A year after the public put a businessman in the White House, restaurateurs are still assessing the impact. They’ve heard ample reassurances from Donald Trump that government would be less of a piano on their backs, but many of the industry’s key issues have yet to be sorted.
Still, there’s no denying the industry has benefited from the administration’s commitment to tax reform and rolling back some restrictions and requirements.
Here’s a review of how the industry has fared, for better and sometimes worse, since the hotelier and TV star resettled into the Oval Office.
The industry should send Trump a fruit basket for this one. A rule change undertaken by President Obama’s Department of Labor would have changed the definition by which salaried employees would qualify for overtime pay, a move that threatened a near-vertical rise in labor costs and a rethinking of how restaurants are staffed. After a judge provided temporary relief by overturning the Obama administration’s redefinitions, Trump’s DOL decided not to appeal, in effect letting the measure fizzle.
However, the department is expected to promulgate new overtime pay rules by October, though the bet is they’ll be less burdensome than the changes issued under President Obama.
The unqualified victory for the industry has been Trump’s defense of franchising. The threat of franchisors being held liable in court for franchisees’ employment policies and practices—a real possibility under a redefinition of when the two could be legally regarded as joint employers—was defanged by Trump’s remaking of the National Labor Relations Board.
In early December, the reconstituted board ended what chains described as a fundamental threat to franchising, the rethinking of when franchisor and franchisee could be regarded in court and by regulators as joint employers. It reversed the definition that had been promulgated just two years earlier by a board that took pride in its radicalism.
Now the danger is gone, at least at the federal level, and chains are no longer lamenting that their business model is under attack.
The redefinition of “joint employer” was part of an obvious effort by the Obama-era NLRB to blur the distinctions between franchisor and franchisees, a tactic serving the larger strategy of easing unionization in the service sector. If franchisors were held responsible for excesses or abuses on the part of franchisees, mustering employee and public support for unionization would presumably be that much easier.
The possibility of a big chain being unionized was very real under President Obama’s NLRB. The most obvious sign of an about-face was the new board’s decision to reconsider so-called quickie elections, where a vote on unionization can be held a matter of days after a petition to organize is filed. Restaurants and other employers griped that the shortened process left them little time to make their case to employees for remaining union-free.
That option was killed by the NLRB a few days after it re-redefined the joint-employer standard. Then it followed a few days after that with a reversal of the reasoning that permitted "micro unions," or collective bargaining units of just a handful of employees—like only the bakers in a Panera Bread restaurant.
There’s no denying that unionization has become much less of a fear to restaurants since Trump took office.
This is one of the areas where the industry’s interests don’t align with the chief executive’s goal. President Trump is pushing for new immigration rules that would be more restrictive than the industry would like, given its struggles to find employees. The administration wants to limit the number of passes that are granted to job-seekers, and to return the children of illegal immigrants to their parents’ homelands.
The National Restaurant Association would prefer the overhaul be guided more by economic reason and less by emotion. It would prefer development of an alternative system described by the group as matching “willing workers with willing employers.” Instead of building border walls and stiffening entry requirements, the NRA would like to see security heightened in ways that won’t discourage tourism, the source of every fifth dollar spent in restaurants.
Trump has blasted Congress for failing to hammer through something he could sign into law as a replacement for Obamacare, signaling the matter is likely on hold as Republicans struggle to agree on a plan. But he did hand the industry a major win with an executive order that permits associations like the NRA to offer members healthcare insurance. By pooling restaurants’ insurance purchases, the group could negotiate better rates because of the volume discount, according to proponents.
This was a two-fer. The Republicans’ success in pushing through comprehensive tax reform will almost certainly help restaurants’ bottom lines by rolling back corporate rates and the effective tax levy on so-called pass-through businesses like limited-liability partnerships.
There’s also an expectation the top line will be helped, because consumers will be left with more disposable income with the rollback in their rates and an increase in the standard deduction.
As part of the new administration's effort to lighten businesses' regulatory burden, Trump's hires decided to delay enforcement of long-looming menu disclosure rules for another year. The supermarket and c-store industries cheered, knowing they had another 12 months to figure out their obligations and how to meet them.
But the restaurant industry was displeased. Affected restaurants had been ready for months with their menu labeling adjustments—or so they thought. Without a single nationwide standard to meet, chains found themselves facing different rules for New York City than they might have to meet elsewhere. The fear was that the suspension of enforcement would open the door to a hodgepodge of local disclosure requirements.
The industry gave Trump a low grade on this decision.
Paid parental leave
Trump was expected to champion the benefit at the federal level because paid leave is a pet cause of daughter Ivanka, who by all accounts has the chief executive’s ear. But nothing has materialized to date.