Taxes
U.S. House – The U.S. House Ways & Means Committee advanced legislation reflecting President Trump’s tax priorities. Among the provisions in the large bill are many important industry priorities including a four-year window where tipped and overtime income would not be taxed. As currently written, only those workers considered highly compensated would be ineligible for the tax exemption on tipped income. Additionally, the 20 percent business income deduction was raised to 23 percent, there are additional tax credits for family and medical leave as well as significant changes to estate taxes. The industry is working to ensure that the expiring deduction for employer-provided meals is restored as the legislation progresses. A vote in the full house could occur next week and then action will move to the U.S. Senate. More details.
Wages
Nebraska – Despite a series of parliamentary maneuvers, legislators failed to pass a bill that would adjust the minimum wage law approved by the voters in 2022; however, time still remains in the 2025 legislative session. For context, three years ago Nebraska voters approved increasing the minimum wage in stages. The current wage is $13.50/hr and is scheduled to go up to $15/hr next Jan., increasing with inflation thereafter. But the bill would have changed that. Employers would be allowed to pay 14- and 15-year-olds a $13.50/hr youth wage. And 16 though 19-year-olds could be paid the same $13.50/hr as a training wage for their first 90 days on the job. Originally, the bill would have also capped the annual inflation adjustment for the minimum wage at 1.5 percent but was amended to 1.75 percent. Senators had previously voted 33-16 to give the bill second round approval. The latest vote fell short due to an “absence.” It is still likely that the bill will be attached to another legislative vehicle sure to pass. The governor has indicated his support. More details.
Lancaster County, PA – The city council joined a chorus of municipalities in the commonwealth that have shown support for a $15/hr minimum wage. By a 7-0 vote, the council passed a resolution supporting HB-1150, which would more than double Pennsylvania’s minimum hourly wage, currently $7.25/hr. The council is also calling on the state legislature to repeal the current minimum wage preemption law which prohibits localities from setting their own minimum wages. The wage bill, introduced in early April, has seen no legislative action to date. More details.
Los Angeles, CA – By a 12-3 vote, the city council passed a proposal that would increase the minimum wage for hotel and airport workers with the goal of providing them $30/hr by 2028. Under the plan, hotel and airport workers would receive $22.50/hr beginning in July, followed by a $2.50/hr increase in each of the following three years. The workers would earn $25/hr in 2026, $27.50/hr in 2027 and $30/hr in 2028 when the Olympic and Paralympic Games arrive in the L.A. region. Employers would also be required to provide a new $8.35/hr payment to cover health care, but the committee agreed to push that requirement to Jan. 1, 2026, instead of July when the first wage hike would begin. The city is expected to establish a public housekeeping training requirement as well, similar to policies in Santa Monica and West Hollywood, but it would only affect hotels with more than 60 rooms. More details.
Paid Leave
Missouri – Legislation is on its way to the governor that repeals the state’s paid sick time law that went into effect May 1. Passed by the voters last Nov. Proposition A, required employers with business receipts greater than $500,000 a year to provide at least one hour of paid leave for every 30 hours worked. Employers with fewer than 15 workers were to allow workers to earn at least 40 hours per year, with larger employers mandated to allow at least 56 hours. The law also gradually increased the minimum wage to $15/hr by 2026 but the new bill repeals language attaching the wage to the CPI after 2026. Democratic filibusters in the senate had derailed progress of the bill but Republican leaders maneuvered to bring the bill to a vote. This comes a week after the state supreme court upheld the measure after the business community – led by the Missouri Restaurant Association – filed a lawsuit alleging that the initiative’s ballot summary and cost estimate were misleading and thus amounted to an election irregularity that should invalidate the results. The governor is expected to sign the bill. More details.
Labor Policy
Colorado – The governor appears poised to veto legislation that would make it easier to form a union. The legislation seeks to eliminate a second election mandated by Colorado’s Labor Peace Act, a requirement that is unique to Colorado. Federal law allows employees to unionize with a simple majority vote, but they must participate in a second vote with 75 percent approval to determine if workers who don’t support the union have to pay representation fees. The Colorado Labor Peace Act passed in the 1940s, and bill sponsors referred to the provision requiring a second vote as “a relic of the past.” The governor voiced his opposition throughout the legislative session which adjourned for the year. The governor had stated that without his proposed amendments, he would veto the bill. His amendments were rejected and as such a veto is imminent. More details.
Labor Activism
Denver, CO – One Fair Wage hosted an event at a local restaurant to announce five Denver businesses that have joined its efforts and committed to pay their employees full minimum wage without taxing their tips. The five businesses are Convivio Cafe, Tony P’s Italian restaurant in LoHi, food truck Combi Cafe, the Corner Beet, and Sullivan Scrap Kitchen. Three of the owners were on hand to speak at the event, along with Saru Jayaraman, co-founder and president of One Fair Wage, and Denver City Councilmember Sarah Parady. The business owners who join One Fair Wage’s campaign will receive a $5,000 grant – not to give to employees, but to pay for training to help find ways to pay fair wages and stay profitable. This comes against the backdrop of legislation currently on the governor’s desk that would allow cities and counties that increase their local minimum wages to also increase their tip credits above the fixed $3.02/hr set in current state law which One Fair Wage vigorously opposes. More details.
