Elections
Federal – As the final results are still being tallied, Republicans appear poised to earn trifecta control of the White House and both chambers of U.S. Congress. Expect the Trump Administration and legislative leadership to hit the ground running and sprint to accomplish major policy items in the first 100 days. With such a large Republican majority in the U.S. Senate, the new administration shouldn’t have issues getting appointees approved. In both chambers, President-elect Trump will likely be able to enforce party unity and whip Republican caucus members in line in a way we haven’t seen in the past few years.
Early areas of focus will include immigration, tariffs, and taxes, among other issues. All of which directly impact the industry. President-elect Trump has discussed employer crackdowns on immigration, and the “No Tax on Tips” proposal (once dismissed by many as campaign fodder) will almost certainly be a part of any tax package. The industry needs to immediately engage with legislative leadership and the transition team, working through trade group partners, to work on these issues before legislation hits the floor.
Expect Congress to use the Congressional Review Act to undo any recently implemented Biden Administration rules. And, many of the federal labor policy concerns of the past few years will fade away, as the industry finds more business-friendly appointees at federal agencies, like the Labor Department and the National Labor Relations Board.
President-elect Trump has only one term (four years) under the 22nd Amendment to the Constitution, and his team is certainly aware that sitting presidents almost always lose the U.S. House in the first midterm election. Therefore, the Trump Administration will not waste any time, and will approach his second term as if they have only two years to accomplish all of their objectives.
State – California Governor Gavin Newsom has already called a special session to protect “California’s values” from the new Trump Administration. Stymied in D.C., expect the labor community to turn much of its energy to the state and local in 2025.
Progressives will have two fewer venues to pursue their policy goals with Republicans breaking Democrat trifectas in two states, Minnesota and Michigan. Republicans won control of the Michigan House and have earned a tie in the Minnesota House (which will likely lead to a power-sharing arrangement). Minnesota, in particular, is important. The state has been at the forefront of labor policy issues, and the industry has been concerned that the state may pursue a FAST Act-like sectoral bargaining regime. (Minneapolis is currently pursuing a local version.)
Lame duck periods in Michigan and Minnesota could be very interesting as outgoing Democrats may rush to accomplish any waning policy priorities before Republicans take control. The industry needs to immediately engage in both states to ensure harmful legislation isn’t rushed through.
Ballot Initiatives – Perhaps the most important industry victory this cycle was the crushing defeat of One Fair Wage’s Massachusetts ballot initiative eliminating the tip credit. This was the first time that voters had an opportunity to consider a standalone tip credit elimination measure. The industry effectively mobilized servers and industry leaders, as well as the popular Democratic Governor and other elected officials, to campaign against the measure. This was an important inflection point for the issue and has national implications.
Voters approved a number of labor policy measures. Voters in Alaska and Missouri approved minimum wage increases coupled with paid leave. Nebraska voters approved a new paid leave mandate. Interestingly, California voters appear poised to reject an $18/hr minimum wage increase in the Golden State, demonstrating that there is a limit to what even California voters will approve. Exit polling will hopefully provide further insights into voters’ reasoning, but almost certainly, the current economic environment (inflation and rising costs) as well as recent wage hikes (QSRs, healthcare workers, etc.) have created fatigue, and a concern/recognition that businesses in the state are already under intense pressure.
Finally, over the past few years, the industry has grappled with natural gas bans in various jurisdictions. On Election Day, Washington state voters approved a prohibition on natural gas bans and on a carbon-taxing cap-and-trade regulatory regime in the state. These results should give the industry confidence that most voters do not favor natural gas bans and buoy industry efforts to address the issue in 2025 and beyond.
Labor Policy
Minneapolis, MN – The city council released details of its proposed labor standards board. According to the draft, the board would have 15 members: five employer representatives, five employee representatives, and five “community stakeholder” group representatives. The council would appoint 12 members and the mayor would pick three. The most crucial work would happen on appointed subcommittees called “sectoral workgroups” that would examine specific industries, survey workers, craft regulations, and report back to the full board. A council committee considered the proposal at a meeting this week and voted to send the resolution to the full council for consideration next week. More details.
Sustainability
California – A federal court denied a plaintiff’s motion to deny or defer summary judgment on the constitutionality of the state’s new climate disclosure law. Last year, the governor signed legislation that mandates disclosure of GHG emissions data – Scopes 1, 2 and 3 – by all U.S. business entities (public or private) with total annual revenues in excess of a billion dollars that “do business in California.” The law is estimated to apply to about 5,300 companies. Early in 2024, the U.S. Chamber of Commerce and other trade groups sued the state of California seeking declaratory relief arguing that the laws are void because they violate the First Amendment, are precluded under the Supremacy Clause by the Clean Air Act and are invalid under the Constitution’s limitations on extraterritorial regulation, particularly under the dormant Commerce Clause. The judge ruled on just the First Amendment-related arguments (there are additional arguments not included in this ruling) and decided they will move forward with discovery. More details.
Key Takeaway
- Employers have a few immediate priorities post-Election Day. First, engage in Minnesota and Michigan where progressives may try to rush through priorities during lame duck. Second, work through trade groups to communicate with legislative leaders and transition staff to ensure that Republican energy on issues like immigration or “No Taxes on Tips” don’t miss the mark and hurt the industry. Third, encourage trade groups to use this opportunity to fully discredit One Fair Wage – their message, their policy goals, who they claim to represent, and their conduct.
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.