Ready for a $20 an hour minimum wage? That’s just one of the burdensome new regulations recently proposed in cities and states that threaten to change the rules and raise costs for franchise owners across Dunkin’ and other systems. Democratic lightning rod and U.S. Rep. Rashida Tlaib is leading the charge for what would amount to a $40,000-a-year wage floor, paid through a heightened minimum wage. Meanwhile, Chicago has passed a restrictive, predictive scheduling ordinance, and, with its vote, the Maine legislature becomes the 11th to pass new sick leave regulations with violations costing business owners $1,000 a pop. These are some of the developments that could be on your radar this fall and on your balance sheets going forward.
Is $20 the new $15?
Ready or not, here comes the next big push on the minimum wage front. Activists, apparently emboldened by the success of the new years-long campaign for a $15 an hour minimum, are now upping the ante and calling for a $20 an hour wage floor.
Freshman Congresswoman Rashida Tlaib (D-Mich.) recently told activists in Detroit the minimum wage really needs to be raised to $18-20 an hour, not $15. Her comments came not long after the Democratic majority in the House voted in favor of hiking the federal minimum wage to $15 an hour, according to published reports.
In comments made to members of One Fair Wage, which lobbies for restaurant workers to be paid the same federal minimum paid to workers who don’t get tips, Tlaib argued that $15 is an outdated number that has been kicking around for a number of years at this point.
“By the way, when we started it, it should have been $15. Now I think it should be $20. Make sure America Rising hears that. It should be $20 an hour — $18 to $20 an hour at this point,” Tlaib said, according to a report in The Hill, a news site that covers Congress.
OK, how seriously should anyone take this? After all, it sounds like a stretch. The odds the House’s $15 an hour federal minimum wage bill will get through the Senate, which Republicans control, are zilch. Yet the same could have been said seven years ago when the Service Employees International Union (SEIU) launched the “Fight for $15” campaign. Sure, the federal minimum wage has remained unchanged, but seven states and a number of cities have either already raised their minimum to $15, or are in the process of doing so in steps over the next few years.
There have been multiple studies about the impact of hiking the federal minimum wage, with franchise and business owners warning they would have to reduce hours and learn how to do more with fewer employees. Some economists warn big increases in the minimum wage will only hasten automation, a process many quick service chains, most notably McDonald’s and Dunkin’, appear to be steadily moving towards.
A recent report from the nonpartisan Congressional Budget Office examined the impact of boosting the federal minimum wage. While it would boost pay for 27 million workers, it would also kill 1.3 million jobs. Rep. Bobby Scott (D-Va.), who sponsored the “Raise the Wage Act” in the House, said the CBO report shows “the $15 minimum wage would help more than it hurts,” according to The Hill, to which the publication wrote, “That’s easy for him to say; his job isn’t on the line.”
No matter. There’s now a push on in Florida to get the Sunshine State to join the ranks of states that have passed $15-an-hour minimums. John Morgan, an Orlando-based lawyer, recently announced he has enough signatures to put a $15 an hour minimum on the state ballot. Morgan’s proposed Fair Wage Amendment would boost Florida’s minimum wage, now at $8.46 an hour, to $10 an hour in 2021. The law would then raise the minimum a dollar per year until it reaches $15 by 2026.
Sick Leave Spreading
It’s catching. Maine recently became the 11th state to pass a sick leave law. But in doing so, it also became the first in another category, allowing sick leave to be taken for something other than personal illness. The Pine Tree State in May passed legislation that requires businesses with 10 or more employees to provide as much as 40 hours per year in paid sick time. Employees will be able to use those hours for more than just personal illness however; earned leave time can be used to deal with family emergencies, or to care for a sick child or elderly parent.
Maine’s business community lobbied to exempt businesses with fewer than 10 employees from having to offer the 40 hours of annual paid sick leave. It remains to be seen how much the new law will cost employers. State officials say the law would exempt 40,000 of the states 50,972 businesses, while still giving sick leave benefits to 85 percent of the state’s workers.
In Portland, Maine’s largest city, the city council voted 5-4, to reject a similar sick leave proposal. But, that move was largely symbolic, as the new state law specifically preempts local communities from enacting their own paid leave mandates. The law kicks in on January 1, 2020, at which point Maine will join the District of Columbia and 10 other states with sick leave laws (Arizona, California, Connecticut, Maryland, Massachusetts, New Jersey, Oregon, Rhode Island Vermont and Washington).
Chicago to Regulate Work Schedules
The Windy City has become the latest in the country to get into the business of overseeing private sector workplace schedules. The Chicago City Council voted on July 24 to require large employers in the city to notify workers at least two weeks ahead of time of shift changes and to pay them for changes made without sufficient notice.
Chicago joins four other cities and one state with predictive scheduling laws on their books, after the city’s aldermen passed one of the broadest ordinances to date, covering restaurants and seven other industries. The “fair workweek” law was the product of two years of haggling between city officials and the leaders of various business and industry organizations. In the end, the pushback may have succeeded in softening the blow for some in the business community, including smaller franchise owners. While the new regulations cover restaurant chains with at least 30 locations and 250 workers, franchise owners are off the hook as long as they don’t own more than three locations. What’s more, the law only applies to workers earning less than $26 per hour, or $50,000 per year.
The new rules will go into effect next July 1, with an initial requirement of 10 days’ notice, increasing to 14 days’ notice in 2022. Changes made to a schedule without proper notice could cost franchisees an hour’s worth of “predictability pay.” Shifts that are cancelled – or trimmed –within 24 hours will cost the employer half of the total cost of the shift. There is also a “right to rest” provision that enables workers to refuse a shift that has been scheduled within 10 hours of their last shift.
Chicago joins the cities of San Francisco and Emeryville, California, as well as New York City and Philadelphia, as municipalities now regulating workers’ shifts. Oregon is the sole state to date that has passed its own predictive scheduling law. On the other side of the coin, state lawmakers in Tennessee, Iowa, Georgia, and Arkansas have all passed laws banning their state government from passing predictive scheduling ordinances.
The actions taken by local and state governments can have a big impact on the bottom line of franchise owners, as seen above. Efforts to boost the minimum wage – including talk now of a $20 an hour standard – could have a big impact on your bottom line. So can state and local laws that require you and other small businesses to provide sick leave or impose restrictions on the way workplace schedules are drawn up. For franchisees and other business owners, it pays to be vigilant and stay ahead of proposals that could cost you time, money and expense. And here at Independent Joe, we’ll continue to keep an eye out for you.