Wages
Anaheim, CA – The city council amended a previous vote taken a few weeks ago and reapproved a special election for voters to consider establishing a $25/hr minimum wage for hotel workers in the city. The special election will now be held Oct. 3 instead of the original Sept. 12. The proposed increase would also automatically adjust based on inflation going forward. The vote was in deference to an initiative supported by UNITE HERE Local 11 that received enough signatures to qualify for the ballot. In addition to the wage piece, it would also limit the square footage hotel maids can clean to 4,000 square feet per day in 8 hours. If they are required to work more, they would be paid twice their hourly rate for their entire shift. It would also require all rooms to be cleaned each night that they are occupied. More details.
Washington, DC – The city council heard compromise legislation this week that would require bars, restaurants, and other employers of tipped workers to pay their entire staff the city’s full prevailing minimum wage by 2025 (two years earlier than called for by Initiative 82, the ballot measure approved by D.C. voters in Nov.) while giving some relief to employers. It includes language that creates a set definition of service charge: namely, a percentage of food and beverage sales that cannot exceed 22 percent and pays the base wages of employees. If an establishment adds a service charge as outlined then an owner can exempt the fee from sales tax (reducing costs to their patrons) and excludes the fee from calculation of rent if it’s based on sales thereby saving the owners money. This is supposed to make it more appealing for restaurants to add service charges to patrons’ tabs and use those fees to pay their tipped workers’ base wages. The Restaurant Association of Metropolitan Washington has been supportive of the legislation in part for the service fee provisions but also supports the bill’s faster implementation of Initiative 82 because the annual step increases outlined in the ballot measure have become administratively complicated. The “rip off the band-aid” approach would skip the mandated 2024 increase giving restaurants more time to prepare for the substantial increase, from $8/hr to more than $17/hr, in 2025. One Fair Wage is opposed. The future for the contentious bill is unclear and the DC Attorney General has come out against the bill. More details.
DoorDash – The company announced it is changing the way it compensates its food delivery workers by giving them the option of earning a minimum hourly wage, rather than be paid by delivery. The change comes amid criticisms of gig economy platforms because many of their workers may not even earn the minimum wage due to the way the companies structure their pay, which are typically based on per-service fees rather than hourly rates. The new option will allow DoorDash drivers to choose to be paid an hourly rate that begins from the time they accept a delivery and ends when the delivery is completed, as well as receiving 100 percent of the tips. The company didn’t specify the minimum hourly wage it will offer workers, although it has been reported to be somewhere between $10/hr to $19.50/hr, depending on the region. More details.
Paid Leave
Maine – Legislation is on its way to the governor’s desk mandating that workers at businesses with fewer than 15 employees would receive up to 12 weeks of paid leave to care for a newborn baby or for other reasons, such as an extended illness or to care for a sick or disabled family member. Under the legislation, payroll taxes would begin in 2025 with the first benefits to be paid out starting in May 2026. The benefits would be paid for with a 0.7 percent to 1 percent payroll tax, with employers and employees each contributing half. This week, the governor announced her support of the bill as well as her approval of funding in the state budget agreement to jumpstart the program. More details.
Labor Policy
Federal – The Pregnant Workers Fairness Act went into law this week mandating that employers with at least 15 employees provide “reasonable accommodations” to workers who need them due to pregnancy, childbirth or related medical conditions. Employers will be able to opt out of providing accommodations to pregnant workers if they can show that doing so presents an “undue hardship” on their business operations. The Equal Employment Opportunities Commission (EEOC), which will enforce the law, has yet to publish a list of the types of accommodations that will be required under the new law. But examples could include more flexible hours, the option to sit in jobs that require long periods of standing, a parking spot closer to the workplace, access to uniforms and safety apparel that fit a pregnant person’s changing body, and excusal from heavy lifting or working around chemicals that could be dangerous during pregnancy. By the end of this year, the commission is required to publish guidance on how employers should implement the law, including a list of examples of reasonable accommodations, which the public will have a chance to weigh in on. More details.
