Wages
California – On April 1, the state’s minimum wage will rise to $20/hr for most quick service restaurant workers. The increase was mandated by passage last year of the FAST Act (AB-257) which also mandated the creation of a nine-member FAST Food Council. When it takes effect next week, fast food workers in California will have among the highest minimum wages in the country, according to data compiled by the University of California-Berkeley Center for Labor Research and Education. The state’s minimum wage for all other workers ($15.50/hr) is already among the highest in the U.S. On a related note, the news cycle this week has been full of stories documenting potential impacts to the industry and individual operators. For example, two Pizza Hut franchisees announced they will lay off roughly 1,200 workers across the state. More details.
Illinois – A hearing will be held next week in a house committee on pending legislation to eliminate the tip credit that also includes provisions allowing for private rights of action for violations and a mandate that all service and delivery charges be allocated toward employee’s tips. It is unclear whether these provisions were added with the intent to negotiate out later in order to protect the underlying bill. More details.
Rhode Island – Legislation to increase the minimum wage to $15/hr and eliminate the tip credit by 2030 was “held” for further study by a house committee. Rhode Island’s current server wage is $3.89/hr. The hearing was notable for the large numbers of servers and bartenders who attended and voiced their opposition to the proposal ultimately derailing the bill. Another more modest proposal is under consideration in the senate and could be heard in the coming weeks. More details.
Virginia – As expected, the governor vetoed legislation to incrementally increase the minimum wage to $15/hr by 2026. The bills passed out of their respective chambers on razor-thin party line votes so the potential for a veto override is highly unlikely. At a speaking event earlier in the winter, the governor had indicated that he was unlikely to support the measure saying, “market forces are working.” More details.
Paid Leave
Kentucky – Legislation to give private and public employers the option to allow employees to purchase paid family leave insurance unanimously passed out of the senate and is on its way to the governor. It had previously passed the house on a 92-1 vote. 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.
Labor Policy
Labor Department – The agency published a final rule ensuring that a non-employee, including a union official, can accompany workers during workplace inspections conducted by the Occupational Safety and Health Administration. The purpose of these revisions is to expand the scope of appropriate third-party representatives who can accompany an OSHA inspector, including to encompass representatives from community organizations, worker advocacy groups, and unions, even if the workplace that OSHA is inspecting is not unionized. The new rule will be published in the Federal Register April 1. More details.
California – The governor signed legislation allowing for some additional exemptions from last year’s FAST Act (AB-257). The new bill, AB-610, also authored by Assemblyman Chris Holden, would carve out new exemptions from the definition of “fast food restaurant,” including “restaurants in airports, hotels, event centers, theme parks, museums, and certain other locations.” Current law exempts only bakeries operating in a prescribed manner and in operation since September 15, 2023, and certain restaurants in grocery establishments. Some unions, notably UNITE HERE, that were not party to the compromise struck last year were critical of the negotiated outcome applying to their members. More details.
Florida – The governor signed legislation allowing Florida minors older than 16 to work more than 30 hours per week if a parent, guardian, or school superintendent gives their permission in a waiver. Teens of those same ages could work more than eight hours on weekends and holidays. Originally, the bill waived some break requirements but the final version provides that older teenagers must have a 30-minute break every four hours if their shift is longer than eight hours. Under the law, employers could schedule 16- and 17-year-olds to work for more than six days at a time. Homeschooled and virtual-schooled 16- and 17-year-olds can work without any of the limitations the state places on minors. More details.
Labor Activism
Starbucks – Starbucks workers in numerous states including Arkansas, Louisiana, New York, Texas, and others voted for union representation this week. The escalation comes in the wake of the company’s announcement late last month that they would begin contract talks with the nearly 10,000 unionized workers it already has. Earlier in March, the 400th store was successfully organized and the activity of the last few weeks has pushed that number significantly higher. More details.
Interchange Fees
Visa and Mastercard – The credit card giants reached an estimated $30 billion settlement to limit credit and debit card fees for merchants. The antitrust settlement announced this week is one of the largest in U.S. history. If it receives court approval, it would resolve most claims in nationwide litigation that began in 2005. Under the settlement, Visa and Mastercard would reduce swipe rates by at least four basis points – 0.04 percentage points – for three years and ensure an average rate that is seven basis points below the current average for five years. Both card networks also agreed to cap rates for five years and remove anti-steering provisions. Merchants will have more discretion to offer discounts or impose surcharges on cards with higher interchange fees. More details.
Alcohol
Virginia – The governor signed legislation making permanent the current law allowing for cocktails to-go and home delivery of alcohol. The law was set to expire July 1. Since the beginning of the pandemic, 26 states as well as the District of Columbia, have enacted laws to permanently allow cocktails to-go, and nine other states have enacted laws that allow cocktails to-go on a temporary basis. More details.
Misc.
Denver, CO – The city council unanimously approved an ordinance requiring restaurants that sell combo meals for children to list only milk, water, or milk substitutes like almond milk as the default drink options in those meals. Sweet beverages like soda, juice, and flavored milk can still be provided by request, but by July 1, 2025, every restaurant in Denver (from fast food chains to independent diners) will have to adjust their menus to remove those as listed options for kids meals if they offer them. Other municipalities in the state including Lafayette, Longwood, and Golden have similar ordinances and statewide laws have passed in California, Delaware, and Hawaii. More details.
Diversity, Equity & Inclusion
KFC – The company, owned by YUM Brands, announced it had reached “gender parity” across its global corporate offices, with women now constituting 51 percent of the company’s restaurant support center team. KFC has been measuring progress using the McKinsey & Company Inclusion Survey, which tests whether a subset of employees believe they have an equal chance of success within the company. KFC is the first concept within Yum Brands to achieve gender parity as part of the company’s broader goal to do the same in leadership positions across its global system by 2030. The company made that commitment in 2018 as part of the Paradigm for Parity coalition. Last year, more than 42 percent of the company’s leadership positions were held by women, a significant increase from about 30 percent when the goal was first announced just five years ago. More details.
Key Takeaways
- Recent media coverage over the economic ramifications of Washington, DC’s new law eliminating the tip credit as well as the pending increase to $20/hr for QSR workers in California is providing an opportunity for the industry to re-frame these issues. There has been extensive reporting the last few weeks documenting job loss and restaurant closures in both jurisdictions not only without casting the industry as a villain but directly connecting the policy decisions to the economic reactions. On a related note, the documented wage losses to transportation network drivers in Seattle is causing that city to revisit its driver-focused minimum wage laws and already causing lawmakers in Minneapolis to revise the law they just passed a few weeks ago. Uber and Lyft have done a tremendous job of weaponizing the data to repeal current laws regarding ride-share drivers and dampen enthusiasm for similar ordinances in other jurisdictions. The restaurant industry needs to do the same thing with the stories coming out of California and DC to push back on similar bills pending in Connecticut, Illinois, Rhode Island and elsewhere.
- The settlement reached this week potentially ending the litigation brought forth by a coalition of merchants against Visa and Mastercard for their anti-competitive practices needs to be closely examined. Whatever “wins” the industry may perceive will be minimal and short-lived by design and open the door for the credit card issuers to raise other fees to make up for any lost revenue. The major trade associations comprising the Merchant Payment Coalition – of which the National Restaurant Association is a member – have decried this “settlement” and will be asking the court to reject it. Individual operators as well as large brands have the opportunity – and should seize it – to weigh in with the court and ask them to toss it out. If this agreement were to be accepted, it would almost assuredly kill any avenues for regulatory and/or legislative relief from these fees for the foreseeable future.
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 Restaurant Business online website, SoundCloud, iTunes and Spotify.