Wages
Michigan – Numerous “compromise” bills have been introduced in the first week of the new legislative session in response to the state supreme court’s ruling last summer. It ruled that effective Feb. 21, the first of annual increases to the state minimum wage would begin as well as the eventual phase-out of the tip credit by 2029. In an effort to beat that deadline, the new Republican house majority released a legislative proposal to increase the minimum wage to $15/hr by 2029 and that would keep the tipped wage at 38 percent of Michigan’s minimum wage. A senate Democrat introduced legislation that would increase the wage to $15/hr by 2027, while keeping the tipped wage at 38 percent of the standard rate in 2025. After that, the proposed measure would gradually increase the tipped minimum wage to 60 percent of the traditional minimum wage over a 10-year period. The house version looks similar to compromise legislation debated but not acted upon during the recent lame duck session. Prospects for a compromise before the deadline are unclear. More details.
Missouri – Multiple bills have been introduced in the house to rollback significant provisions of Proposition A, the ballot measure passed overwhelmingly by voters in Nov. Under the provisions of the new law, Missouri’s minimum wage rose to $13.75/hr on Jan. 1, up from $12.30/hr. It will increase again to $15/hr on Jan. 1, 2026, with future adjustments tied to inflation. Along with increasing the minimum wage, Proposition A requires some employers to provide paid sick and family leave starting May 1. Businesses with revenue of $500,000 or more must provide one hour for every 30 hours worked, up to five days per year for businesses with fewer than 15 employees and seven days per year for larger businesses. One of the newly-introduced bills would exempt seasonal businesses or those employing 50 or fewer workers – almost half of all Missouri workers – from the higher minimum wage. Another bill would roll back the minimum for workers younger than 20 to $12.30/hr. No companion legislation has been introduced in the senate. More details.
Paid Leave
Maine – Starting Jan. 1, Maine employers began withholding a portion of wages to pay into the new paid family and medical leave fund, which the labor department will manage through an online system. Employers with at least one Maine-based employee are now required to start making contributions into the system. Employers with 15 or more workers will contribute 1 percent of wages but may deduct half of that from employee wages. Employers with fewer employees will contribute 0.5 percent and may take all of it from employees’ wages. The department finalized the rules for the benefits program last month after multiple rounds of public input. The program will allow eligible public and private sector workers to take up to 12 weeks of paid leave for reasons such as illness, to care for a loved one, or the birth of a new child. Employees are expected to be able to access the benefit starting May 1, 2026. The legislation creating the program was signed into law in 2023 and Maine now joins 13 other states and the District of Columbia in implementing a paid family and medical leave program. More details.
Labor Policy
NLRB – An Administrative Law Judge (ALJ) found that there were no current Board precedents making non-compete agreements unlawful, a direct challenge to Board General Counsel Abruzzo’s internal memo in Oct. outlining her intention to change the law. The ALJ found that only the Board itself had the authority to make that policy change. While a partial victory for employers, the issue is largely moot as the Trump Administration will most likely end the agency’s efforts to outlaw non-compete agreements altogether. More details.
California – On Jan. 1, a state captive audience ban went into effect. The law limits employers’ ability to conduct mandatory meetings on religious or political matters. As a result, several business groups, including the California Restaurant Association, filed a federal lawsuit challenging the constitutionality of the law and seeking declaratory and injunctive relief. The plaintiffs contend that the law discriminates against employers’ viewpoints on political matters and restricts the content of their communications with employees. Further, they argue that the law stifles employer speech and is preempted by the National Labor Relations Act (NLRA), which protects employer free speech under Section 8(c). While litigation is pending, California employers may need to consider whether it is in their organization’s best interest to make such meeting attendance voluntary or proceed in accordance with the NLRA. (It’s worth noting that the current NLRB interprets captive audience meetings as unlawful under the NLRA; however, that is likely to change under a Trump-appointed Board.) California joins a growing number of states that currently have captive audience bans or have bans taking effect in 2025 including Alaska, Connecticut, Hawaii, Illinois, Maine, Minnesota, New Jersey, New York, Oregon, Vermont, and Washington. More details.
