Issue maturation: Looking back at 2019, planning for 2020
Under the mantra of those that do not know history are doomed to repeat it, the activist community notched some major victories this year. And, some of the issues, with which we routinely grapple, have started to take a new trajectory. Companies need to be aware of the 2019 developments highlighted below because we’re likely to see them reappear (or progress) in 2020 and beyond.
It’s important to note that most of the issues listed below changed in some significant, or novel, way in 2019. For instance, the issues of equal pay, scheduling and sexual harassment advanced in many new jurisdictions but are not included below because the policy details stayed relatively static, meaning the issue itself didn’t change dramatically. While some of these issues were splashed across the headlines and filled your inbox over the course of the year, others may have flown under the radar. Whether high or low-profile developments, each is important.
Portable Benefits – In late 2019, Philadelphia enacted the first true portable benefits scheme in the country for domestic workers. Expect other progressive cities and states to closely monitor Philadelphia’s experimentation in this space, looking to adopt workable practices and expand them to other sectors.
Wage Theft – New York, New Jersey and Minnesota all set “high water marks” on wage theft in different ways. As this publication heads to print, New York Governor Cuomo has a bill sitting on his desk for signature that would allow employees that feel they’ve been cheated out of wages to place a lien on their employer. Similar to a “mechanic’s lien,” this is a first-of-its-kind law that gives employees (and their third party representatives) a tremendous amount of leverage over brands. New Jersey, for its part, criminalized wage theft in such a broad way that almost any payroll miscalculation, no matter how small, could qualify as criminal. That law is so lopsided that the legislature began to consider amending and softening the law months after its passage (however, that has yet to happen). Finally, Minnesota, the only divided legislature in the country, demonstrated that addressing wage theft in a substantial and punitive way can be a bi-partisan issue.
Minimum Wage Preemption Rollback – Colorado became the first state in recent memory to roll back state-level wage preemption. Virginia could become the next. Expect preemptions to continue to face challenges in legislatures, as well as in the courts.
Vacation Leave – Maine became the first state to enact paid sick leave for any reason (effectively, paid vacation leave) and Bernalillo County, New Mexico became the first municipality shortly thereafter. New York City entertained pursuing a mandate for two weeks of paid vacation but delayed action. Expect more jurisdictions to look at vacation leave, or paid sick/family leave for any reason, in the future.
Zero Waste / Styrofoam Bans – “Zero waste” initiatives, which are outright bans or mandated compostable requirements (effectively, the same thing in many instances), have become the new standard. Many cities in California have led the charge. Berkeley implemented an all-compostable requirement this year and San Francisco mandated that restaurants accommodate reusable plates and utensils. New Jersey is working on legislation now with the stated intent of following the path of Maryland (first state to ban Styrofoam) and Maine (latest state to ban plastic bags). D.C. is also in the process of writing a zero waste law.
Independent Contractor – California’s AB-5 was quickly imported to New Jersey, New York and Illinois. Looking back on 2019-2020, this may be an inflection point in discussions around “the fissured workplace.”
Overtime Pay – A lot of states (notably Colorado, Washington and Pennsylvania) have examined pushing that state threshold up to, and potentially past, the old Obama-era threshold (reversed by the Trump Administration). Washington recently finalized their new rule.The state duties tests are also receiving renewed attention and this form of manager/worker misclassification is linked to (and will buoyed by) efforts in the independent contractor space. A dramatic change in the duties test is potentially much more problematic and disruptive compared to an elevation of the overtime threshold.
All of these issues look a little different now than they did at the beginning of 2019 and are likely to pick up momentum in 2020.
It Finally Happened: A Real Fast Food Union
Last year, workers at several Burgerville locations in Oregon successfully organized numerous locations. Whether or not this is the first fast food union (or whether unionized QSRs already exist) is a disputed fact, but certainly this is the first real fast food union for which a union conducted a very public, high-profile organizing campaign and won an election (multiple times at several stores, in fact), and with it, union recognition. By those measures, this is in fact, the first fast food union. And for that reason, we need to examine what happened and what it means moving forward.
First, let us throw some cold water on the win, putting it in context. For that, we need only look at Little Big Burger. Shortly after the Burgerville victory, the union (the Industrial Workers of the World or IWW) trained their sights on another chain, Little Big Burger, and the result was much different. While Burgerville attempted to play nice, Little Big Burger, by contrast, immediately set to winning their election, arguing to employees that unionizing was a bad decision, condemning the organizers and their message, and employing standard time-tested tactics to win. Most notably, Little Big Burger was successful in defining (expanding) the bargaining unit from a few problem stores to almost all the stores in the state, in effect watering down the union’s base of support. As a result, Little Big Burger won. If Burgerville had taken the same posture as Little Big Burger, we may be talking about another union defeat.
