Wages
Alaska – Proponents of a proposed ballot initiative, the Minimum Labor Standards Initiative, announced they have submitted over 14,000 signatures to the state elections office, far in excess of the number required. If passed, the multi-pronged initiative would raise the state’s minimum wage to $15/hr by 2027 and then tie it to inflation thereafter, enact a paid sick leave law, and prohibit captive audience meetings. The leave component would allow workers in businesses with 15 or more employees to accrue up to 56 hours of paid leave per year. Alaska’s current minimum wage is $11.73/hr and there is no tip credit. More details.
California – The governor is seeking to delay implementation of recently signed legislation raising the minimum wage for healthcare workers to $25/hr. Due to the state’s $38 billion projected budget deficit, the governor said he is seeking changes to the law. The first pay increases were expected to take effect in June. It’s unclear how long the proposed changes could push back that schedule. The governor wants the wage increases to take place when the state’s fiscal outlook is healthier. Newsom included his request for a delay in the state budget proposal he released this week. He said he is working with legislators and the law’s proponents to craft changes that will be presented in the form of a new bill later this month. His budget proposal said he also wants the legislature to clarify whether state health workers are exempt from the law. More details.
Maryland – Legislation was introduced to eliminate the tip credit by 2027. Similar legislation was introduced and defeated last year. The bill also includes a provision requiring the state labor commissioner to establish the High Road Kitchen Program as a recognition program for restaurants who have voluntarily opted to not utilize the tip credit. An initial hearing is scheduled for Feb. 2. More details.
Paid Leave
U.S. House – After a year-long research process, a bipartisan group of House lawmakers released a list of legislative options to expand paid family leave options for families. The four-part framework, led by co-chairs Democrat Rep. Chrissy Houlahan and Republican Rep. Stephanie Bice, includes a pilot program for states to set up new paid leave programs as well as association-style pooling plans for paid leave insurance at small businesses, among other steps. The plan aims to fill in gaps to paid leave across the country with federal grants that would help, but not require, states to implement or enhance their own paid leave programs. It would create an Interstate Paid Leave Action Network (I-PLAN) to help streamline programs across states. The proposal would enhance tax credits that already exist to incentivize small businesses, especially those with low-income workers, to provide paid leave. It would also allow small businesses to pool resources to more easily provide paid leave to their employees. More details.
Colorado – In the first 10 days of Colorado’s new paid family leave program, the state has paid more than $2.7 million to workers seeking reimbursement following serious life events. The Family and Medical Leave Insurance (FAMLI) Division said that since the state began paying eligible claims on Jan. 1, the money has so far been distributed across 3,208 approved claims. Workers were allowed to begin filing claims in Nov., when FAMLI opened a statewide application portal, to begin receiving assistance immediately at the start of 2024. Covered Colorado workers can receive up to 12 weeks of leave per year to bond with a new child, including adopted and fostered children. The leave also can be used to tend to a serious health condition or a family member’s serious health condition, make arrangements for a family member’s military deployment, or address immediate safety needs related to domestic violence or sexual assault. More details.
Kentucky – Legislation to give private and public employers the option to allow employees to purchase paid family leave insurance unanimously advanced out of a house committee and is headed to the house floor. Per the bill language, paid family leave insurance would allow for temporary wage replacement for workers who take leave to care for a sick family member, or bond with a child after a birth, adoption, or foster care placement. It could also be used when caring for a family member who is a first responder or member of the military and who was injured in the line of duty. At least six other states have a similar provision. More details.
New York – The governor has proposed to expand the state’s current paid leave law and offer any eligible worker 40 hours of paid leave for prenatal care including doctor’s appointments. The legislature has yet to consider the proposal but if it were enacted, New York would become the very first state in the United States to cover these appointments. More details.
Labor Policy
Labor Department – The agency issued its final rule defining “independent contractor” under the Fair Labor Standards Act (FLSA). The final regulation rescinds a 2021 Trump-era rule and returns the standard to one similar to the Obama-era standard. The final rule adopts a six-factor test focused on the “economic reality” of the relationship between a potential employer and a worker under a “totality-of-the-circumstances.” The test asks whether, as a matter of economic realities, the worker depends on the potential employer for continued employment or is operating an independent business. For context, the Trump Labor Department finalized the previous rule in Jan. 2021. Days later, after a change in administrations, the new leadership of the agency sought to delay the rule. It then later purported to withdraw the rule entirely. But after business groups challenged the delay and the withdrawal, a federal district court held that both actions violated the Administrative Procedure Act. The court vacated the attempted delay and the withdrawal. It also held that the 2021 rule was still in effect. Afterward, rather than simply withdrawing the rule again, the Department issued a new one. In Oct. 2022, it published a proposed rule which offered to rescind the 2021 rule and, in its place, adopt a new six-factor test: the worker’s opportunity for profit or loss; investments by the worker and potential employer; the degree of permanence of the relationship; the nature and degree of the potential employer’s control over the work; the extent to which the work is “integral” to the potential employer’s business; and the worker’s skill or initiative. These factors were not exhaustive. That is, other factors might be relevant in a given case. But the proposed rule did not suggest what those factors might be. Instead, it took a “totality-of-the-circumstances” approach. More details.
