Wages
U.S. Senate – Following former President Trump’s comments last week regarding tax cuts on tipped income, legislation was introduced in the U.S. Senate that would change the tax code related to tips. While the legislation is unlikely to pass this year, the bill’s introduction marks a significant step forward in reclaiming control of the national narrative around tipping. More details.
Minimum Wage – Wages in numerous states and localities will increase on July 1, including statewide increases in Oregon and Nevada. Major jurisdictions including Los Angeles, San Francisco, Chicago, and Minneapolis among others will see increases as well. Additionally, the Chicago minimum wage for tipped workers will increase from $9.48/hr to $11.02/hr, the first step in the 5-year phase out of the tipped wage mandated by the law passed last year that calls for an 8 percent annual increase in the tipped each year until it reaches the full minimum wage in 2028. More details.
Ohio – U.S. Senator Bernie Sanders held a rally outside of Cleveland in support of the pending ballot measure to increase the minimum wage and eliminate the tip credit. The proposed amendment would increase the state minimum wage to $12.75/hr on Jan. 1, 2025 and then to $15/hr by 2026. The tipped wage would be phased-out over time until full elimination in 2029. Raise the Wage Ohio, an offshoot of One Fair Wage, announced that they have already gathered more than 550,000 signatures. The group must collect 700,000 signatures by July 3 to make the ballot. More details.
Paid Leave
Chicago, Il – The city’s new paid sick leave law, passed last Nov., will take effect July 1 and the agency overseeing the new ordinance just recently released their final rule for employers. The law defines covered employees as any employee working at least 80 hours for an employer within any 120-day period while physically present within the geographic boundaries of the city. It entitles covered employees to accrue at least 40 hours of paid leave that employees can use for any reason and 40 hours of paid sick leave in a 12-month period. More details.
Labor Policy
U.S. Supreme Court – The court agreed to hear a case that could significantly alter the burden of proof for employers to demonstrate that their workers qualify for exemptions from overtime pay. In 2017, three workers at a grocery distributor filed a class-action lawsuit claiming their employer had improperly classified them as “outside sales employees” who are primarily engaged in sales away from an employer’s place of business and are exempt from overtime pay under the FLSA. A U.S. District Judge in Baltimore ruled for the plaintiffs, finding that their primary duties were not sales but stocking shelves. The company appealed but the 4th Circuit upheld that ruling last year. The company further appealed to the U.S. Supreme Court. In its petition, the company told the court that the 4th Circuit, without justification, had imposed a heightened burden in FLSA cases that is normally reserved for matters such as civil commitment, termination of parental rights, and deportation. The U.S. Supreme Court will hear the case in its next term, which begins in Oct. More details.
NLRB – The National Labor Relations Board has issued its first bargaining order under the framework established in last year’s Cemex decision. The agency ordered the operator of Red Rock Casino Resort Spa to bargain with the Culinary Workers union after determining that the company’s “extensive coercive and unlawful misconduct stemmed from a carefully crafted corporate strategy intentionally designed at every step to interfere with employees’ free choice” to unionize. In 2019, workers voted 627 to 534 against unionizing, a vote that the NLRB now says was tainted by the tactics and set aside. The NLRB said that agency judges have issued at least three other Cemex bargaining orders that are pending before the board. More details.
Minneapolis, MN – The state restaurant and hospitality association, Hospitality Minnesota, organized a rally and press conference this week to push back on the city council’s proposed plan to create a labor standards board. The trade group organized over 120 restaurant operators in the city to oppose the local standards board. The city has become the latest venue in a heated debate over sectoral bargaining. For context, the city created a Nursing Home Workforce Standards Board last year which recently voted to raise the pay floor to $23.49/hr on average in 2027 for nursing home workers, while guaranteeing 11 paid holidays. More details.
Labor Activism
Minneapolis, MN – Workers at Minneapolis restaurants Colita and all four locations of Café Cerés have announced their intent to unionize, delivering petitions to management this week. It’s the second major organizing effort in the Twin Cities restaurant industry this summer, following a unionization push at nearby Kim’s in late May. Workers at both restaurants are organizing with UNITE HERE Local 17. The two staffs organized in tandem because they are both a part of chef Daniel del Prado’s group of restaurants; however, if they successfully unionize, they’ll function as two separate units, according to organizers. More details.
