Election 2016: The issues that will affect restaurants

2016 election issues restaurant

The National Restaurant Association is working on a broad campaign during this landmark election year to make sure all candidates know where the restaurant industry stands on key issues.

Asked whether a Republican president would be better for business, the association’s top government affairs lobbyist says “that’s an assumption people are making.”

“I’m not sure we have enough information to know what Mr. Trump’s positions would be,” says Cicely Simpson, the association’s EVP of policy and government affairs.

That’s why the association is neutral on the candidates. “There’s not a preference, believe it or not, as much as a recognition of the possibilities,” says Simpson. “Our team here is preparing for both outcomes, given the dynamics of this election year.”

The association likely won’t get a gauge on specific key issues until it sits down with the candidates and their staffs to educate them on matters of importance to the restaurant industry.

But there’s no doubt as to what those matters are, says Simpson: The redefinition of some franchisors as joint employers of franchisees’ workforce, and tax reform across the board.

The most ambitious challenge for the moment might be tax reform, given the run-up to the election. “The old adage is, ‘Nothing happens in an election year,’ and nothing happens,” says Simpson. But, she says, there are developments and conversations quietly taking place behind the scenes.

The association is aiming for lower rates for two types of businesses that are common in the restaurant industry: A “C corporation,” or an incorporated operation whose income is taxed at the business level but not subject to a second income tax when it’s distributed to shareholders; and pass-through businesses such as S corps, which reverse the situation. The company does not pay taxes on its profits, but its shareholders do. 

“Our position is to lower rates for both sides of the equation—it needs to be comprehensive,” says Simpson.

The redefinition of which salaried restaurant employees qualify for overtime pay has been a crucial concern of the industry. The NRA and its allies fought successfully to have the threshold initially suggested by the U.S. Department of Labor, an annual salary of $50,000, reduced to $47,476. It also helped to convince Labor not to change the definition of what constitutes management work, a step that could have exposed more restaurants to overtime pay as well as litigation.

Averting a redefinition of franchisors as joint employers of franchisees’ staffs is a far different issue, says Simpson. “That is a more technical issue,” she says. “The point right now is the education piece, to really talk about the joint employer [redefinition] because it’s not going to happen tomorrow. “

The National Labor Relations Board has argued and tentatively decided that some franchisors should be regarded as joint employers because of the tight parameters they set for franchisees. McDonald’s is being regarded as a joint employer in an ongoing court action brought against dozens of franchisees under rules protecting unionization efforts. That legal battle is expected to last for well over a year.

Meanwhile, the industry is pursuing federal and state legislation that would expressly prohibit franchisors from being tagged as joint employers, and other legal challenges are expected.

“We’re on three tracks right now,” says Simpson. In addition to airing its side of the matter to regulators, “we’re educating lawmakers and influencers like restaurateurs, back in their home markets.”

The commitment to educating stakeholders on the joint-employer issue, as well as explaining the industry’s positions to Donald Trump and either Hillary Clinton or Bernie Sanders, is part of a shift in emphasis at the association.  Government affairs once meant lobbying in a straightforward way—largely saying no to any proposal that hampered business.

Rather than reflexively opposing new laws or rules, the association has sought to work with regulators and legislators to make the measures more realistic and feasible for restaurants. Education is crucial. 

“Indeed, we are taking a more holistic view of advocacy,” says Simpson. “We are changing some of our approaches.” 

This post is sponsored by The National Restaurant Association®


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