jan. 7

BY CSA Staff

Wages

Colorado – Several legislators announced support for an “anti-preemption” bill to allow localities to set their own minimum wages above the state’s scheduled increase to $12/hr by 2020. Efforts to do so in past cycles failed in the senate, which is now controlled by Democrats for the first time in several years making passage more likely.

Michigan – The outgoing governor signed into law a bill that delays the state’s scheduled minimum wage increase and reestablishes the tipped wage. The final language extends the phase-in period to 2030 for a $12.05/hr minimum wage with no CPI escalator. Furthermore, the phase-in could be stretched out even later if the unemployment rate is 8.5 percent or higher. The tipped wage is capped at $4.38/hr. Advocates for the increase may initiate litigation and they could also refile for the 2020 ballot.

Michigan – The outgoing governor signed a bill into law that places additional requirements on citizen initiatives in the state. Under the new law, signatures for potential ballot initiatives must come from at least seven of the state’s 14 congressional districts and no more than 15 percent of total signatures can come from any one district. Additionally, paid signature gatherers must register with the secretary of state’s office

New Mexico – Democrats have introduced two bills to raise the state’s minimum wage. One bill targets $12/hr and the other $15/hr. Democrats took over the state senate in the last legislative cycle making the chances of wage increase legislation more likely.

New York – The state labor department established a hotline for workers to report employers that are not following current minimum wage law. The state is in the process of raising its minimum wage to $15/hr for most workers in the state. The current minimum for employers with eleven or more employees elevated to $15/hr on Dec. 31.

Paid Leave

Colorado – State legislators announced plans to introduce paid family leave bills mandating employers participate in a yet-to-be-determined insurance program for their employees’ paid leave. Efforts to pass similar legislation in past cycles failed in the senate, but because it is now controlled by Democrats, passage of some type of paid leave plan is more likely.

Minnesota – Lawmakers are actively discussing a paid family leave program. Democrats had introduced language in the past that called for employers to share in the cost of a paid leave program. Republicans, who control the state senate, have blocked those proposals in the past but have now formed a committee focused on family issues. The chair of that committee has publicly stated her intent to work on a solution for paid leave.

New York – Governor Cuomo vetoed legislation mandating companies offer at least twelve weeks of bereavement leave. The governor had previously expressed support for the concept but cited technical and cost concerns with the program in his veto message.

Albuquerque, NM – The city council passed a law extending paid family leave to city employees. Albuquerque has seen local efforts to increase minimum wages and benefits for private sector employees and this recent action could lead to a broader initiative down the road impacting private employers.

Best Buy – The tech retailer announced an expansion of their benefits program to include 10 days/yr of subsidized backup child care for parents whose regular child care plans fall through.

Scheduling

Philadelphia, PA – Mayor Kenney signed the city’s “fair work week” ordinance into law. The law goes into effect on Jan. 1, 2020.

Labor Policy

Washington – Attorney General Ferguson continues to add franchisors to the list of entities that have signed legally binding agreements to eliminate no-poaching practices from their franchise agreements nationwide. The latest list of seven firms include Jack in the Box, Jackson Hewitt, Jiffy Lube, Menchie’s, Budget Blinds and The Original Pancake House. The seven companies join 39 other businesses who have agreed to similar stipulations.

Amazon – Workers at Amazon fulfillment centers in New York and Minnesota continue to make the case for unionization despite the company establishing a $15/hr entry level wage. Workers continue to complain about the pace of work especially during the holiday season as well as other working conditions at the fulfillment centers.

Joint Employer

Federal – In a split 2-1 ruling by the D.C. Circuit Court of Appeals, the Obama-era joint employer standard was partially upheld by the court, remanding the issue to the NLRB for further clarification. The court may have created more questions than answers (as the dissenting judge noted) and further lengthened any final resolution on the issue. Many speculate that this ruling will almost ensure that when the NLRB releases its new rule (which is currently in drafting and is expected to overturn the Obama-era precedent) it will be challenged in the courts and the U.S. Supreme Court may have the final say on the issue.

NLRB – Peter Robb, the general counsel of the National Labor Relations Board, criticized the Board’s proposed joint employer rule for not going far enough. Most management side attorneys and organizations had praised the rule as reverting the standard back to a pre-Obama definition providing clarity for franchise businesses. Robb’s critique that the rule could and should go further surprised many observers. The rule’s comment period was recently extended to Jan. 14, after which the Board is expected to take action.

