Dunkin’ franchise owners can expect to find a friendlier ear in federal government now that Republicans control both Congress and the White House.
Any attempts to raise the minimum wage on the federal level are arguably pretty much DOA now. Ditto for other issues, such as reclassifying managers as hourly workers, and union-friendly rulings by the National Labor Relations Board.
The Affordable Care Act (ACA) looks to be history now as well, which could free franchise owners of both the employer mandate and possibly the calorie labeling requirement, though the latter, in a strange, bureaucratic twist, could actually prove tougher to get rid of.
“In a word, better,” said Benjamin Litalien, founder and principal of the industry consulting firm FranchiseWell, when asked what the outlook is now for franchise owners with Republican control in Washington. “It won’t be a windfall; it is going to take time.”
Still, we are not likely to see any sea change on the state level, especially in blue states, which may redouble their efforts to pass minimum wage and sick leave legislation while also pushing for calorie and sodium labeling.
A good example of this is California, which on Dec. 1 began mandating menu-labeling by restaurants across the state, in a law based on the erstwhile ACA calorie-disclosure requirements.
Meanwhile, the minimum wage is going up in 19 states as 2017 gets underway, while sick leave legislation is also gaining steam.
“At the state level, where you find most of this action, I think it is going to continue to get fueled,” Litalien says.
Calorie labeling up in the air
Requiring restaurants to provide calorie counts on menus was one of the more controversial pieces of the Affordable Care Act when it passed in 2010, at least for franchise and restaurant owners.
The U.S. Food and Drug Administration (FDA), though, has dragged out for years the implementation of the edict, which could require chains and franchise owners with more than 20 locations to post the number of calories next to their various food and menu offerings.
The FDA recently extended the deadline from December to May, effectively punting the ultimate rollout from the outgoing Obama Administration to President-elect Trump and his team.
Given the Republican distaste for regulation, it would seem like an open and shut case for the end of the menu-labeling requirement, but it’s not so simple.
While nixing the ACA would require a simple majority vote, getting rid of the calorie-labeling provision would require a two-thirds vote of the House, according to the industry publication Nation’s Restaurant News.
Any effort to repeal the menu labeling provision through the federal regulatory process could take years, with no guarantee of success, noted Daniel Liebowitz, an associate in the environmental and regulatory department of Paul Hastings LLP in Washington, D.C.
“The rule is final,” Liebowitz says. “The process to repeal a final rule is tough.”
However, the House in early 2016 did pass the Common Sense Nutrition Disclosure Act, which would scale down some of the calorie-labeling requirements. It could very well gain traction in the coming months in now Republican-dominated Washington and, in the process short circuit the FDA’s menu-labeling rules set to take effect in May, Liebowitz says.
But even if Congress manages to vote out menu-labeling, some states and cities are already rolling out their own versions, creating a crazy quilt of different rules across the country.
Philadelphia, for example, goes well beyond calorie counting to also require the posting on menus of sodium, carbs and saturated fat.
And New York City officials, fresh off of requiring restaurant and franchise owners to put salt shaker symbols on the menu next to offerings with high sodium, have unveiled a “Look Before You Eat” campaign aimed at further driving home the point. The ads are appearing in local newspapers, on TV, and online, as well as on subway and bus lines.
Wages headed up
Andrew Puzder, President-elect Trump’s pick to head the U.S. Department of Labor, has been no fan of proposals to hike the federal minimum wage to $10.50 or beyond that to $15 an hour
Puzder, chief executive of the company that owns Hardees’, told the Los Angeles Times that he is not opposed to increasing the federal minimum from $7.25 or even tying it to inflation.
But boosting the minimum to $15 an hour, along with adding on sick leave legislation and other rules that boost costs for employers, would cost workers their jobs by encouraging automation, he argues.
Puzder has also come out strongly against the Obama Administration’s new labor rules requiring all managers making less than $47,500 a year to be paid overtime.
But Puzder will have far less influence over state-level efforts to boost the minimum wage, which arguably could even gain traction in some blue states as a way of pushing back against the Republican ascendancy in Washington.
