COVID-19
Federal Relief – The Small Business Administration (SBA) confirmed it will distribute $180 million in unspent money allocated for the Restaurant Revitalization Fund (RRF) as awards and will work with the Justice Department to disburse the money. Last week, the National Restaurant Association (NRA) called upon the SBA to disburse the money after a report from the Government Accountability Office (GAO) found that the fund still had the money sitting in its coffers. SBA officials told GAO that $24 million of those unspent funds had been set aside for litigation. Officials have stated that the GAO is working with Justice Department attorneys to “resolve remaining litigation involving RRF and formulate a plan on how to distribute any remaining funds.” The NRA successfully argued that Congress did not intend for those funds to be spent on litigation and called for their immediate release. More details.
Wages
Michigan – A judge delayed the effective date until Feb. 19 of pending increases in the state minimum wage and the enactment of paid leave laws. The state’s assistant attorney general filed a Motion for Stay – which was granted last Friday – to delay implementation of the ruling until all appeals have been exhausted. While skeptical that any legal actions would be ultimately successful, the judge said it was in the public interest to stay the effect of the decision for a period of time equivalent to how long it would have taken the original initiatives to take effect over 2018 and 2019 (205 days, or Feb 19, 2023). For context, that same courtruled that the legislature violated the state’s constitution in 2108 when it significantly amended voter-approved minimum wage and paid sick leave ballot initiatives. In 2018, just prior to the election, the Republican-controlled legislature utilized an “adopt and amend strategy,” under which they passed as legislation the pending ballot language and then after the election the legislature significantly amended them. The judge ruled that such practices diminish the people’s ability to initiate laws which he said violates the state’s constitution. If ultimately implemented, the provisions call for an increase in the minimum wage to $12/hr and then annually adjusted for inflation thereafter. It also calls for an immediate adjustment in the cash wage for tipped employees to $9.60 (80 percent of minimum wage), adjusting to 90 percent in 2023, and then full elimination of the tip credit by 2024. With regard to the paid leave provisions, all employers would be required to provide 1 hour of paid sick leave for every 30 hours worked (capped at 72 hours for employers with more than 10 employees and capped at 40 hours for employers with fewer than 10 employees). More details.
Long Beach, CA – The city council voted unanimously to raise the minimum wage for healthcare workers to $25/hr becoming the fourth jurisdiction in the state to do so. The state continues to experiment with different wage bases for healthcare, hotel and restaurant workers. More details.
Labor Policy
NLRB – A federal appeals court remanded the infamous Browning-Ferris case – the case on which much of the current body of joint employer law has been predicated – back to the National Labor Relations Board (NLRB) for a third time. The dispute has now spanned three presidential administrations and shifted the joint-employment landscape with respect to National Labor Relations Act compliance and liability. The court ruled that the Trump-era NLRB improperly applied its standard to conclude that the employer in the case, a waste management company, didn’t have to bargain with workers supplied by a staffing company; it largely concluded that the Board failed to properly explain its reasoning for that outcome. The agency is in the process of a new rulemaking with regard to the joint employer issue. More details.
California – The FAST Act was referred to the suspense file. It will likely be heard in the final scheduled Senate Appropriations Committee meeting next week. Following regular order, it must clear the committee before an Aug. 12 deadline. If advanced, the bill must then pass the full chamber by the end of the month. Because the senate version of the bill differs from the house version, the differences must be reconciled. The likely scenario is that the house picks up and approves the senate version. Employers should engage immediately through their respective trade groups. The bill is expected to be amended in the coming weeks. More details.
Labor Activism
Starbucks – Starbucks Workers United is asking the company to extend wage hikes to workers at unionized stores. The request comes after Starbucks announced in May that it would hike wages for workers and add other benefits such as credit card tipping by late this year. But, the company said it wouldn’t offer the enhanced benefits to workers at unionized stores because it needs to go through bargaining to make such changes. In a letter to Starbucks CEO Howard Schultz obtained by CNBC, Workers United said the company can legally offer benefits to employees at unionized stores without bargaining, as long as the union agrees. The company stated, “The law is clear: once a store unionizes, no changes to benefits are allowed without good faith collective bargaining.” In related news, workers at two Seattle Starbucks locations slated to close for good Sunday reached an agreement with the company on store closings. Workers will be reassigned to nearby Seattle stores with no gap in their schedules and unionized workers also will be able to refuse to return to their stores if the company reopens selected locations before July 31, 2023, the union said in a statement. That means workers from the two stores would get automatically accepted to transfer back if Starbucks reopens the stores, unless they decided not to. The agreement marks the first time a deal has been struck between Starbucks and Workers United, the union representing workers at dozens of the more than 200 Starbucks that have unionized in the past year. More details.
Taxes
Inflation Reduction Act – This weekend, the U.S. Senate will be considering the Inflation Reduction Act which, among other provisions, would significantly increase corporate taxes. The bill also contains major climate-related provisions and expands the Affordable Care Act. Much of the business community, including the National Restaurant Association, has voiced opposition to the bill. The bill is being advanced through the budget reconciliation process and is currently being examined by the Senate Parliamentarian. Voting is likely to commence late Saturday. Key Democrats Sens. Manchin and Sinema are supporting the legislation, increasing its chances for final passage. More details.
Delivery
Seattle – The city council voted to permanently implement a 15 percent cap on the fees that services such as Uber Eats, DoorDash, GrubHub, and others charge restaurants for food delivery; however, like San Francisco’s recently-adopted ordinance, it has a provision allowing delivery services to charge more if restaurants purchase additional, non-delivery services, such as marketing and consulting. For background, the cap has been in place since April 2020, when it was implemented as part of an emergency order at the onset of the pandemic. It was meant to mitigate the financial hardship that small businesses faced under shutdown orders, as delivery orders increased. But like San Francisco’s recently-adopted ordinance, it has a provision allowing delivery services to charge more if restaurants purchase additional, non-delivery services, such as marketing and consulting. More details.
Key Takeaways
- Kansas voters overwhelmingly rejected a ballot measure that would have eliminated any right to abortion in the state. The lopsided nature of the vote demonstrates that the issue is extremely complicated, and that consumers’ and/or employees’ expectations in this space are much more nuanced than the current political discourse may indicate.
- Operators need to pay close attention to the new compromise tactic by DoorDash and the other delivery platforms whereby they agree to fee caps while also seeking the flexibility for restaurants to make their own decisions regarding fees, marketing, and placement. What the platforms haven’t been able to accomplish legislatively, they may yet still accomplish through the power of the marketplace. This could significantly change their perception among elected officials and have them increasingly seen as responsible industry partners. In turn, that new political capital could be leveraged against their other policy priorities that may or may not be in the best interests of traditional restaurants.
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.