New York City, NY – A series of amendments have been made to the proposed joint employer legislation under the city’s human rights law. The amendments offer some limits on potential liability for franchisors who provide specific training for franchisees and create policies and procedures for investigating any complaints related to worker protections. However, business groups continue to argue that the ordinance confuses the obligations of separate business units, franchisors and franchisees.

Health Care

Federal – The U.S. District judge who recently ruled the Affordable Care Act (ACA) is unconstitutional clarified in recent court filings that the law should remain in place pending appeals of his decision. The original case was brought by twenty Republican state attorneys general. It questions the constitutionality of the ACA after the last year’s tax reform law eliminated the individual mandate. The plaintiffs argue that the mandate no longer functions as a tax and, therefore, the underlying law is unconstitutional. Seventeen Democrat attorneys general have appealed the ruling. The case could ultimately make its way to the U.S. Supreme Court.

Seattle, WA – In a victory for hoteliers, the Washington State Court of Appeals struck down a 2016 initiative that mandated specific health care benefits, among other requirements, for hotel employees in the city. The court determined that the initiative violated the city’s single-subject requirement for ballot initiatives as it also mandated hotels provide panic buttons to staff, maintain a list of individual guests who have sexually or otherwise assaulted hotel workers and required time-and-a-half pay for workers cleaning above a specific square footage limit. A separate case brought by the ERISA Industry Committee on the potential federal preemption violations has been paused pending appeal of the state court decision.

Taxes

California – Legislative leaders introduced legislation which would establish a threshold of $500,000 in annual sales, above which an out-of-state retailer would be obligated to collect and remit sales taxes for in-state consumers. The bill’s threshold is notably higher than the Department of Taxes and Fee Administration’s proposed rule of $100,000 which is in line with many other states that have acted on the issue recently. The state is also expected to address the collection obligations of marketplace providers for third-party sales into the state.

Data Privacy

California – The attorney general’s office announced they will hold six public forums over the next several months as part of the rule-making process for the landmark California Consumer Privacy Act (CCPA) enacted in 2018. The law does not go into effect until 2020 but further discussion in both the regulatory and legislative arenas are highly likely to continue throughout 2019’s legislative session.

Miscellaneous

New York City, NYA law went into effect on Jan. 1 that prohibits pharmacies in the city from selling tobacco products.

Amazon – In a letter to the U.S. Department of Justice, Senator Blumenthal (D-CT) has requested an investigation into the online retailer’s enforcement of price parity provisions in their contracts with third-party sellers. The Senator argues that the provisions are anti-competitive and artificially increase prices for consumers by not allowing vendors on Amazon’s marketplace to offer discounts. It remains to be seen whether DOJ will initiate any investigation.

Key Takeaways

  • The court ruling on the ACA has political ramifications for the industry and its elected allies. Much to the chagrin of Republican leaders in Washington and in the states, the healthcare issue is unexpectedly back in their laps. Recently we have seen governors – even conservative governors like Greg Abbott in Texas – call for legislation to mandate insurers cover pre-existing conditions. The last election cycle showed that for the first time, there is a significant health care voting bloc and both parties will be reacting to it. Resolving the issue will not only take a lot of time and attention away from other business priorities, industry business models may get dragged into the conversation yet again.
  • While the current immigration headlines are focused on border walls and caravans, operators need to be aware of other developments in the space. There is a growing conversation among pro-immigration activists that the crackdown is diminishing the number of agricultural workers and subsequent corner cutting is exposing our food supply to significant contamination. If there is another foodborne illness outbreak similar to the recent romaine lettuce recall, proponents will seize on the issue and drive a public conversation over food supply security. Additionally, bills have been quietly re-filed for the 2019 session in many legislatures mandating employers utilize the E-Verify system and calling for significant penalties for employers found to have employed – knowingly or unknowingly – undocumented workers. Brands need to pay close attention to both of these trendlines.

Legislature Status for Week of 1/7/19

  • The United States Senate is in session this week
  • The United States House is in session this week
  • Thirty-three state legislatures are meeting actively this week:
    • AL, CA, CT, CO, DE, ID, IL, IN, KY, MA, MD, ME, MI, MN, MO, MS, MT, NC, ND, NE, NH, NY, OH, RI, SC, SD, TN, TX, VA, VT, WI, WV, WY

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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