The Trump Administration sooner or later will start delivering on its promise to slash government red tape but, in the meantime, the battle over wages, sick leave and food labeling requirements continues to rage on at the city, state and county level.
New York City officials are crowing over a court victory upholding their new labeling requirement for salty foods, while activists are pushing minimum wage and sick leave proposals in several cities and states.
However, the most effective push back is coming right now not from the new administration in Washington, D.C., but from Republican governors and state lawmakers across the country.
A number of states are pushing legislation that would bar local communities from setting their own wage and labor rules.
“There is certainly cautious optimism across the franchise sector that Trump will roll back the tide,” says Benjamin Litalien, founder and principal of FranchiseWell.
Salty foods label survives challenge
Dunkin’ and other quick-service franchise owners in the Big Apple will have to keep flagging salty items on their menus for the foreseeable future.
A state appeals court has upheld a controversial New York regulation that requires restaurant owners across the city to slap an icon shaped like a salt shaker next to sandwiches and other items that are particularly salty.
To qualify for salt shaker status, the menu item has to have more than the recommended daily level of sodium, or 2,300 milligrams, or effectively a teaspoon of salt. The number, in turn, is based on the FDA’s recommendation of daily sodium intake.
Restaurants are also required to post a warning that “[h]igh sodium intake can increase blood pressure and risk of heart disease and stroke.”
The National Restaurant Association has argued the science related to sodium consumption is still unsettled while blasting the New York City Board of Health – which unsuccessfully pushed a ban on sales of soda and other drinks larger than 16 ounces a few years back – as a “renegade regulator,” according to a legal brief filed with the appeals court.
“The New York City sodium regulation, by contrast, is about the Board – for the second time in three years – looking to grab headlines as the purveyor of ‘first in the nation’ health initiatives, notwithstanding that, in truth, its sodium regulation is illogical, unlawful, and more likely to mislead consumers about sodium health than help them,” lawyers for the restaurant association write.
The NRA also contends the way the city’s new sodium labeling regs are written are unfair as well. The rules target 17 percent of New York restaurants, including large chains like Dunkin’, while exempting independent and small restaurant chains like diners, as well as grocery and convenience stores.
This supposedly targeted approach misses the fact that many of those larger chains like Dunkin’ are made up of individual franchise owners who are no different than the family-run restaurant or diner across the street, Litalien says.
“I think it’s systemic of the ignorance of the franchise model,” he says. “It highlights how little regulators and legislators know about franchising. It smacks of penalizing small business owners under the guise of a chain.”
It’s hardly surprising the restaurant organization is fighting the labeling of salty foods.
The court decision upholding New York’s sodium labeling could have nationwide repercussions, with the city’s new warning on salty foods being the first of its kind in the country.
The restaurant organization has argued in favor of nationwide disclosure rules under which restaurants would detail the sodium count in various foods and menu items to customers who write to request the information.
The NRA has indicated it is reviewing its legal options in the wake of the decision.
“The National Restaurant Association will be exploring all of our legal options moving forward following today’s ruling,” Cicely Simpson, executive vice president of the National Restaurant Association, said in a statement. “Local mandates on sodium regulation are a costly and onerous burden on all New York City restaurateurs. Instead of confusing state and local mandates, we believe the best approach to disclosing nutrition information is the uniformed national menu standard that will go into effect this year.”
Minimum wage battle ramps up
Republicans may control Washington but there’s no sign yet of a slowdown of local campaigns to raise the minimum wage in a myriad of cities and states.
In fact, with the exception of Connecticut, three of the four latest minimum wage proposals are being pushed in red state territory.
Connecticut, Nevada, Kansas City and Flagstaff, Ariz., are the latest states and cities to debate whether to hike the minimum wage to $15 an hour.
More than 40 state representatives and senators in Connecticut are pushing a proposal that would boost the state’s minimum wage to $11 an hour on Jan. 1, 2018, followed by annual increases until it reaches $15 in 2022.
Nevada legislators are debating two bills that would significantly boost the state’s minimum wage, which currently stands at $7.25 an hour for those with employer-provided insurance, and $8.25 for those that don’t.
