Wages
Missouri – Numerous ballot initiatives to raise the minimum wage (eight in total) were filed with the secretary of state’s office. The bills are largely viewed as placeholders until activists can coalesce around one proposal regarding wage levels, phase-ins, and the tip credit. The industry should expect an aggressive effort from the labor community, likely targeting elimination of the tip credit altogether. Missouri’s current minimum wage is $12/hr as of Jan. 1 and the tip credit is 50 percent meaning the cash wage for tipped employees is currently $6/hr. More details.
Labor Policy
Labor Department – The Biden Administration released its long-awaited Fall 2022 Unified Agenda of Regulatory and Deregulatory Actions. Final rules expected to be issued in 2023 include: the National Labor Relations Board’s (NLRB) rule on joint employment and revised election procedures; the Labor Department’s rule on independent contractors and “persuader” reporting, and; OSHA’s rule on injury and illness recordkeeping and occupational exposure to COVID-19 in healthcare settings. On the joint employer issue, the Board issued a proposed rule in Sept. 2022 broadening the standard for determining whether two employers, as defined in Section 2(2) of the National Labor Relations Act, are joint employers under the NLRA, thereby expanding joint employment liability. The public comment period closed on Dec. 21, 2022 and a final rule should be issued by late next summer. More details.
FTC – The Federal Trade Commission (FTC) proposed a rule this week to prohibit employers from imposing noncompete clauses on workers – a widespread practice that some economists say suppresses wages, prevents new companies from forming, and raises consumer prices. The ban would make it illegal for companies to enter into noncompete contracts with employees or continue to maintain such contracts if they already exist, and it would require that companies with active noncompete clauses inform workers that they are void. Such agreements typically prevent workers from getting jobs at a competitor of a current or former employer for a defined period. The FTC estimates that banning noncompete contracts would open new job opportunities for 30 million Americans and raise wages by $300 billion a year. The commission will open the proposal for two months of public comments and the rule will take effect six months after a final version is published, likely extending into at least 2024. More details
California – Last Friday, the Sacramento Superior Court issued a temporary hold on implementation of FAST Act preventing the law from being implemented or enforced until the court has the chance to decide the merits of the case. The judge scheduled the next hearing for Jan. 13. For context, the industry-backed coalition, Save Local Restaurants, gathered the necessary signatures to freeze implementation of the law and place a referendum of the law on the 2024 ballot. However, a Department of Industrial Relations email in mid-Dec. indicated that the state intended to begin enforcing the new law Jan. 1 (the original effective date of the law). Under existing case law, the referendum process should have immediately delayed implementation until the voters could decide. The agency decided to move ahead anyway, forcing Save Local Restaurants to sue and the judge subsequently found that the issue merited a further hearing which, as stated above, is scheduled for Jan. 13. More details.
Labor Activism
Starbucks – The NLRB Regional Director in Buffalo determined that Starbucks illegally terminated a barista who was a key architect of the union campaign that has swept through hundreds of its cafes nationwide over the last year. The union leader, Jaz Brisack, resigned her Starbucks position in Sept., alleging that the company had pushed her out by changing its scheduling policies and applying them to her in a discriminatory way. After an investigation, the regional director determined that Starbucks illegally terminated the barista in retaliation for her activism. Unless the company reaches a settlement with that office, the regional director will issue a complaint on behalf of the labor board’s general counsel. The company has denied any wrongdoing. More details.
Delivery
Portland, OR – The city council approved a permanent delivery fee cap of 15 percent as well as a takeout fee cap of 4 percent. A temporary cap was enacted early in the pandemic and had been extended numerous times including last summer. More details.
Washington, DC – Grubhub agreed to pay an $800,000 civil penalty along with an additional $2.7 million to consumers to settle a lawsuit brought in March by D.C. Attorney General Karl Racine, who alleged that the company charged customers hidden fees and used deceptive marketing in violation of the law. The attorney general’s complaint said Grubhub engaged in a bait-and-switch scheme by representing to customers that they would pay only a “delivery fee,” then adding a “service fee” and “small order fee” to many orders at the checkout page after customers had gone through the trouble of selecting restaurants and menu items. The company denied the allegations but decided to settle “in the best interests of the company.” Racine had previously reached similar settlements with both DoorDash and UberEats. More details.
Key Takeaways
- This week, workers at a Microsoft subsidiary that produces video games won a unionization fight covering about 300 workers. Most notably, the company adopted a neutrality stance throughout the process bypassing a traditional election. Workers were allowed to express their intentions through union authorization cards (card check) or anonymously through an online platform. The approach by the company has been widely viewed as an olive branch response against the backdrop of extensive regulatory scrutiny the company is currently under over additional acquisitions and other broader political attacks on the tech industry. In fact, as a result of the company’s approach, the Communication Workers of America (CWA) is advocating on their behalf in front of the Federal Trade Commission as Microsoft is working to acquire Activision – a deal with which the FTC has major concerns over competitiveness. While a rare approach, Microsoft is not the first nor the last company to go down this road – especially those that are in the market to merge or acquire other brands which could need approval from a labor-friendly administration. Brands should pay close attention to this phenomenon as more companies are faced with these difficult choices.
- With the start of the new year, mandated minimum wages increased in 23 states and nearly 30 cities, either as a result of recently-enacted wage legislation or cost of living adjustments further exacerbating two major political crosscurrents currently in play regarding wages. First, over the past few months, many Administration economists and financial regulators including Jerome Powell, the Chairman of the Federal Reserve Board, have been citing wage inflation as the primary cause of lingering inflation as businesses are passing on those increased costs to consumers. Conversely, the labor community is maximizing the political and operational advantage the labor shortage is affording them and will be doubling down on their efforts legislatively and at the ballot to enact further wage increases. This scenario has the potential to have the financial and monetary arm of the Administration opposing efforts of the pro-union faction of the White House and agencies. It could put the entire wage argument in a very different light in 2023.
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.