Pay Transparency – Five states have joined the growing number of states with pay transparency laws requiring employers to include compensation information in job postings. Laws in Illinois and Minnesota took effect on Jan. 1, 2025, and New Jersey, Vermont, and Massachusetts laws will take effect later this year. While the new laws differ in their specific requirements, they generally mirror pay transparency statutes passed in recent years in other states, including California, Colorado, and New York, that require employers to disclose pay ranges, and sometimes benefits information and other compensation, in job postings. In light of the growing number of states enacting pay transparency laws, employers should review their job postings and advertisements and revise to include pay ranges and other information as required by applicable laws. Employers should also ensure that all job postings provided to third parties to advertise on the employer’s behalf contain the necessary information to comply with applicable pay transparency laws. More details.
Labor Activism
SEIU -After a nearly 20-year separation, the Service Employees International Union (SEIU), which represents nearly two million workers in industries like home health care and janitorial services, announced that it would become part of the AFL-CIO, an umbrella group of more than 50 unions that represent more than 12.5 million workers. The service employees union was an AFL-CIO affiliate for decades before leaving the federation in 2005 amid a rift over strategy. The leader of the SEIU at the time, Andy Stern, argued that affiliated unions should be allowed to scale back their contributions to the federation so they could invest more in organizing new members. The action is seen by observers as an effort to better protect union interests against what is potentially a union-hostile Trump administration. In a statement, the two groups said the partnership would help them push for changes to local, state, and federal rules that made it easier for workers to join unions, and help them support “multiunion, multisector” campaigns to organize workers. More details.
Diversity, Equity, and Inclusion
McDonald’s – The company announced that it will retire specific goals for achieving diversity at senior leadership levels. It also intends to end a program that encourages its suppliers to develop diversity training and to increase the number of minority group members represented within their own leadership ranks. In an open letter to employees and franchisees, McDonald’s senior leadership team said it remains committed to inclusion and believes a diverse workforce is a competitive advantage. The company said 30 percent of its U.S. leaders are members of underrepresented groups, up from 29 percent in 2021. McDonald’s previously committed to reaching 35 percent by the end of this year. The company said that the “shifting legal landscape” after the U.S. Supreme Court decision and the actions of other corporations caused it to take a hard look at its own policies. Robby Starbuck, a conservative political commentator who has threatened consumer boycotts of prominent consumer brands that don’t retreat from their diversity programs, said that he recently told McDonald’s he would be doing a story on its “woke policies.” To date, the McDonald’s Hispanic Owner-Operators Association and the National Black McDonald’s Operators Association have not commented. More details.
Alcohol
U.S. Surgeon General – U.S. Surgeon General Vivek Murthy issued a warning that alcohol is a preventable cause of cancer and called for reconsidering the federal government’s guidelines for how much Americans can safely drink. As with cigarettes, he said, the cautionary labels already on alcoholic beverages should mention the risk of cancer. The warning itself may have little immediate impact on sales; however, alcohol sales have been steadily trending downward for some time and Gen Zers in particular are drinking significantly less than their predecessors putting more pressure on already tight restaurant margins. The issue is not new, however. The World Health Organization’s International Agency for Research on Cancer first classified alcoholic beverages as carcinogenic as far back as 1988. More details.
Key Takeaways
- As state legislatures across the country convene their 2025 sessions this month, governors will be delivering their annual “State of the State” addresses laying out their policy priorities for the year. Brands should pay close attention to not only the content of the speeches – the individual policy agenda items – but to the intensity of the rhetoric itself. Many blue state governors will be aggressively pursuing progressive state policies to counteract initiatives from newly-reconfigured federal agencies with some even preparing for potential litigation against the Trump Administration. Conversely, the tone and tenor of red state governors around immigration, corporate DEI initiatives, and other social issues may give the employer community important insight on how to prioritize those potential threats. While the speeches can be very political in nature, they can also be effective tools for observers to anticipate important challenges to the business model and to corporate brands.
- In the first official election since the Nov. presidential contest, this week Virginia Democrats preserved their narrow statehouse majorities in both chambers and now have a narrow 21-19 edge in the state senate and a 51-49 lead in the house as they enter Republican Governor Glenn Youngkin’s last year in office. Both Virginia and New Jersey will conduct statewide elections this year electing new governors and legislatures and those elections have often served as an effective insight into the mood of the electorate and a bellwether going into mid-term elections. Both states have recently been more “in play” than usual and effective political engagement could result in important outcomes for the industry.