Elections
Gubernatorial Elections – Democrats enjoyed another solid performance in the 2023 off-year elections this week. Democratic Governor Andy Beshear won reelection in Kentucky against a tough rival, Attorney General Daniel Cameron. Mississippi’s Republican Governor Tate Reeves ultimately beat back a strong challenge from Democrat Brandon Presley in the deep red state. At the end of the day, the status quo remains with gubernatorial incumbents winning in every state.
Legislative Elections – Similar to the 2022 midterm elections, Democrats were able to run competitive races in Republican jurisdictions and secured victories in competitive legislative contests as well. In the biggest story of the night, Democrats secured both legislative chambers in Virginia (they already controlled the upper chamber). That will certainly create a new dynamic in the state. Democrats will now be able to advance their priorities to Republican Governor Glenn Youngkin; however, he is likely to serve as a backstop on most issues that impact the business community. The partisan makeup will remain the same in other states that had legislative elections, including Mississippi and New Jersey.
Wages
Illinois – The state announced a wage increase effective Jan. 1. The wage will increase from $13/hr to $14/hr for workers 18 and over and to $12/hr for workers under the age of 18. The cash wage for tipped employees will increase to $8.40/hr. The increases were mandated by legislation passed in 2019 eventually establishing a $15/hr minimum wage in 2025. More details.
Washington, DC – Clyde’s Restaurant Group has been sued by a travelers’ advocacy group for tacking a 3.75 percent service fee onto guests’ checks. The group, Travelers United, says the fee is a violation of local rules governing the disclosure of menu prices. The suit alleges that the surcharge prevents customers from accurately comparing Clyde’s prices to what competing restaurants charge since the listed prices for entrees, appetizers and drinks will be kicked up by 3.75%. The suit solely targets Clyde’s, the operator of such landmark local dining establishments as Old Ebbett Grill, 1789 and six bar-and-grills that operate under the name Clyde’s. It is one of the city’s oldest multi-concept operators and is known for generating high volumes within its holdings. All eight of the company’s restaurants within the district are charging the service fee and have done so for about a year, the suit states. More details.
El Cerrito, CA – The bay-area city announced it will increase its local minimum wage to $17.92/hr (an increase of 57 cents per hour). The wage will adjust annually based on changes in the local Consumer Price Index. On Nov. 17, 2015, the city council adopted an ordinance to establish a local minimum wage in El Cerrito starting in 2016, with stepped increases to raise the rate to $15/hr by 2019. This is one of the highest wage rates in the state. More details.
Paid Leave
Chicago, IL – The city council committee passed an ordinance entitling workers to five paid sick days as well as five paid vacation days for all employees. The policy applies to employees who in a two-week period perform at least two hours of work within city limits and does not supersede collective bargaining agreements for unionized employees. The city already mandates workers get at least five days of paid sick leave annually. The expansion passed this week adds an additional five days that employees can use for any reason. Additionally, companies with 100 or more workers would be required to pay out up to seven days of unused time when employees leave. There would be a two-year phase-in for companies with 51-100 employees to pay exiting workers for unused time, while companies with 50 or fewer employees wouldn’t be on the hook for those payouts. Starting Jan. 1, 2024, workers will begin to accrue one hour of paid leave and paid sick leave for every 35 hours worked. Both types of leave will be capped at 40 hours in a 12-month period, or five days of each annually. Employees can carry over up to 16 hours, or two days, of paid leave to the following year, and up to 80 hours, or 10 days, of paid sick leave. Employers also have the option of immediately granting workers 40 hours of paid sick leave and 40 hours of paid leave at the start of their employment or each year, rather than requiring it be accrued. They can also grant unlimited paid time off as well. Employers must allow workers to use paid sick leave no later than 30 days after they’ve started working and paid leave must be able to be used no later than 90 days. Employers with 50 or fewer employees will not be required to pay out any unused paid leave days. Medium-sized businesses, which are defined as those with 51 to 100 employees, will have a year to phase in the full payout amount. They must pay out up to 16 hours, or two days, of paid leave until Dec. 31, 2024. Starting in 2025, they will be required to pay out all unused, accrued paid leave, which is capped at seven days, or 56 hours. Large businesses with more than 100 employees must pay up to the maximum of seven unused days. Businesses that violate the ordinance can be subject to fines up to $3,000, and can be liable for damages equal to three times the amount of leave denied or lost, plus interest and attorney’s fees. Employees can also pursue lawsuits against employers for violating the ordinance. Private right to actions regarding paid leave provisions can’t take place until Jan. 1, 2025 – a concession for businesses who argued an earlier start date would be too soon for businesses to comply with. More details.