We also have to remember that all this is happening in Portlandia, not Anytown, USA. Lots of things that happen in Portland are not easily and immediately exportable to every corner of the country. Furthermore, this is the IWW, not the SEIU. By design and mission, they are bottom-up, not top-down organized. And their focus is split between a hundred idealistic ventures, not singularly focused on contract unionism. In short, they can’t scale, at least not quickly and to every major city, like the SEIU. Perhaps most meaningful over the long-term, they’re not professionals at winning, negotiating and maintaining union contracts. They’re much more akin to professional protestors and ideologues.
When you consider these facts, it’s really easy to dismiss the new Burgerville union. We would argue that is a mistake because there is something much larger at work here that’s as much cultural as anything else. It’s well documented that younger workers today have a significantly greater affinity for labor unions than their predecessors. That was on full display in both the Burgerville and Little Big Burger organizing efforts. What is not as immediately clear are the sectors of the economy flirting with unionization and its potential impact down the road for employers.
For example, the staff of every Democratic presidential campaign has unionized this cycle. Prior to this cycle, no campaign had ever unionized. Political campaigns are by-in-large made up of ambitious, ideologically-driven 20-somethings that will matriculate to local, state and federal offices and agencies, steering national public policy and political conversation. The next generation is embracing and internalizing union organizing in a very unprecedented way. Very few from the political class, unless they came up through the union ranks, have ever taken part in a union election. That is no longer the case and will be a reality for the foreseeable future in national Democratic politics. And this is happening against the backdrop of the Democratic Socialist Bernie Sanders, who has been making the same arguments on the fringes of the political debate for decades, now fully capturing the heart of one of the two major parties, pushing all of its candidates to the left. These developments, among other things, bode well for the future of the labor movement.
All this gets very real and less theoretical when (if ever) a union like the SEIU starts winning elections in different parts of the country. The SEIU, not to be outdone by the IWW, announced that it intends to organize QSRs at airports and rest stops in 2020. Some concessionaires in government-controlled facilities are already subject to union demands whether through a traditional CBA or as terms of their contract. In theory, those facilities could, in effect, force would-be concessionaires to bargain with the SEIU which is why the SEIU is focused there.
To be clear, the Burgerville union is a key milestone for union organizers, but perhaps only because it’s the first. In the grand scheme of things, it’s probably a small dot on the scatter plot and localized to metro Portland. The real thing to watch is the SEIU’s success in airports and other facilities in the early part of 2020.
Democratic Presidential Primary: What to Watch For
As Senator Elizabeth Warren took her turn climbing in the polls late this summer, corporate executives everywhere began to hyperventilate at the prospect of a Warren presidency. Detailed doomsday analyses of the economic impact of Warren’s proposals were hitting inboxes everywhere. But looking at the specific labor platform of a particular candidate isn’t always a useful way for a company to assess potential exposure in the public policy and public affairs arena. A much more informative approach is to look at the similarities across all the labor platforms of the Democratic candidates and focus on issues of general consensus. Those areas where they all agree are the policy proposals that are most likely to be implemented in the coming years.
History tells us it’s nearly impossible at this point to predict who will emerge from the Democratic primary process, and, beyond that, predicting who will ultimately win the presidency. And, what about Congress? Certainly, the president, whomever it may be, can accomplish political priorities through agency actions but without control of Congress, any wholesale reforms on par with today’s Democratic primary rhetoric is unachievable. If there is a new president, recent history shows us that they will have a very small window to enact their top priorities – and the issues listed below are the ones that are likely to move if that were to happen. It’s worth noting that issues earning some level of support across the aisle are likely to be at the top of priority list as well.
For those reasons, paid family/sick leave, a restrictive scheduling mandate, independent contractor misclassification, and the elimination of non-compete clauses and arbitration agreements will likely be at the top of the list. Additionally, its worth noting that almost all of the Democatic candidates mention sectoral bargaining as well. They all seem to mean slightly different things, but we can safely assume that it will translate into efforts to make it easier for unions to organize – and probably the bulk of that activity would be at the agency level. Many candidates lump the joint employer issue into their talking points on sectoral bargaining. In terms of planning and gauging exposure in the employment and labor law space, energies are best spent focusing on these areas.
Democrats will begin 2020 with total control of the legislature and the governor’s office for the first time in over 25 years. Like Colorado and New Jersey, which both recently flipped to all “blue,” employers are bracing for a rush of pent up energy on a long wish list of labor priorities. However, in Virginia’s short 60-day legislative session, the labor community will be hard-pressed to get everything on their wishlist and the business community may be in a position to slow down the process.
