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Regulatory Wrap-Up: Weekly recap of retail-related legislative, judicial developments – July 30

BY CSA Staff

Wages

Michigan – A three-judge panel was established to consider the case brought by business interests against the proposed minimum wage ballot initiative that would raise the state’s minimum wage to $12/hr by 2022 and eliminate the tipped wage, currently set at $3.52/hr. The legal challenge alleges that the proposed language fails to identify and amend the proper sections of existing state wage law which is a technical violation of the initiative process. The panel is expected to rule on the case in the coming weeks.

Birmingham, AL – The U.S. Court of Appeals for the Eleventh Circuit overturned a lower court’s decision, giving new life to an NAACP lawsuit that argues the state discriminated against Birmingham’s majority African-American residents. At issue is the increase in the minimum wage to $10.10/hr that the city passed in 2016. Just two days after passage, the state legislature enacted a preemption law nullifying the city’s ordinance. The case alleges that the state law was intended to discriminate against the city’s largely African-American workforce in violation of the equal protection clause. Now that the lower court’s decision has been nullified, the case will continue to move through the process.

Chicago, IL – An ordinance was introduced this week that would amend the tipped wage requirement within the city’s minimum wage law. It would require employers to pay tipped workers $8.40/hr, instead of the current $6.25/hr. The mayor has not taken a position on the ordinance and it is unclear how much support it has within the council.

Paid Leave

Federal – A house subcommittee held a hearing on the Workflex in the 21st Century Act, which would exempt employers from state and local paid leave laws if they offer a certain level of leave for both part-time and full-time workers. The hearing is the first step in what will likely be a long legislative process with no real action expected prior to the midterm elections.

Scheduling

New York City, NY – The city’s Department of Consumer Affairs released proposed rules related to the enforcement of the Fair Workweek law that passed last year. The department will hold a public hearing to review the rules on July 30 but few, if any, substantive changes are expected.

Wage Theft

Four Corners Group – Several servers that worked at one of over a dozen well-known Chicago area restaurants (including Renalli’s, Highline, and Brickhouse) have initiated a class action against the parent company alleging over $30 million in unpaid tips and other wage violations.

Papa John’s – Indicative of a national trend, delivery drivers in Kentucky have initiated a potential class action against several franchisees alleging minimum wage violations as a result of insufficient reimbursements for travel expenses and car maintenance.

Labor Policy

Pennsylvania – The U.S. Court of Appeals for the Third Circuit (which covers Delaware, New Jersey and Pennsylvania) overturned a lower court’s decision involving a sexual harassment claim by a former county employee. In the ruling for the plaintiff, the court found that even though the employer had a harassment reporting process in place and had ultimately fired the offender for infractions unrelated to the plaintiff’s case, the employer could still be found liable by a future jury.

Nike, Inc. – After an internal audit, Nike is raising the pay for nearly 7,000 of its employees to address any pay inequities that cannot be attributed directly to merit. Other brands have taken similar steps recently in response to a growing awareness around potential gender or racial pay gaps within their workforces.

Health Care

Federal – A coalition of twelve state attorneys general have filed suit against the Trump Administration to reverse the recent rule allowing for association health plans. The rule is designed to expand options for smaller employers by allowing them to band together and form insurance pools. The states argue that the rule allows these insurance plans to offer fewer benefits than required under the Affordable Care Act and are in violation of federal law.

Report – The Bureau of Labor Statistics released a report indicating that the number of individuals with employer-sponsored health care had risen for the first time since 2012. The modest 2 percent increase across the country is likely the result of a tightened labor market, as employers look to attract and retain the best employees.

Taxes

Minnesota – The Department of Revenue announced that out-of-state retailers with a certain level of sales into the state must begin collecting and remitting sales taxes by Oct. 1, 2018.

New Hampshire – The house blocked a senate-passed bill intended to prevent other states from forcing New Hampshire retailers to collect sales taxes on their out-of-state sales. The house approved a study commission instead. The special session was called in response to the recent South Dakota v. Wayfair Supreme Court ruling that eliminated the physical presence standard for sales tax collection authority. The state does not levy a sales tax on in-state consumers and the governor and legislative leaders have vowed to prevent other states from forcing New Hampshire businesses to collect and remit the tax. The failure of the legislature to act may lead to another special session being called.

South Dakota – The governor’s office said there may be a need for a special session later this summer “to expedite implementation” of the state’s sales tax law. The law taxing out-of-state companies that meet certain sales thresholds was upheld by the U.S. Supreme Court in June. An official notice of a special session has not yet been formally issued.

Key Takeaways

  • The NAACP’s legal victory on the minimum wage lawsuit has ramifications far outside the state of Alabama. The industry has been cast in a negative light as an ally of legislators who appear indifferent to the racial and social justice undertones of the issue. Regardless of the legal merits of the case – it is a narrative that the labor community will drive and the media will escalate. If this case is ultimately deemed successful by the unions, we can expect to see similar cases brought in other southern blue cities inside red states. From both a public and employee relations standpoint, companies need to pay close attention to this process and prepare accordingly.

 

  • With last week’s announcement that the White House is proposing a nearly $12 billion “bailout” of farmers as an offset to losses from the ongoing tariff and trade war, the agriculture and food production industries (and by association food retailers) are potentially becoming political footballs in a trade war. Companies need to be cognizant that their industry – and potentially their own brands – may get caught up in the public discourse and/or the potential fallout.

Legislature Status for Week of 7/30/18

  • The United States Senate is in session this week
  • The United States House is in 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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