Recently, the Trump administration released their 2019 regulatory agenda. As far as its effect on operators, most of it seems to be associated with the labor department’s joint employer and overtime regulations that keep sliding down the calendar toward some kind of resolution. They now both appear up for addressing, once again, come spring.
It’s no surprise to those of us that have been following the promised deregulations of the current administration. After all, the 2019 budget made President Trump’s priorities crystal clear. In order to pay for defense spending (including $24 billion to modernize the nuclear infrastructure), the border wall, and a plan for infrastructure, funding will be cut from the State Department, Environmental Protection Agency, The Small Business Administration, and Agriculture, to name a few.
Obviously, joint employment and overtime regulations are not high priority. Employers and employees alike have been clamoring for a change since President Trump got into office. With frustration mounting, some states are addressing these policies themselves, and the National Restaurant Association continues to lobby for a push against the joint employment standard and a call to fix the restaurant tax depreciation issue that came into being after Trump’s tax reform package went into effect. In addition, the instigation of global trade wars may, ultimately, affect a restaurant’s supply chain including availability and pricing.
Here is the current joint employment federal labor law: If a business is a joint employer, they can be held liable for unfair labor practices including failure to pay the required minimum wage and overtime. Currently, you are a joint employer if you have the right to exercise control, even if that control is indirect and has nothing to do with hiring, wages, scheduling, or discipline. The proposed regulation makes a joint employer one that possesses and exercises substantial direct and immediate control over those areas. Obviously, there is much at stake for franchised businesses and staffing agencies.
As far as the minimum wage battle, many believe that the federal government is not in a position to mandate a one-size-fits-all wage. PEW did a 50-state analysis regarding what the value is of a $15 minimum wage. The main takeaway was that the real value of a $15 minimum wage depends on where you live. The cost of living is much higher in specific regions and much lower in others. The cluster of areas where $15 is worth less includes South Florida, the West Coast, Las Vegas, and Chicago. For instance, a $15 minimum wage translates to $12 real purchasing power in San Francisco while East of the Mississippi, $15 is worth up to $20 in several areas. In West Virginia, a $15 hourly wage has a real purchasing power of $19.04. The cost of living in California varies greatly with a 42 percent spread in value from the most expensive to the least. The conclusion? One-size does not fit all in terms of mandates and regulations.
For this reason, in most jurisdictions, there is an overwhelming opposition to a mandated $15 minimum wage. Arkansas is going to $11. Missouri is going to $12. The Employment Policy Institute predicted that California’s $15/hour minimum wage may end up costing the state 400,000 jobs. When the $15 minimum wage went into effect in Seattle, hours for low-wage earners fell leading to a decrease in overall earnings.
The Service Employees International Union’s (SEIU) effort to fight for $15 included organizing workers into unions which, as of to date, has not occurred. As wage and benefits rise, there is not that same angst for the SEIU and other unions to capitalize on.
And don’t forget about your high chairs. New federal standards come into effect in 2019 and include features that increase stability, offer warning labels, and improve restraint systems. While restaurants are not required to use chairs that meet these standards, informed customers will, undoubtedly, be asking if the chairs that protect their babies are sufficiently safe. According to the National Electronic Injury Surveillance System, 1,600 restaurant high-chair-related injuries were treated in hospital emergency rooms between 2011 and 2016.
Whether you lean to the right or left, there are definitely very high stakes associated with this next election for the restaurant industry. One side leans toward $15 minimum wage and universal healthcare while the other leans toward deregulation. Maybe, just maybe, we can meet in the middle.
Earlier versions of this article incorrectly said that the FDA Calorie posting requirements had been extended to May, 2019 from 2018. This was incorrect, the legislation was extended from 2017 to 2018 but it now in effect. This article has been updated.