Wages
Alaska – The state elections office gave a preliminary indication that petition gatherers have met the signature threshold for a sweeping labor package. The measure would gradually increase Alaska’s minimum wage to $15/hr by 2027, provide employees with guaranteed paid sick leave, and prohibit employers from compelling employees to attend captive audience meetings. Petitioners needed to gather the signatures of 26,705 eligible Alaska voters, with a specified minimum number from at least 30 of the state’s 40 state house districts. The measure had at least 34,000 signatures and met the minimum district requirement as of this week. This was a preliminary announcement and not yet official as signatures are still being verified. More details.
California – A Bloomberg news story has gone viral documenting the close relationship between the governor and a prominent Panera franchisee inferring that the mega-donor received special treatment resulting in the company’s exemption from major portions of the FAST Act. The timing of the release coincided with the introduction of recent legislation by the author of the FAST Act to exempt certain industries (all unionized, or union organizing targets) from the scope of the bill at the behest of various unions. Late yesterday amid the media frenzy, the governor’s office announced that Panera was covered by the wage portion of the law because to be exempt under the bakery exemption, restaurants must produce bread onsite. Newsom’s office said chain bakeries like Panera mix dough at an offsite location and ship it to the restaurant to be baked. Republican State Senate Minority Leader Brain Jones is asking the state attorney general to investigate the allegations of “pay-to-play” politics in the drafting of the bill. More details.
Colorado – Legislation to eliminate the tip credit will not go forward, despite a rally and press conference earlier this month by One Fair Wage highlighting its impending introduction. The sponsor cited vigorous industry advocacy as a reason for standing down on the legislation. More details.
Connecticut – A senate committee heard legislation that would eliminate the tip credit. While no vote was taken, the industry was well-represented. In related news, answering a reporter’s question, the governor cited the compelling case made directly to him by the CEO of the Connecticut Restaurant Association, explaining why the current system works better for servers. More details.
Paid Leave
Virginia – Legislation is on its way to the governor that would mandate 12 weeks of paid leave for any worker who is ill, is tending to a sick family member, or is a new parent. Both employees and employers would put money into the program with employees paying about one-half of one percent of their salary. (For an employee that makes around $50,000 a year, the employee would pay a little more than $4 a week.) Businesses with fewer than 10 employees are exempt. Virginia already has a law on the books passed in 2022 allowing employers and employees private paid leave insurance options. It is unclear if the governor will sign or veto the bill. More details.
Labor Policy
Labor Department – The Senate Health, Education, Labor and Pensions (HELP) Committee advanced along party lines Julie Su’s nomination to be Labor Secretary. Biden first nominated Su in Feb. 2023, and the committee voted along party lines to advance Su’s nomination in late April. However, her nomination languished and never made it to the floor after Sens. Joe Manchin (D-WV), Jon Tester (D-MT), and Kyrsten Sinema (I-AZ) indicated they would oppose it. Su has been serving as Acting Secretary despite her stalled nomination. A Government Accountability Office (GAO) report in Sept. concluded that arrangement did not violate federal law. There is no indication that opposition to her renomination has softened. More details.
Connecticut – The governor signaled his potential opposition to proposed legislation to provide unemployment benefits to striking workers. A similar bill passed the senate in 2022 but stalled in the house. Labor allies are renewing their efforts and while the governor is a staunch union ally, if passed, this legislation would entail a major price tag for the state. A similar dynamic unfolded in California where the labor-friendly governor vetoed similar legislation citing significant costs to the state. More details.
Maryland – Legislation mandating 14 days of advanced scheduling notice, penalties for last minute schedule changes, and restrictions on “clopenings” will receive its first hearing next week in a house committee. The bill essentially mirrors the templated legislation labor community activists have pursued in friendly jurisdictions around the country. More details.
