Ukraine
McDonald’s, Starbucks, and KFC – These leading brands announced a cessation of their business interests in Russia as a result of the recent invasion of Ukraine. McDonald’s will close the nearly 850 company-owned restaurants they operate there but will continue paying the salaries of its 62,000 workers. The company will also continue to pay the leases for its shuttered stores along with other supply chain costs. Starbucks similarly has closed their locations and Yum Brands is in the process of shuttering their KFC and Pizza Hut locations. More details.
COVID-19
Federal Relief – Despite vigorous lobbying efforts on behalf of the industry, a second round of restaurant relief will not be included in the omnibus spending bill passed by the U.S. Congress this week. The industry had been seeking an additional $48 billion of funding for the Restaurant Revitalization Fund. More details.
Wisconsin – The governor signed legislation exempting monies from the Restaurant Revitalization Fund (RRF) from state income tax. The measure also allows the aid recipients to deduct any payments made with the funds that would have been deductible if they hadn’t used federal assistance money. That component essentially goes beyond making the received money tax-free by allowing it to be subtracted from taxes as if it was generated through cash flow. Shielding the funds from income taxes brings Wisconsin’s tax treatment of the money (up to $10 million per restaurant company) in line with the federal exemption that was extended by the U.S. Congress. More details.
Wages
Hawaii – In advance of the crossover deadline, the house passed legislation increasing the state minimum wage from $10.10/hr to $18/hr by 2028. It would also increase the tip credit from $0.75/hr to $2.75/hr. The senate passed similar legislation last month but that bill brings the wage to $18/hr by 2026 and eliminates the tip credit completely. Legislative leaders and the governor will work to hammer out the differences. More details.
Washington – Legislation is on its way to the governor’s desk that sets a minimum pay rate for transportation network drivers based on the size of the city in which a trip originates. For trips that begin in cities with a population of more than 600,000, drivers must be paid $.59/minute and $1.38/mile, or a minimum of $5.17/trip. For all other trips, drivers are guaranteed a minimum rate of $.34/minute and $1.17/mile, or a minimum of $3/trip. Drivers are now also entitled to one hour of paid sick leave per every 40 hours worked. More details.
Nationwide – The insurance company announced it will be raising its starting wage to $21/hr, effective Apr. 4. This is the second consecutive year the company has raised its minimum wage. In 2016, the company implemented an initial minimum pay of $15/hr and increased that to $16/hr three years later. In 2021, the company raised the wage to $18/hr and will increase it three more dollars this year. More details.
Paid Leave
Delaware – The senate passed legislation mandating private-sector businesses in the state provide 12 weeks of paid family and medical leave. The bill tiers requirements by business size. It requires businesses employing 25 or more workers to provide up to 12 weeks of paid parental leave per year, and a combined total of up to six weeks of paid family caregiving leave, medical leave or military leave every two years. The combined total of paid leave in any given year could not exceed 12 weeks. Businesses with 10 to 24 workers would be required to provide only paid parental leave, while those with fewer than 10 employees would be exempt from the law. Businesses that already offer comparable benefits would be able to opt out of the state-run insurance program. The program would be funded by a payroll tax split evenly between employers and employees, starting on Jan. 1, 2025. The combined tax would be .8 percent for 2025 and 2026. The state Department of Labor would establish the tax rate for succeeding years based on “sound actuarial principles,” but benefit payments would be cut to ensure the rate does not exceed 1 percent. The bill now moves to the house. More details.
Virginia – Legislation allowing businesses to voluntarily purchase private insurance plans that provide paid family leave is on its way to the governor. The bill, passed with only two dissenting votes in the entire legislature, gives businesses the opportunity to provide these benefits as an incentive for workers but does not put any additional burdens on businesses that are unable to afford these benefits for employees. Some Democratic lawmakers sought to pass legislation that would have established mandatory paid family leave, but those efforts were defeated. More details.