Labor Policy
Joint Employer – Leading Republican members on the U.S. House and Senate labor committees, along with retiring Democratic Sen. Joe Manchin, introduced a Congressional Review Act (CRA) resolution to overturn the new National Labor Relations Board (NLRB) joint employer rule. This Congress has used CRAs to attack several key Biden administration policies, including President Biden’s student loan forgiveness plan. Each has been met with a Biden veto; however, none have had the votes to override the veto. Additionally, a collection of business associations filed a lawsuit in Texas seeking to prevent the NLRB from implementing the new rules, which are slated to go into effect in late Dec. The filing accuses the NLRB of exceeding its legal authority under the National Labor Relations Act in a way that is “as destabilizing as it is unlawful” and threatens to roil numerous industries. It also alleges that the NLRB violated the Administrative Procedure Act, which governs agencies’ rulemaking processes, by racing to junk a standard developed during the Trump administration. The lawsuit is being brought jointly by the U.S Chamber of Commerce, the American Hotel and Lodging Association, Associated Builders and Contractors, the International Franchise Association, National Retail Federation, and the National Restaurant Association’s Restaurant Law Center along with the Texas Restaurant Association. More details.
Plaza Azteca – The chain with dozens of locations on the East Coast has been ordered to pay $11.4 million in back wages to more than 1,300 employees after the Labor Department uncovered a series of apparent labor-law violations. These include the company failing to pay minimum wages and overtime rates. A consent judgment said that the chain admitted to violating sections of the Fair Labor Standards Act related to minimum wages, maximum hours, and collection of data. The suit claimed that numerous Plaza Azteca restaurants paid predetermined amounts to back-of-the-house employees, like bussers, cooks, and dishwashers, regardless of how many hours they worked. This meant that the employers failed to pay the minimum wage to some employees and didn’t pay a time-and-a-half rate pay to some employees for hours worked over 40 in a workweek, the Labor Department said. Most back-of-the-house employees at the company’s restaurants worked between 56 and 65 hours per workweek, and in some weeks. More details.
Labor Activism
Las Vegas, NV – MGM Resorts International, the largest employer on the Las Vegas strip, has joined rival Caesars Entertainment in reaching a tentative deal with the Las Vegas hotel workers union to narrowly avert a sweeping strike. Taken together, the pending agreements cover more than 30,000 hospitality union workers who had threatened to walk out in the pre-dawn hours today if negotiations failed. Terms of the new five-year contracts haven’t yet been released, but the Culinary Workers Union said the agreements provide significant pay raises and safety improvements. More details.
Starbucks – Starbucks Workers United, which represents 9,000 baristas at shops across the country, vowed this week to file unfair labor practice charges against the company shortly after the company announced a new benefits package for non-unionized locations. It includes a 3 percent base wage increase (with further pay bumps for workers who have been with the company for multiple years), faster vacation time accrual, and access to company-hosted barista competitions. Unionized workers will be left out of the new vacation time policy as well as any compensation from going to barista competitions. However, workers at SBWU-represented stores will be able to access other benefits, such as a credit card for Starbucks workers – in partnership with Visa – and improved scheduling processes. The company’s decision again to increase benefits for its workers comes weeks after a National Labor Relations Board judge ruled that 2022 nationwide wage increases violated federal labor law by omitting unionized baristas. More details
Key Takeaways
- Abortion continues to be an animating issue, aiding Democrats at the ballot box. Progressive Democrats (many of which are hostile to our business model issues) are winning elections in this environment and often replacing pro-business conservatives in the process. While the immediate issue is not a business-focused one, it ultimately may be creating a more challenging political, policymaking and regulatory environment going forward.
- This week, One Fair Wage released a “report” entitled, The Sky is Not Falling; The Floor is Rising, marking the one-year anniversary of the passage of Washington, DC’s Initiative 82 which will eliminate the tip credit over the next few years. Not surprisingly, their findings suggest that in the twelve months since voters decided the issue, the number of restaurant jobs has increased 6.8% according to Labor Department data. They go on to note that restaurant worker earnings including wages and tips have increased by 5.48 % and that this growth rate is higher than the 3.55 % increase in base wages alone over the same period, demonstrating that tips have not declined. Whether or not the data has any empirical integrity at all is not important. What matters is that the anti-tipping activists are leaning into their messaging full force and will begin exporting this “data” to other jurisdictions they are pressuring to go down this same road. The industry needs to be equally vigilant in countering those arguments with sound numbers and vigorously reclaiming the conversation.
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.