U.S. Supreme Court – In a unanimous decision, the court ruled in a case that makes it harder for businesses to deny religious accommodations as burdensome – a victory for religious advocates who said the old test severely undermined their rights. An employer now must show “that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business”. Christian, Jewish, Muslim and Hindu religious groups all filed briefs with the court calling for it to raise the standard for businesses to deny accommodations. The union representing the defendant (the U.S. Postal Service) argued that religious workers should not be prioritized over their non-religious colleagues. More details.
California – A senate committee advanced assembly-passed joint employer legislation focused squarely on the quick service restaurant sector. The bill would require that a fast food restaurant franchisor share with its fast food restaurant franchisee all civil legal responsibility and civil liability for the franchisee’s violations of prescribed laws and orders, or their implementing rules or regulations. The bill would authorize enforcement of those provisions against a franchisor, including administratively or by civil action, to the same extent that they may be enforced against the franchisee. The language is similar to the joint employer language removed from AB-257, the FAST Act. And the sponsor of the FAST Act sponsored the assembly version of this bill. The bill next moves to the Judiciary Committee. More details.
California – A provision was added to the state budget bill that would reinstitute the dormant Industrial Welfare Commission (IWC), which could impact a wide range of employers in the state. The IWC would have the power to convene industry-specific wage boards to regulate the wages, hours, and working conditions in various industries through new orders, and the authority to issue subpoenas and conduct discovery. The IWC could enact rules and regulations through a quasi-legislative process not subject to Administrative Procedures Act (APA) oversight. The proposed funding requires that the IWC convene in January 2024 and issue orders by the end of October 2024. More details.
Maine – At the request of the governor, the sponsor of captive audience legislation recalled the bill from the governor’s desk to make a few changes in the language. The governor had until June 27 to act on legislation that would have made Maine the fourth state (Connecticut, Oregon, and Minnesota) to pass a ban on captive audience meetings. (A bill in New York has also been transmitted to the governor there.) It’s unclear whether any tweaks will force another vote in both houses. The bill as originally drafted prohibits an employer from “discharging, disciplining or otherwise penalizing or threatening to discharge” a worker who declines to receive a communication or attend a meeting about religious or political matters. The bill provides an exemption for religious employers. More details.
Key Takeaways
- The SEIU’s tactic to re-establish the Industrial Welfare Commission (IWC) in California is seismic. The IWC allows for sectoral bargaining and was enacted prior to the federal National Labor Relations Act (before contract trade unionism became the accepted form of labor representation in the U.S.). In going this route, the SEIU is threatening an end-run around the FAST Act referendum process. The IWC is different from the FAST Act in some notable ways. The scope of the commission is different (in terms of the work conditions it can / cannot regulate), and its industry focus is not limited to the QSR segment (it is empowered to regulate most, perhaps all, employers in the state). The FAST Act was always destined to be replicated in other segments but with the reconstitution of the IWC, that day may be coming sooner than expected. And while the initial funding allocation is small and expected to focus on QSRs, it could immediately expand to the entire restaurant industry or even more broadly, perhaps ultimately including retailing and hotels, etc. The industry is now embarking on perhaps the most consequential political negotiation in decades and this development could and should serve as the catalyst for a coordinated and well-resourced response from the entire employer community. It’s critical that brands engage at a high level and strongly support industry efforts to push back.
- The landmark affirmative action ruling this week by the U.S. Supreme Court has ramifications beyond academia. Many observers, including some corporate leaders, think the decision will embolden additional legal challenges either by conservative activists or employees. While the underlying principle on which the case was decided – the equal protection clause – does not apply to private employers, that likely won’t stop a significant escalation in the ongoing campaign against corporate diversity and inclusion programs. Brands should prepare for a renewed debate around these initiatives both from outside and inside the organization.
Podcast
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