State Of The Union
Biden Administration – In his annual address, President Biden took on the issue of “junk fees” and highlighted his administration’s new “Strike Force on Unfair & Illegal Pricing”. On a related note, earlier in the week, his Council of Economic Advisors released a report citing nearly $90 Billion in junk fees annually and attributed about $10 Billion of that to restaurant-related fees. And on top of that, the Consumer Financial Protection Bureau finalized a rule Tuesday to limit credit card late fees at $8 by closing a loophole used by large card issuers. The U.S. Chamber of Commerce and other business groups oppose the rule and the Chamber said it planned to file suit to block it.. More details.
Elections
Los Angeles County, CA – The author of the FAST Act, Assemblyman Chris Holden (D), was trounced in his race this week for a seat on the Los Angeles County Board of Supervisors. The incumbent, Kathryn Barger, won with 59.8 percent of the vote to Holden’s 20.7 percent. The balance was split between three other candidates. More details.
Wages
Oklahoma – The state supreme court rejected a lawsuit brought by the Oklahoma State Chamber and Oklahoma Farm Bureau Legal Foundation asking the court to declare the pending petition to raise the minimum wage legally insufficient. They argued that a portion of the petition violates the state constitution and that the proposed wording of the ballot initiative is misleading. The ballot initiative will now proceed. If approved by the voters, it would raise Oklahoma’s minimum wage to $15/hr by 2029 and for 2030 and thereafter, it would be indexed to the cost of living. More details.
Mississippi – Legislation to raise the state minimum wage to $10/hr failed to make it out of its committee of jurisdiction and is dead for the year. More details.
New Hampshire – A senate committee voted 3-2 to recommend the full senate reject a measure to raise the minimum wage to $15/hr by 2025. Under New Hampshire rules, the bill will likely still receive a vote on the senate floor despite the committee action but it is unlikely to pass. More details.
Long Beach, CA – This week, voters tentatively (and barely) approved a local ballot measure which would increase the minimum wage for certain hotel workers to $29.50/hr by 2028. About 50.63 percent of voters were in favor of Measure RW, according to the Los Angeles County Registrar’s Office. Currently there is just a 592 vote margin and results are far from official. If approved, the measure would raise the minimum wage to $23/hr in 2024, with an annual 6.45 percent increase over the next five years for a total of $29.50/hr by 2028. The wage increase would only apply to hotels with at least 100 guest rooms and hotel operators would be allowed to opt out if they enter into a negotiated union contract with terms different from those laid out in Long Beach’s proposed ballot measure. The current minimum wage for Long Beach hotel workers is $17.55/hr. More details.
Panera – In the wake of significant media coverage documenting the close relationship between the governor and a prominent Panera franchisee, the franchisee in question announced he would comply with the wage portion of the FAST Act and pay his employees $20/hr. The media coverage over the past week claimed that the mega-donor received special treatment resulting in his Panera locations being exempt from major portions of the FAST Act. The media coverage also coincided with the introduction of recent legislation by the author of the bill to exempt certain industries (all unionized or union organizing targets) from the scope of the bill at the behest of various unions. Amid the media frenzy, the governor’s office was forced to announce 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.
Labor Policy
California – On March 15, the Fast Food Council will hold its initial meeting in Oakland. This meeting is expected to be introductory with no policy measures under discussion. Members of the new council were appointed last week. The industry will be represented by leaders from Krispy Kreme, Wendy’s, El Pollo Loco, and a large Taco Bell and Arby’s franchisee. Other members of the council include two fast food employees, fast food union members, and a representative of the SEIU. More details.
Florida – Legislation is on its way to the governor that adds additional exemptions to last year’s controversial “paycheck protection” law that prevents some union members from having their dues automatically withdrawn from their paychecks. Last year’s bill was targeted mostly toward teachers unions and other labor organizations that tend to support Democrats. Lawmakers exempted unions representing police officers, firefighters and correction officers, among others that tend to support Republicans. The new legislation expands that exemption to cover 911 public safety telecommunicators, emergency medical technicians and paramedics, allowing them to join the other workers that can still have union dues automatically deducted. It also removes a requirement calling for unions to have their finances audited yearly by a certified public accountant. But, at the same time, the bill also puts additional requirements on certain unions like state-mandated membership forms. More details.