The minimum wage went up in 19 states at the start of the year, with deep blue states like California, Massachusetts, New York, Washington, Connecticut and Vermont leading the way in terms of the biggest increases. (Arizona is the big red state exception, rising to $10 now, $12 in 2020, and indexed after that, but it is currently being challenged in the courts by major business interests in the state.)
The Bay State and Washington State have the biggest initial increases, both to $11 an hour, compared to California’s $10.50, but the Golden State plans to follow that with further increases topping out at $15 an hour by 2022 and 2023, according to Business for a Fair Minimum Wage, which is tracking the state-level pay hikes.
Washington’s minimum rises to $13.50 by 2020, while labor activists recently kicked off a legislative drive in Massachusetts to further increase the minimum to $15.
New York is more complicated, with the minimum rising in different parts of the state to different levels – and minimum wage increases accelerated for fast food workers as well.
The Big Apple just went up to $11 an hour, with additional increases to $15 an hour between now and 2018/2019. The suburbs of Westchester County and Long Island are now at $10 an hour, rising to $15 an hour by 2021. Upstate New York has jumped to $9.70 an hour, with increases topping out at $12.50 in 2020. After that, there is the potential for additional increases up to $15 an hour.
Vermont’s minimum has risen to $10 an hour, edging up to $10.50 in 2018, after which it will be indexed, while Connecticut has risen to $10.10.
Starting this year, the minimum wage has also gone up in Michigan ($8.90), Maine ($9), Colorado ($9.30) and Hawaii ($9.25).
Maybe the biggest opposition at the state level has come from Maine Gov. Paul LePage, who has ordered state labor officials to delay the enforcement of Maine’s new $9 an hour minimum by a month while he readies legislation to repeal the increase.
Pushback on sick leave
Minneapolis businesses are sparring with city officials in court in a bid to derail a new sick leave law set to take effect in July.
While a state judge did not rule on the Minnesota Chamber of Commerce’s request for an injunction, he did have questions on the scope of the new rules championed by Minneapolis Mayor Betsy Hodge.
The new ordinance requires businesses with at least six employees to award one hour of sick leave for every 30 worked, for a total of 48 hours each year.
However, maybe the most controversial provision is the requirement that companies based outside Minneapolis comply with the city’s new sick leave rules if one or more employees works at least 80 hours a year in the city, or 1.5 hours a week.
Hennepin County Judge Mel I. Dickstein directed some pointed questions at the city’s top lawyer, asking whether the new rules were so wide-ranging that they would ensnare companies whose employees came into the city on a weekly basis for meetings or to conduct business.
“Are they subject to Minneapolis’s requirement because at least an hour-and-a-half a week they come into the city of Minneapolis, and how could that be?” Dickstein asked, according to the Minneapolis Star Tribune. “And how could the reach of the Minneapolis ordinance be so far? I don’t understand that.”
Republicans in the Minnesota Legislature have discussed filing a bill that would prevent local cities and towns from passing sick leave and other labor legislation, according to the newspaper.
If so, they will take a page from Republican lawmakers in Ohio, who recently passed a bill that effectively bars local officials from raising the minimum wage on their own. Gov. John Kasich signed the bill in into law in the last week of December, putting a halt to plans by Cleveland to hold a vote this spring on a proposal to boost the minimum wage in the city to $15 an hour.
Meanwhile, three different sick leave laws have taken effect in Illinois covering the state, as well as Cook County and Chicago.
The coming year is likely to see a major shift in Washington towards a more openly pro-business, anti-regulation approach.
The ACA and its coverage mandates for businesses and possibly even the FDA’s menu labeling rule may be headed out the door. The same is true for the new overtime rules and for that matter the National Labor Relations Board’s more pro-union approach under the Obama Administration.
But challenges remain at the state and local levels, with no let-up in efforts by lawmakers and activists around the country to boost the minimum wage, mandate sick leave and regulate shift scheduling.
Here at Independent Joe, we’ll keep our eye on the ball so you can do what you do best, running your franchise and keeping your customers happy.