Additionally, unlike Colorado and New Jersey, senior members of the Virginia Democratic caucus in both chambers are much more moderate (cut from the old “Blue Dog” mold) than their newly-elected colleagues and, of course, those senior members run both legislative chambers. Legislative leaders like Senator Saslaw and Delegate Sickles are emblematic of long-serving and relatively pro-business legislators that should serve as a moderating force. The governor, for his part, has also plotted a middle path on many issues as well.
Because of the short 60-day session beginning in early Jan., the employer community, if it hasn’t already, needs to begin weighing-in with lawmakers, targeting legislative leadership and moderates in both chambers. If it does so, then we could end up with workable policies.
2020 Legislative Outlook
For better or worse, most of the legislative and regulatory issues important to the retail community will be addressed (or not) through the lens of the 2020 presidential election cycle. Whether it’s trade, immigration or data privacy, the issues will unfortunately be merely a vehicle to play to various voter constituencies, with employers and retailers likely near the bottom of that priority list.
As far as legislative outcomes, 2020 will likely look eerily similar to 2019 with slightly more polarization. A divided Congress, much more focused on either impeaching or protecting an embattled president heading into reelection will likely produce few if any substantive policy outcomes. But the state level, and increasingly the local level, may be where the real action is for employers. Here are some of the key issues to pay attention to in 2020:
Minimum Wage: As predicted, the Democratic House passed a national $15 per hour wage bill and also as predicted, that legislation has been dead on arrival in the Senate. While many in the business community may be of a mind to compromise for a lower wage level coupled with possible concessions on joint employer, tips or other labor issues, any movement in Congress either this year or next seems highly unlikely. But at the state level look for continued pushes in blue states with new majorities, especially in the West and Northeast. And, as mentioned above, Virginia will almost certainly tackle minimum wage immediately. Additionally, 2020 brings opportunity for state ballot initiatives to increase the minimum wage which almost always pass. Florida is at the top of the list of states with a $15 per hour wage on the 2020 ballot.
Paid Leave: At the state level, and increasingly in Congress, the issue of paid leave is quickly becoming “resolved” – i.e. both parties overwhelmingly believe in some level of paid leave benefit. The issue is now more of a “how and how much?” question. There is still a strong disparity in how both parties address the issue, but we are largely past the point of “should we?”
In fact most employers, in an effort to attract and retain the workers they need in an era of such low unemployment, have rolled out paid leave policies in excess of what most legislators are discussing. Save for California and a few other blue states, the marketplace is driving the issue faster than politicians. While there will be some additional bill introductions in Congress, and a few of them even bi-partisan, nothing palatable to Democrats in the House would ever pass the Senate and vice-versa. The action will be at the state and local level as more jurisdictions pass laws and those with existing laws will work to make those even more generous.
Overtime: Now that the labor department has settled on a new federal overtime standard, it is likely that many states will address the issue and set their own standards in excess of the federal threshold. Look for activity in Colorado, Maine, Massachusetts, Michigan, Pennsylvania, Washington and other heavily Democratic states.
Restrictive Scheduling: No federal action is likely in 2020, but look for states and localities to continue pursuing restrictive scheduling legislation across the country. Pay particularly close attention to New Jersey, Illinois and Washington. Many of these bills call for two to three weeks advance posting of schedules, penalty pay when an employer changes a schedule, restrictions on hours between shifts and some call for the offering of additional hours to existing workers before additional workers can be hired. The labor community has indicated that this is a top priority in 2020.
Independent Contractor: As noted earlier, look for traditional “big blue states” to follow California’s lead and pass their own versions of AB5. New York, New Jersey, Illinois, Connecticut and possibly Virginia will be very active in this space.
Data Privacy: 2020 will likely see little federal action on data privacy. Essentially, House Speaker Nancy Pelosi is not going allow passage of any legislation that preempts California or any other state with data privacy laws on the books and the Republicans won’t support any bill that doesn’t have preemption. As businesses adjust their models to comply with California and increasingly other states, the urgency of a federal solution will diminish. At the state level, look for employers to escalate a burgeoning skirmish between those that want to collect data to sell and those that collect it for targeted consumer offerings.
Trade: It remains unclear if and how the ongoing trade war with China will get resolved. Because at its heart, the trade war is much more of a political exercise than an economic one, the definition of what is a “win” and a “loss” is very malleable. The president’s insistence on fighting simultaneous trade wars on multiple fronts with multiple countries has left China less alienated than normal and thus more empowered. By next summer, expect the president to cut some sort of a “deal”, declare a big victory and celebrate with his supporters. At that point, operators can hopefully remove some of the uncertainty surrounding their supply chains going forward.