Starbucks – More than 1,000 baristas at 75 U.S. stores have gone on strike since last Sunday to protest a new company dress code. The company put new limits on what its baristas can wear under their green aprons and is requiring employees at company-operated and licensed stores in the U.S. and Canada to wear a solid black shirt and khaki, black, or blue denim bottoms. Under the previous dress code, baristas could wear a broader range of dark colors and patterned shirts. Starbucks said the new rules would make its green aprons stand out and create a sense of familiarity for customers as it tries to establish a warmer, more welcoming feeling in its stores. But Starbucks Workers United, the union that represents workers at 570 of the 10,000 company-owned U.S. stores, said the dress code should be subject to collective bargaining. The company said that the strike was having a limited impact on its stores and by the union’s own count, less than 1 percent of Starbucks workers are participating in the strikes, and in some cases the strikes closed stores for less than an hour. More details.
Food Policy
MAHA – The Make America Healthy Again Commission, formed in Feb. through executive order, will release a report May 22 to identify the root causes of America’s childhood chronic diseases. Expected topics include food, lack of exercise, use of technology and time spent looking at screens, pesticides, and the medical system. The report is expected to define ultra-processed food and will likely discuss food additives and preservatives. Significant attention is also likely to focus on pesticides which Health and Human Services Secretary Kennedy believes have had a “deleterious” impact on health. Targets include glyphosate – the active ingredient in Roundup, the world’s most widely used weedkiller – and atrazine, a herbicide commonly sprayed on corn and grasses. He made headlines when he suggested that endocrine disruptors – chemicals found in pesticides and plastic – may be influencing children’s sexual orientation and gender identity. More details.
In-N-Out Burger – The company announced that it is making several changes to its ingredient sourcing policies, including the removal of artificial food coloring from its pink lemonade and strawberry syrup and swapping out ketchup that contains high-fructose corn syrup. The new policy is likely in response to the Food and Drug Administration and Health and Human Services departments’ plan to phase out artificial food dyes by the end of 2026. The quick-service chain is one of the first restaurant companies to make changes following the announcement of the food dye ban. More details.
Sustainability
Maryland – The governor signed legislation that would make the state the sixth to have an Extended Producer Responsibility (EPR) law. The law covers certain packaging and paper products, including beverage containers and calls for a producer responsibility organization (PRO) to set fees and reimbursements. Reimbursements to local governments would cover up to half the cost of collection and cover all transportation and processing costs associated with recycling in the state. The law calls for a reimbursement rate to cover at least 50 percent of the cost by July 1, 2028, then 75 percent in 2029 and 90 percent in 2030. The PRO also will set producer fees, with funds going toward initiatives such as reuse and recycling infrastructure improvements, including organics recycling infrastructure. More details.
Key Takeaways
- President Trump’s big, beautiful bill is on shaky ground. Expect furious horse trading on priorities in the coming weeks. Companies must stay vigilant – working through its trade groups – to ensure its priorities are included in the final package.
- The release of the MAHA Commission report next week should provide an outline of how the Administration is prioritizing its areas of focus. A few things the restaurant industry should watch for are calls for “transparency” which could lead to labeling requirements, as well as a focus on certain ingredients, like seed oils. Much of the report is likely to focus on other policy areas which may indicate that key industry issues fall lower on the Administration’s priorities.
- This week, UNITE HERE Local 25, which represents service workers in the D.C. area, released a report contradicting industry concerns about the challenges restaurants face from the city’s voter-approved ballot measure aimed at raising the minimum wage for tipped employees. Their report, not surprisingly, finds that while the industry may indeed face myriad challenges, available industry-wide metrics since voters passed I-82 paint a more complex picture – one in which DC workers are benefitting and the industry is still growing.” Citing liquor license and employment data, they argue that the industry has in fact grown over the last year. The industry needs to continue their aggressive push back on these types of studies in both DC and nationwide. A repeal of the DC law, as advocated by the mayor, could reset the issue nationally and potentially end the debate.
- We reported last week that in Washington, DC, the Department of Homeland Security visited more than 100 businesses in the metropolitan area to conduct “worksite enforcement operations” with most of those businesses being restaurants. This week, ICE agents conducted similar visits to restaurants in Nashville’s tourist corridor. In fact, some restaurants didn’t even open for business to protect their workers – including staunch Trump supporter Kid Rock’s steakhouse. Additionally, this week, the Administration reiterated their goal of deporting one million undocumented immigrants annually and we can be sure that the restaurant industry will continue to be a major target in achieving that goal.