Data Privacy
Vermont – The governor vetoed comprehensive data privacy legislation that included, among other things, minimization requirements which would have significantly constrained what personal data companies can gather and use. It also would have banned companies from selling consumers’ sensitive data. Of particular note were provisions allowing for private rights of action giving consumers the right to sue companies that mishandle their data. The private right of action would have sunset after two years unless the legislature reauthorizes it. After the veto, the house overwhelmingly voted to override it, but the senate sustained the veto in a 15-14 vote. Vermont would have been the 18th state to pass comprehensive data privacy legislation, and the fifth this year along with Kentucky, Maryland, New Hampshire, and New Jersey. More details.
Misc.
U.S. Congress – Numerous Republican members of the U.S. House and U.S. Senate sent letters to the Federal Trade Commission (FTC) calling on the agency to cease treating restaurant service and delivery fees as “junk fees,” and raise the alarm that pending rules could significantly damage restaurant business models and restaurant employees. While these letters may not impact the trajectory of the rulemaking, they help further draw a line of distinction between legitimate service fees used by restaurant operators across the country from various undisclosed fees utilized by other industries. More details.
Swipe Fees – The federal judge overseeing the proposed settlement between Visa and Mastercard and a group of merchants indicated that she is likely to reject the settlement and will issue a final opinion soon. The tentative agreement would lower credit card interchange fees and make other changes, including allowing merchants to choose which credit cards they charge consumers extra to use. The pact would lower all rates by .04 percentage point for three years, and the average rate across the networks would be lowered by .07 percentage point for five years. The lawsuit, which was filed in 2005, seeks to break Visa and Mastercard rules that require merchants that accept one of their credit cards to accept all of them. The merchants also want to take away from the networks the power to set interchange fees. Critics of the settlement, including the judge, said that the deal did little to address these issues. Visa and Mastercard could now be forced to agree to a deal that is more favorable for merchants or face the likelihood of going to trial. More details.
California – Two assembly committees unanimously advanced legislation exempting restaurants from a new “junk fee” law passed last year. The bill had already unanimously passed the senate. The author of last year’s bill is the sponsor of the current legislation, maintaining that he intended his original bill to focus on the disclosure, not the elimination, of service and delivery fees. The original law becomes effective July 1 but the industry has continued to receive conflicting compliance guidance from the state attorney general’s office. If passed, the bill means restaurants would continue to operate as they currently do, disclosing any extra fees on menus, websites, or reservation notices. Action now moves to the assembly floor. More details.
California – A deal was struck between the business and labor communities to significantly reform the Private Attorneys General Act (PAGA), and in return, remove a pending ballot initiative this Nov. that sought to gut the law. The compromise reforms PAGA in a way that both business and worker groups say resolves problems with the law. Concessions to business groups mainly involve changes to the penalty structure, making it more difficult for lawyers to simply demand a payout from a company. Importantly, the compromise provides for a right-to-cure process. If companies can show they are trying to correct a violation (back pay to workers and agreeing to change the offending practices), their penalties will be low. Labor groups say the changes will help ensure that bad behavior by employers is halted, rather than simply awarding them a settlement and allowing a company to go back to problematic practices. The deal also allows workers to more quickly be paid back for wage theft and other violations. More details.
Key Takeaway
- Waffle House recently announced they were significantly increasing the base pay rate for tipped employees. The company will set a $3/hr minimum tipped wage for servers, increasing it to $5.25/hr by 2026. Staff will also receive tenure bonuses, based on how long they have worked at the company. While the moves illustrate the competitiveness of the marketplace, they are not being made in a vacuum. The company has become the leading target of the Union of Southern Service Workers, an offshoot of the SEIU, which has been organizing workers in more than 30 units to date. With the proliferation of union organizing coupled with the ready assistance of the NLRB and other federal agencies, brands need to constantly assess their pay and benefit offerings to protect themselves as much as possible from this type of attack.
Podcast
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