Labor Activism
Anheuser-Busch – The International Brotherhood of Teamsters ratified the agreement they reached last week with Anheuser-Busch 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 agreement was unanimously recommended by the union’s National Negotiating Committee after A-B recently resumed negotiations. The deal will grant workers 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.
Darden – The company won another victory in its ongoing legal battle with One Fair Wage (OFW) when, for the second time, a California judge dismissed the complaint ruling that OFW did not have standing to pursue the case. The activist group has been using Darden as a proxy in their efforts to eliminate tipped wages arguing that the company’s tipping policy is inherently racist and encourages sexual harassment of servers. OFW was given three weeks to file a motion to reconsider. More details.
Starbucks – As a result of last week’s announcement that the company and the union representing workers at hundreds of its stores had agreed upon a “path forward” to negotiate collective bargaining agreements, the Strategic Organizing Center (SOC), a coalition of North American labor unions, is withdrawing its three director candidates for the company’s 11-member board one week before Starbucks investors were slated to elect directors to oversee corporate strategy at the company’s March 13 annual meeting. Last November, the coalition, which is funded by the SEIU and owns less than 0.00002 percent of the company’s outstanding shares, launched the proxy effort arguing that Starbucks’ resistance to the union organizing campaign that began in 2021 tarnished the brand and hurt shareholders by weighing on the share price. The campaign is the logical consequence of the universal proxy rules implemented by the Securities and Exchange Commission (SEC) in 2022 which have opened the gates for social activists like labor unions to hijack the annual shareholder meeting process as a very public platform to pressure corporate management and advance their agendas. The fight was closely watched on Wall Street because it marked the first time a labor union used tools traditionally employed by hedge funds to push for board seats at a major corporation. More details.
Waffle House – Two additional former employees have filed a federal class-action lawsuit against a Waffle House franchisee, alleging the company failed to pay employees minimum wage at Tennessee restaurants. In January, an employee at a differently-licensed franchisee filed a class action lawsuit against that entity asserting that the company failed to pay employees minimum wage and then incorrectly inflated their wages in its payroll system. According to that filing, it is alleged that the tip sharing policy did not guarantee that employees’ hourly rate and credited tips equal to at least $7.25/hr (minimum wage). Additionally, the suit claims that employees spent 20 percent of their work time doing non-tip tasks, and during that time, were docked the same reduced rate as if they were serving customers and further that employees were docked $3 per shift for the cost of company food, regardless of whether they ate at the restaurant that day. The company has been the subject of a corporate organizing campaign by the Union of Southern Service Workers. More details.
Alcohol
Indiana – Legislation is on its way to the governor that permanently allows cocktails to go in approved, sealed containers but requires retailers to purchase liquor liability insurance or an endorsement with coverage of at least $500,000 to obtain or renew a permit. The bill also has language allowing for happy hour drink specials. The governor is expected to sign. More details.
Delivery
Florida – Legislation is on its way to the governor 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.
Sustainability
SEC – The Securities and Exchange Commission (SEC) agency released its final climate disclosure rules laying out new requirements for companies to divulge their climate risks and some of their greenhouse emissions in public filings submitted annually to the agency. The new rules require publicly-traded companies to analyze and publish how climate change threatens their business whether through physical risks like floods and other extreme weather or through “transition risks” like regulation. Between the first draft of the SEC’s climate disclosure rules – published in 2022 – and now, the regulator scrapped requirements for companies to reveal “Scope 3” greenhouse emissions stemming from the products they sell. The rules are likely to be challenged in court, where their fate remains uncertain – especially in light of recent Supreme Court decisions limiting the federal government’s power to pass ambitious climate-related regulations. More details.
Key Takeaway
- As implications of California’s FAST Act continue to unfold, one unintended but potentially important outcome of the entire ordeal may be a strengthening of the industry’s political resolve in the state. As noted above, Rep. Chris Holden, the author of the FAST Act, was soundly beaten in his effort to win a seat on the Los Angeles County Board of Supervisors. Of importance to note was the effort of angry McDonald’s franchisees in California to pool their resources and push back on his candidacy. They formed the California Alliance of Family-Owned Businesses and have spent more than $1.8 million so far this year, including funding a significant mail campaign against Holden. If the industry is going to be successful against the labor community’s assault on the business model, they must exact a political price from those elected officials who lead the fight against the industry.
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.