Labor Activism
Anheuser-Busch – The International Brotherhood of Teamsters and Anheuser-Busch InBev (A-B) have reached a tentative agreement on a new five-year contract that the union said will raise pay, improve health care and retirement benefits, and provide job security for its members at their twelve U.S. breweries. The Teamsters said the agreement was unanimously recommended by its National Negotiating Committee after A-B resumed negotiations this week. The full agreement is expected to be shared with Teamsters members prior to the ratification process, with a vote expected next week. The Teamsters say the deal will grant members an immediate $4/hr raise and an $8/hr increase over the life of the contract, raising pay of members by an average of 23 percent. More details.
Starbucks – The company and the union representing workers at hundreds of its stores said they had agreed upon a “path forward” to negotiate collective bargaining agreements and develop “a fair process for workers to organize.” As a show of “good faith,” Starbucks agreed to extend credit card tipping and other company-wide benefits that were announced in 2022 but withheld from unionized stores. Both Workers United and the coffee chain described the announcement as a major breakthrough after two years of nonstop organizing and legal battles. Roughly 400 of Starbucks’ 9,000 corporate-owned U.S. stores have joined the union since late 2021 in one of the most high-profile labor campaigns in years. The company’s top human resources officer wrote in a letter to employees that the company was in talks with the union to create a “foundational framework” for contracts at those stores. None have collective bargaining agreements yet, and until now the union has accused the company of bargaining in bad faith. More details.
Misc.
New Jersey – Franchisee “Bill of Rights” legislation directly targeting the hotel industry advanced out of an assembly committee and is headed for an additional committee stop. A companion bill has been introduced in the senate. The bill includes language restricting the right of a franchisor to change the terms of a franchise agreement, limiting the ability of a franchisor to encourage supplier network partners, and stiffens stipulations on territories, among other things. While not impacting the restaurant industry per se, the disparagement of the franchise model does not help to advance industry interests. More details.
Minnesota – Legislation was introduced that would make additional “service fees” unlawful at restaurants and hotels across the state. The new proposal to restrict the fees originated after the legislator noticed a 4 percent surcharge tacked onto her tab following a meal at the Minneapolis-St. Paul International Airport. The legislator argues that restaurants and hotels should build all mandatory costs into the base prices shown on menus and rate sheets. The crackdown on service fees is part organic, and part by design. While many consumers are expressing outrage at all manner of “junk fees,” the issue has been successfully leveraged by the activists seeking to eliminate the tip credit, pushing back on affected restaurant owners that have added service charges to offset the increased costs. More details.
Delivery
Florida – Legislation advanced out of a house committee that requires delivery platforms to obtain written or electronic consent of restaurants before advertising them or picking up orders. If passed, the platforms are also required to remove restaurants within 10 days of a request, and they also can not intentionally inflate or deflate restaurant pricing. Delivery platforms would also be required to itemize costs for their customers. Additionally, customers also would have unlimited rights to appeal disputed orders and transactions under this legislation. The legislation also includes preemption language prohibiting local governments from regulating the platforms. Companion legislation is pending in the senate. More details.
Key Takeaways
- The storylines regarding Wendy’s potential experimentation with dynamic pricing should be a wake-up call for brands. While the company’s original intent was easily explained, the learning here is the reminder of the current volatility of consumers and the related political environment. Whether it’s anger at the airlines over ever-increasing seat and baggage charges, anger at hotels over resort fees, artists over ticket fees, vacation rental platforms, delivery charges, point of sale tipping – the list goes on. Consumers have an overall sense – legitimate in many ways – that they are constantly being gouged either directly or indirectly. While what Wendy’s was discussing was far from any of this, the immediate and forceful blowback, however misdirected it was, is a helpful reminder that our consumers are angry and it takes very little for an aberrant spark to become a forest fire.
- The announcement this week of an agreement between Starbucks and the union Starbucks Workers United (now representing nearly 9,000 Starbucks employees) could be the first step toward a sweeping collective bargaining agreement (CBA) that establishes a new measuring stick within the industry. If the union is, in fact, able to secure concessions in a CBA, it will boost the union and likely impact the labor market. That said, the company gave away very little this week, promising only to increase pay and benefits of union members to the same level as all other employees (they have been excluded to date). In return, the union has agreed to a temporary “ceasefire” as negotiations continue.
Podcast
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