A proposal in the Nevada Assembly, the lower house, would bump the minimum wage to $15 an hour for those without insurance by 2022, with the rate a slightly lower $14 an hour for those who do have coverage. A bill in the state Senate would raise the minimum by 75 cents a year until it hits $11 an hour for those with insurance and $12 an hour for those without.
In Kansas, the state Supreme Court gave the green light that will see a proposal to raise the minimum wage to $15 an hour in Kansas City on the ballot in August. If passed, the city’s minimum wage would more than double from $7.70 an hour today to $15 an hour by 2020.
And in Flagstaff, a new law will raise the minimum wage in the city to $15 an hour by 2021, well beyond a statewide increase to $12 an hour by 2020 that Arizona voters recently approved.
However, pushback against the avalanche of minimum wage increases across the country is also mounting among business owners and some lawmakers as well.
In Connecticut, three local chambers of commerce have come out against the push to raise the state’s minimum to $15 an hour.
And Republican gains in the state Senate – now evenly divided 8-8 between the two parties – could provide a roadblock in the upper house against the $15 an hour bill.
Flagstaff business owners have launched their own counter campaign, Elevate Flagstaff, which would amend state law to lower the minimum wage to $12 an hour, down from the planned $15 an hour.
Some Republican controlled state legislators are also getting into the act, looking to short-circuit local attempts to raise wages on a community-by-community basis.
Republicans in the Iowa Legislature are pushing a bill that would stop cities and counties from raising their minimum wages above the state’s minimum, which now stands at $7.25 an hour.
In Ohio, Republican Gov. John Kasich recently shot down a bid by labor activists in Cleveland to raise that city’s minimum wage to $15 an hour. Kasich’s bill prevents local cities and towns from passing ordinances raising local wages beyond the state minimum of $8.15 an hour.
Sick leave spreads – and fuels pushback
Maryland and Rhode Island are the latest states to jump on the paid sick leave bandwagon.
Maryland legislators are eyeing competing sick leave proposals, one from the state’s Republican governor and the other from Democrats in the Assembly.
Gov. Larry Hogan is pushing a somewhat more business-friendly plan that would require employers with at least 50 employees at one location to offer sick leave. For companies with fewer than 50 employees who volunteer to offer paid sick time, the governor’s plan would offer a tax break of up to $1,700.
It’s not clear whether the governor’s mandatory sick leave policy would exempt franchise owners, who may own one or more restaurants but are unlikely to have 50 employees at a single location.
Assembly Democrats are pushing a plan that would set a much lower threshold, with businesses and franchises with 15 employees or more required to offer seven days a year of paid sick leave. Those with fewer than 15 employees would have to provide unpaid sick leave.
Companies could face fines for not complying and would have to keep thorough records.
The debate is also heating up in Rhode Island, where legislators have proposed a bill that would enable workers to earn up to seven paid sick leave days a year.
Under the bill, workers would accumulate one hour of sick time for every 30 worked and could use it either to take care of themselves or family members.
However, as with the minimum wage, a number of state legislatures are starting to move to preempt cities, towns and counties from adopting their own sick leave policies and labor rules. State lawmakers in Ohio and Kentucky recently barred local communities from requiring employers to provide fringe benefits.
In Minnesota, lawmakers have proposed their own preemption bill that, if passed, could roll back sick leave ordinances passed in St. Paul and Minneapolis. The effort is aided by the fact that Republicans recently took control of both houses of the legislature. The Minneapolis Chamber of Commerce has been a leading opponent as well, challenging Minneapolis’ sick leave law in court.
Many important decisions will be made in the coming year, both at the state level and in Washington, D.C., that could very well mean dollars gained or lost for your franchise. While minimum wage and sick leave battles loom large, momentous changes are coming as well on the healthcare front as a Republican-controlled Congress tries to make good on its pledge to repeal and replace Obamacare. Major changes are also likely to come at the Labor Department and the National Labor Relations Board as Trump appointees finally take the reins. Keep your eye on this space and we will keep you up to date with all the latest developments. •
“I think it’s systemic of the ignorance of the franchise model. It highlights how little regulators and legislators know about franchising. It smacks of penalizing small business owners under the guise of a chain.”