Labor Department – The White House announced that President Joe Biden has renominated Julie Su to serve as Labor Secretary as her confirmation has languished in the U.S. Senate for more than 10 months. The decision to renominate Su, who has served as the Acting Labor Secretary since Marty Walsh vacated the role last Feb., was widely expected. Su’s nomination cleared a key Senate committee in April, but with no Republicans on record supporting her, the Biden Administration and her backers have scrambled to lock down 50 Democratic votes needed to confirm her. Wavering senators say that she had minimal experience in negotiations between workers and management, and point to perceptions that she’s anti-business. More details.
Joint Employer – The U.S. House passed a resolution to overturn the National Labor Relations Board (NLRB) joint employer rule, driving momentum in Congress to reject the new regulation. The chamber voted 206-177 on a measure to reject the NLRB rule, which has drawn major opposition from Republicans and some Democrats on Capitol Hill. The resolution now heads to the U.S. Senate, where a simple majority will be needed for passage. Several House Democrats joined Republicans in voting for the measure. The House vote marks the first victory for Republicans and several business groups that have carried on a months-long lobbying campaign to defeat the NLRB rule. Many in the business community – particularly the franchise industry, which would be affected by the rule – have said the regulation will dramatically raise costs for employers and take away jobs. If the measure were to pass the U.S. Senate, it faces an almost certain veto from the president. More details.
Labor Activism
Amazon – A bipartisan group of U.S. Senators, led by Democrat Sen. Chris Murphy asked Amazon to provide information regarding the company’s delivery network and its response to union organizing – the latest instance of lawmakers putting heat on the retail giant over its labor practices. In a letter, the lawmakers accused Amazon of using a subcontracting arrangement to “avoid legal liability” regarding drivers’ pay and working conditions, and said they planned to carry out a “distinct oversight inquiry” into the matter. The Senators are demanding details regarding Amazon’s “delivery service partner” (or DSP network), the sprawling system of subcontracted delivery drivers that make up Amazon’s fleet. The drivers are technically employed and paid by outside contractors but the Teamsters and other labor groups maintain that the retail giant is really the one setting the working conditions. Whether Amazon is a “joint employer” of the drivers is a crucial legal question, since such a finding could compel Amazon to the bargaining table if workers unionize. Murphy was joined on the letter by 24 other Democrats and, in a somewhat rare move, three Republicans: Sens. Josh Hawley of Missouri, J.D. Vance of Ohio and Roger Marshall of Kansas. More details.
Sustainability
CO2 Solutions Coalition – A new coalition has been launched to educate federal policymakers on the “essential and beneficial uses of CO2 in food processing, beverage carbonation, and drinking water purification” among other issues. The coalition is designed to push back on many environmental policies to curb CO2 emissions that may be having unintended consequences on supply chains heavily relied on by small businesses including restaurants. The coalition is being led by the Compressed Gas Association, and members include the American Beverage Association, International Beverage Dispensing Equipment Association, Gases and Welding Distributors Association, the North American Meat Institute, National Turkey Federation, National Pork Producers Council, Brewers Association and the Beer Institute. More details.
Starbucks – A consumer advocacy group is suing the company for false advertising, alleging that it sources coffee and tea from farms with human rights and labor abuses, while touting its commitment to ethical sourcing. The case, filed in a Washington, D.C. court by the National Consumers League, alleges that the company is misleading the public by widely marketing its “100 percent ethical” sourcing commitment on its coffee and tea products, when it knowingly sources from suppliers with “documented, severe human rights and labor abuses.” The lawsuit cites reporting about human rights and labor abuses on specific coffee and tea farms in Guatemala, Kenya and Brazil, and alleges that Starbucks has continued to purchase from these suppliers in spite of the documented violations. The company said it was “deeply concerned,” and that it would “thoroughly investigate” claims of labor violations, “take immediate action” to suspend purchases or “ensure corrective action” occurred. More details.
Key Takeaway
- Regardless of how the congressional effort to revoke the NLRB’s joint employer rule ultimately plays out, the fact that the industry was able – for the first time in history – to have both chambers of Congress weigh-in directly on the issue is remarkable and should not go unappreciated. Peeling off democratic votes in both the house and senate further strengthens our positioning in the battles to come at the state and federal level and will increasingly isolate the activists who champion joint employer policies. Through this process, industry leaders and affected brands have empowered the industry to be more forceful and effective in defending an important industry business model.
Podcast
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