Legislative & Regulatory Outlook for 2018
As with all new years, 2018 will come with a new set of issues and challenges for retailers in both Washington, D.C., and across the country. It also comes with new opportunities for progress on issues important to the industry and the business models of individual merchants. But 2018 is an election year which will shape the tone and tenor of every issue conversation throughout the year.
Here are some key issues to pay attention to in 2018:
Data Privacy: Sir Isaac Newton taught us that for every action there is an opposite and equal reaction. But as is often the case in politics, sometimes there is an overreaction. As a result of the uniquely massive Equifax data breach as well as several other breaches, many states have quickly rushed legislation in an effort to protect consumers, including calls to quickly report to law enforcement any such activity whether the breach resulted in access to consumer information or not.
There is a pending ballot initiative in California that could make it very difficult for any entity that collects data by enabling consumers to know what data is being collected about them and to prevent the sale of that data to a third party. Clearly this type of initiative would be popular with consumers/voters and could force a challenging conversation in Sacramento regarding legislative efforts to curb data collection. As a result, there may be an opening for federal legislation to bring some level of uniformity to the laws around breach notification. In the past, various industry groups have lacked cohesion on both the threat and the preferred approach, a dynamic that may be changing given the size of the Equifax breach and the activities in states like California.
While nothing is certain in Washington, D.C., and even more so in an election year, there may be a legitimate chance for a sensible, national solution. Short of that, look for states to continue legislating in this policy space.
Trade: The Trump Administration has not made it easy for business owners to discern between tough talk on trade and actual policy initiatives or outcomes. Outside of border walls, it’s not clear where the Administration is going with regard to NAFTA, trade relations with China, and a host of other issues. While highlighting trade made for good politics in the presidential election last year, unraveling either all or pieces of NAFTA could be bad politics this year, especially in agriculturally-rich states in the Midwest that have benefited from NAFTA and coincidentally, strongly supported Trump.
At the state level, the industry will have to keep a close eye on activism at the ports, particularly on the West Coast. At the Port of Long Beach, one of the busiest in the world, ongoing debate about the use of independent contractors by trucking companies, environmental protections around the ports, labor standards and other issues important to the activist community is and will continue to cause challenges for supply chains throughout the industry. Look for more of that type of activity to spread to other western ports in 2018.
Paid Leave: While a paid leave tax credit was added to the Republican tax reform proposal that passed the Congress in 2017, many states will still likely pursue paid leave legislation keeping the issue very much alive. Many employers are likely not in position to leverage the credit and may still be susceptible to state and local laws.
The issue has changed dramatically in a few short years with many Republicans – including the President – not asking if there should be a national standard but how and when. A similar dynamic is unfolding in the states. As 2018 is an election year, expect the issue to still be on the front burner in cities and states across the country.
Minimum Wage: It is highly unlikely that the Congress will pursue a federal minimum wage hike but it could always end up as part of a horse trading conversation at the end of the appropriations process. That is still very unlikely. Until then, look for states and localities to continue advancing mandated wage increases. Hot spots to watch are New Jersey and St. Paul, Minn., legislatively and significant ballot activity in Michigan, Missouri and Massachusetts.
Overtime: The Labor Department announced this week that a new proposed overtime standard will be announced in October of 2018. That will set off a rulemaking process but Labor Secretary Acosta has been consistent in his public statements that the threshold needs to be raised but that the proposal under the Obama Administration was too high. Look for a threshold in the $35,000-$40,000 range.
National Labor Relations Board: NLRB General Counsel Peter Robb has been clear to his field directors in outlining the types of cases that necessitate “alternative analysis.”
This is a clear indicator that the NLRB will likely be reversing many of the Obama-era decisions and returning balance to the Board. We have already seen progress on the joint employer standard, ambush elections and micro-unions and expect to see rulemaking on ambush elections in 2018.
Healthcare: With passage of the tax reform package which includes a repeal of the individual mandate to purchase insurance, as well as significant regulatory changes to the ACA forthcoming by the Administration, many states will feel increased pressure on their Medicaid and other safety net programs, leading inevitably to a search for new funding sources – i.e. state and local taxes.
E-Fairness: There is a strong chance that the Quill decision could finally see its day in court – the Supreme Court – in 2018. We may know by February whether the Court has agreed to hear the case. Should the Court take up the case, we may see a renewed interest in federal legislation. Regardless states will be pursuing new and innovative efforts to capture revenue they feel is already owed.
CEO Pay Disclosure: Beginning in 2018, publicly-traded companies must publish in their proxy statements a comparison of the compensation of their chief executive officer to the median compensation of their other employees.
A survey released by Korn Ferry highlights the concern that many entry-level employers have with the upcoming mandated disclosures of CEO pay compared to median worker pay. The reporting could show ratios up to 1100% when comparing the chief executive against the median compensation level of all other employees. This level of disparity will certainly gain national attention and cause reputational issues for many brands and potentially the industry as a whole.
At the state and local level, look for more jurisdictions to simply tax the ratio as Portland plans to do, or to follow California’s lead with introduction of similar pay disclosure or “wage shaming” bills.
Restrictive Scheduling: While no federal action is likely in Washington, D.C., look for states and localities to continue pursuing restrictive scheduling legislation across the country. Many of these bills call for 2-3 weeks advance posting of schedules, penalty pay when an employer changes a schedule, restrictions on hours between shifts and the offering of additional hours to existing workers before additional workers can be hired.
While there are always many more issues than can be listed here, if you have any questions or need more information, please contact our policy partners at Align Public Strategies. Click here to learn how Align can provide your brand.
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