In with the new and out with the old.
This summer small business owners are getting a clearer picture of where the Trump Administration stands on some key issues.
The Trump Administration is taking aim at a pair of controversial, Obama-era policies that say could be damaging to the franchising business while also driving up costs.
The first involves the 2015 joint-employer ruling by the National Labor Relations Board that held some franchisors legally responsible for pay and working conditions at the franchise level.
The second centers on new rules that would reclassify many managers at quick service restaurants as hourly workers—making them eligible for overtime.
But even as the Trump Administration starts to put its imprint on federal labor policies and regulations, it is facing pushback from Democrat-controlled states like New York and California.
Joint-employer rules under scrutiny
The days may be numbered for the National Labor Relations Board’s joint-employer rule, which has been slammed by some critics for undermining the nation’s multibillion-dollar franchising sector.
The new Secretary of Labor, Alexander Acosta, recently announced the withdrawal of informal guidelines on the hotly contested NLRB decision.
The NLRB’s ruling, which has been widely criticized by business industry groups, found that some franchisors could be held liable for workplace issues and problems at the franchise level “even if it had only indirect or unexercised control over hiring,” the Nation’s Restaurant News reported.
The many critics of the joint-employer ruling argued it threatened to hollow out the foundation of independence on which the franchising sector has been built. While the initial ruling involved Browning-Ferris Industries and a staffing agency, a later, separate ruling against McDonald’s struck even closer to home for the quick service sector.
“The labor rules at issue amounted to informal regulatory ‘dark matter’ that made it harder for people who want to be in business for themselves and punished large companies for contracting with smaller ones,” noted Trey Kovacs, labor expert at the conservative Competitive Enterprise Institute, of the move by the new labor secretary, in a press statement.
Kovacs went on to argue that the decision to rescind the informal joint employer guidelines established by the Obama Administration is a good.
“Labor Secretary Acosta’s decision to rescind regulator guidance on independent contractor and joint employer rules is a positive sign this administration will reverse federal rules that needlessly hamstring worker and employer flexibility in the modern workplace,” according to Kovacs.
Overtime rules spark tug-of-war between feds, states
The Obama Administration made waves when it rolled out plans to roughly double the salary threshold to $47,476 for determining whether someone should be classified as an hourly worker who must be paid overtime, or rather as a manager who is exempt from overtime. The move had obvious implications for franchise owners, who would face the choice of boosting the pay of their managers above that $47,476 mark or shelling out time-and-a-half for overtime.
A federal court last November put the overtime rules on hold, with the Trump Administration opting not to continue a legal appeal started in the waning days of the Obama Administration. Acosta recently announced plans to seek new comments from the public on the proposed overtime rules changes.
While Acosta noted at his confirmation hearing that the old income marker of $23,360 for determining whether someone should be paid a salary or paid hourly probably needed to be updated, he said doubling the threshold to $47,446 was a “shock to the system,” according to Bloomberg BNA.
Bucking the new administration, California and a number of other states are pushing ahead to adopt the $47,446 threshold to determine whether an employee should get overtime, according to the Orange County Register.
The California Assembly recently passed a bill that would raise the overtime threshold starting Jan. 1, 2018. It now goes to the Senate, where it has a decent chance of passing, the paper reports.
Shift scheduling regs start to spread
New York is the latest city to jump on the fair scheduling bandwagon. Mayor Bill de Blasio recently signed a bill aimed at quick service and other chain restaurants in the Big Apple. It follows in the footsteps of new regulations passed by San Francisco, Seattle and a handful of other cities.
Business groups have attacked the move, arguing it will come down hardest on small business people like many quick service franchise owners in the city.
“The strict scheduling requirements will challenge New York City’s retail employers to develop new means of managing their businesses impacted by the unpredictability posed by seasonal demand, customer fluctuation, weather, holidays, employee turnover issues, and other variations in day-to-day retail operations,” John O’Connor of law firm Epstein Becker Green wrote on the Lexology website.
As reported by Reuters, the new bill which goes into effect in less than six months, require: Work schedules be drawn up 14 days in advance, with penalties of $10 to $75 paid to the worker for changes within that two-week period; and a requirement that employees get at least 11-hours off between shifts. Restaurant owners that schedule back to back shifts would have to pay the employee an extra $100. In addition, current workers will have to be offered additional shifts before new workers can be hired to take those shifts.
The road ahead
As with most things in Washington D.C., the pace of change can be slow. While observers believe we should expect more moves from the new Trump Administration in the months ahead as it pushes ahead with plans to scale back onerous regulations on business, it is unlikely the NLRB’s joint-labor decision will be reversed overnight. Then again, no one expects the Trump Administration to be scrambling to enforce the rule either. It’s all part of the “out with the old and in with the new” process taking place in the halls of government.