Wages
Labor Department – A federal judge in Texas temporarily halted implementation of the Labor Department’s new overtime rule for the state of Texas just before it was set to go into effect July 1 – a win for the state which had said the change would drive up payroll costs and destroy its budget. The decision applies only to state employees in Texas and does not impact private employers there or in any other state. For context, the new overtime rule will require employers to pay overtime premiums to salaried workers who earn less than $1,128 per week, or about $58,600 per year, when they work more than 40 hours in a week. The current threshold, set in 2019, is about $35,500. Another similar lawsuit is still pending. More details.
Baltimore, MD – Legislation was introduced in the city council to eliminate the tip credit by July of 2029. The current server wage in Maryland is $3.63/hr and if passed, the legislation calls for an immediate jump to $6/hr by July 1, 2025 and then by $2/hr each year thereafter until a final larger jump in 2029. Similar legislation was introduced and defeated in both Montgomery County and Prince George’s Count in late 2023. A statewide bill was also defeated this year in Annapolis. More details.
Labor Policy
SCOTUS – The U.S. Supreme Court overturned a landmark 40-year-old decision that gave federal agencies broad regulatory power. The decision has broad implications and narrows the authority of federal agencies. Critics of that 1984 Chevron ruling, which involved a challenge to a regulation enacted by the Environmental Protection Agency under the Clean Air Act, have said the so-called Chevron doctrine gives unelected federal bureaucrats too much power in crafting regulations that touch on major areas of American life, such as the workplace, the environment, and health care. In a separation of powers argument, conservatives have long contended that the decision empowered the executive branch at the expense of the judicial branch and that Congress intended for disputes to be adjudicated by the courts, not quasi-judicial administrative law judges. “Chevron is overruled. Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority, as the [Administrative Procedure Act] requires,” Roberts wrote for the court. The chief justice called the earlier decision a “judicial invention that required judges to disregard their statutory duties.” More details.
SCOTUS – The high court’s conservative majority ruled that the Securities Exchange Commission’s use of administrative law tribunals to impose civil penalties in certain fraud cases violates the constitutional right to a jury trial. Numerous federal agencies, including the National Labor Relations Board and Labor Department, make extensive use of these administrative law judges to hear cases on a variety of issues. The ruling will make it much more difficult in many cases for agencies to prosecute perceived wrongdoings which could have significant consequences for refereeing union organizing drives and regulating other workforce policies. More details.
California – The California Division of Occupational Safety and Health approved a rule to protect workers from indoor heat, making California the third state in the country to do so. Under the new indoor standard when temperatures hit 82 degrees, employers need to provide cooling areas with water and encourage employees to use them if needed. At 87 degrees, employers have to take additional measures to protect workers if they can’t cool the area, like changing worker schedules to cooler times of day, reducing work intensity and speed, rotating workers on shorter shifts, and supplying personal cooling fans and vests as a last resort. (These measures would also be required at 82 degrees for work that requires employees to wear heat trapping clothing or work near a radiant heat source.) The new rule goes into effect in Aug. More details.
Labor Activism
California – Legislation passed the senate that would extend unemployment benefits to striking workers. The same legislation passed the legislature last year but was vetoed by the governor citing concerns about increased unemployment insurance debt and its potential impact on employers. New York and New Jersey allow striking workers to collect unemployment insurance and have recently expanded eligibility requirements for accessing those funds. It is unclear if this version of the bill will advance further. Democrats have been split on the question on whether or not workers striking to protest the Israel / Palestine conflict would qualify. More details.
Minneapolis – By a 2-1 margin, workers at celebrity chef Ann Kim’s Uptown restaurant, Kim’s, voted to unionize, affiliating with UNITE HERE Local 17. Last month, roughly 60 employees (a super majority of the staff) delivered a petition directly to the chef calling on the business to recognize their union and negotiate a contract. Workers are calling for “respect, stability, and better pay and benefits.” Citing cuts, on-call days, and inconsistent hours, the workers say they aren’t able to count on their schedule or get the hours they need to pay rent. The workers say that even with the company having a surcharge model (Minnesota has no tip credit) that enables it to “elevate wages for everyone,” hourly pay for kitchen workers at Kim’s is similar to comparable Minneapolis restaurants while service staff say they earn less under the model than they would with earning tips. With Minnesota’s new junk fee law, which is set to go into effect in 2025, banning restaurant surcharges that don’t go directly to workers in the form of gratuities, Kim’s current no-tipping model is likely to change before that time. The union also represents over 6,000 workers in Minnesota hotels, airport restaurants, craft beverage makers, sports stadiums, university cafeterias, and more. More details.
Alcohol
Delaware – Legislation is on its way to the governor allowing restaurants, breweries, and other venues with liquor licenses to use third-party contractors to home deliver alcoholic beverages. For a fee of $1,000 every other year, third-party services like Doordash and Uber Eats can register with a license from the Office of Alcoholic Beverage Control Commissioner to deliver alcohol. The bill prohibits venues that already hold a license to serve alcohol on-site, nixing the possibility of a restaurant using their own staff to handle deliveries. The governor is expected to sign. More details.
Diversity, Equity & Inclusion
Smithfield Foods – America First Legal (AFL), an organization established by former Trump administration officials, has called on the U.S. Equal Employment Opportunity Commission (EEOC) and Virginia Attorney General Jason Miyares to investigate the company, claiming their diversity hiring initiatives discriminate against white males. In letters dated June 13, AFL accused Smithfield of using race, color, and sex as motivating factors in its employment practices. The allegations are rooted in Smithfield’s 2023 sustainability report, which outlines the company’s goals to increase racial and gender diversity in leadership positions and enhance production facility spending with minority-owned businesses. More details.
Data Privacy
U.S. House – The House Energy and Commerce Committee abruptly canceled the scheduled markup of a federal data privacy bill in the face of significant opposition to the measure from the tech industry, consumer-facing trade associations and civil rights organizations. The bill had been significantly amended in previous hearings but lingering bi-partisan opposition has likely ended the effort for the year. House leadership opposed the measure because it doesn’t supersede state laws and retained provisions allowing for private lawsuits. Many Democrats opposed it because the latest version removed “key civil rights protections and algorithmic auditing provisions” that were included in the previous version. More details.
Misc.
Swipe Fees – The federal judge overseeing the proposed settlement between Visa and Mastercard and a group of merchants officially rejected the settlement. The tentative agreement would have lowered credit card interchange fees and made other changes, including allowing merchants to choose which credit cards they charge consumers extra to use. The pact would have lowered all rates by .04 percentage point for three years, and the average rate across the networks would have been 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 said that the deal did little to address these issues. Visa and Mastercard will have to renegotiate a new settlement that is more favorable for merchants or face the likelihood of going to trial. More details.
California – Legislation is on its way to the governor exempting restaurants from a new “junk fee” law passed last year. 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 signed, which is expected, the bill means restaurants would continue to operate as they currently do, disclosing any extra fees on menus, websites, or reservation notices. More details.
Key Takeaway
- The ramifications from the dueling Supreme Court decisions this week significantly altering the ability of federal agencies to use administrative law judges cannot be understated. While it will likely make a wide range of enforcement mechanisms much more difficult for agencies to pursue and thereby further shielding employers, there will likely be a significant reaction in the labor marketplace. Labor unions will make the case that workers are even more vulnerable to abuse and need the protection of unions now more than ever. The decisions are big wins for the business community in the near-term but could be an even bigger win for the labor community long-term.
Podcast
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