Labor Policy
Labor Department – The Wage and Hour Division (WHD) released a field assistance bulletin detailing what constitutes illegal action, such as penalizing a worker for taking time off under the Family and Medical Leave Act or threatening an immigrant employee’s legal status. The division is making materials available to workers about such practices and ways to report alleged violations. It is also finalizing a Spanish-language version of some of the information to be released at a later date as part of the effort. The agency said the overarching goal is to discourage employers from targeting their workers for coming forward with grievances and protect those who do lodge complaints by making it a priority for investigators. The office is also working with other agencies, including the EEOC and NLRB, to combat these issues with an emphasis on “vulnerable low-wage workers” across various industries. More details.
Labor Activism
One Fair Wage – The national nonprofit announced the launch of a new legal aid hotline for NY restaurant workers facing “worker rights violations, hostility from customers, wage theft, sexual harassment, and other safety concerns.” The announcement was in conjunction with the introduction of legislation to create a restaurant relief fund that would limit eligibility to only restaurants that eliminate tipping. More details.
Starbucks – Employees at three more Starbucks stores in suburban Buffalo have voted to form unions, a count of ballots revealed Wednesday, bringing to six the number of unionized Starbucks shops and further advancing organizing efforts underway in at least two dozen states. Workers at stores in Cheektowaga, Amherst, and Depew voted by narrow margins in favor of unionizing, according to the National Labor Relations Board’s tally. The count was 8-7 in Cheektowaga, 15-12 in Amherst and 15-12 in Depew. Based on filings, many more elections are likely to be concluded in the next few weeks. More details.
Sustainability
Hawaii – The house passed legislation that would establish an extended producer responsibility program in the state. The bill would require certain producers of consumer goods to register with the state health department and pay an annual fee based on the amount of packaging volume the covered producer places on the market each calendar year. Additionally, the bill provides for the deposit of fees into a special extended producer responsibility fund and some of those monies be allocated toward the creation of a report that assesses the resources needed to reduce the volume of packaging waste sent to landfills. The bill still faces an uncertain future in the senate. More details.
Washington – Legislation is on its way to the governor’s desk that would set a target to reduce organic waste disposal by 75 percent by 2030 and increase the volume of edible food recovery 20 percent by 2025 (both relative to a 2015 baseline). The bill defines organic waste as manure, yard debris, food waste, food processing waste, wood waste, and garden waste. Businesses with at least eight cubic yards of weekly organic waste would be required to have some form of on-site management or collection services in place by 2024, with that threshold dropping to cover generators of smaller volumes in 2025 and 2026. The bill would require certain local governments to adopt compost procurement requirements, expand funding to support farm usage of compost, require new local regulations to allow for the siting of organics processing facilities, establish first-in-the-nation label and color standards for compostable products, update liability standards for food donation and create a Washington Center for Sustainable Food Management. More details.
Misc.
Florida – Legislation targeting “woke ” corporate training and critical race theory in Florida schools is on its way to the governor’s desk. Opponents of the bill, which is a priority of the governor, say the bill’s true goal is to stifle potentially difficult classroom and workspace conversation of race, gender identity, and privilege. The governor will sign the bill. More details.
Key Takeaways
- Many state legislatures are either in the closing days of their 2022 legislative sessions or approaching parliamentary deadlines (such as crossover) for pending legislation to remain viable. As such, the next two or three weeks should see a notable uptick in the volume of legislation nearing passage and brands should stay vigilant to ensure their interests are being protected.
- The next two or three weeks will also likely bring a host of union organizing election results regarding Starbucks units in markets across the country. If the organizers achieve favorable results over that time period, the unions will have more momentum than at any period over the last 25 years. Brands need to stay close to the Starbucks campaign and ensure they are properly inoculating themselves from similar efforts.
- All brands should study closely the reputational and public affairs exercise that Disney experienced this week. Put in an unfairly tough political position by the Florida governor over their level of support regarding a piece of his social agenda legislation, the company tried to maintain some level of neutrality and “thread the needle” with employees in an internal communication. Their approach backfired spectacularly and they managed to enrage their employees, shareholders – and the governor as well. Today’s brand of politics, whether from the left and increasingly from the right, intentionally pulls corporate brands, often against their will, into these fights. When faced with that same conundrum, the safest route is always to position yourself as a vigorous supporter of your employees, their health and welfare, and their best interests. While not foolproof, over the long term it is a better strategy than appeasing increasingly fickle politicians with very different sets of goals and objectives.
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.