After a year like 2015, restaurant operators likely will need more than a juice cleanse and half-hearted fitness resolution to start feeling good again. This year, regulators crusaded to help unions, double wages and change the industry’s overtime pay scale. Ouch, ouch and ouch.
But restaurateurs went down swinging, filing lawsuits and sounding the war whoops of the National Restaurant Association and the International Franchise Association.
While restaurateurs tack Spongebob Band-Aids to their wounds, lets take a second to reflect on the biggest legislative and regulatory blows of the year.
This year has been a nearly literal tug-of-war between the National Labor Relations Board, legislators, lobbyists and McDonald’s—all over franchisor liability. In December 2014, the NLRB ruled that McDonald’s Corp. could be accountable for labor practices of its franchisees, potentially unleashing discrimination and labor condition lawsuits on many restaurant franchisors.
After coalitions and politicians sought to temper the impact, the NLRB ruled in August that a party doesn’t have to directly control labor and conditions to qualify as a “joint employer,” a view that almost certainly redefines the franchisor-franchisee relationship. It also raises questions about the interconnection of restaurants with third parties like cleaning services and other outsourced third-party service providers.
While union organizers praised the decision for making their jobs easier, the NRA warned of a stifling affect on job creation and entrepreneurship. “While we continue to review the NLRB’s ruling, it appears that once again the Board is stacking the deck against small businesses,” said Angelo Amador, senior vice president of labor and workforce policy and regulatory counsel for the National Restaurant Association, in a statement.
How to reveal is yet to be revealed
It’s been almost six years since the Affordable Care Act made menu labeling a reality for chain restaurants. At this stage, restaurateurs are much like expectant parents: Sure, there’s a book or two about what’s about to happen, but they won’t really know what the experience is like until they go through it. The hard and fast rules on what to do just aren’t there, or at least not yet. At least the due-date was pushed back to next Dec. 1.
Meanwhile, unforeseen fears keep popping up. New York City, the first jurisdiction in the country to pose menu labeling, uncorked the new requirement of putting salt warnings on chain restaurants’ menus. Items containing at least 2,300 milligrams of salt have to be flagged with a salt-shaker icon. Places that fail to comply will be subject to fines after March 1.
Restaurants say the “living wage” will kill them
Los Angeles became the largest city to approve a $15 wage, following the lead of Seattle in starting the climb to that level. Meanwhile, New York State became the first state to mandate the so-called living wage for fast-food workers, albeit over a period of years, and Governor Andrew Cuomo vowed to raise the pay of all hourlies to that level. The Empire State’s bragging rights of embracing the highest pay floor in the nation may be short-lived; Berkeley, Calif., is already eying a $19-an-hour minimum.
Pain working overtime
The Department of Labor proposed in June that the salary cap for employees exempted from overtime-pay requirements be raised to $50,400 from the current level of $23,660, a change that will cost restaurateurs and other employers an additional $874 million, according to the National Retail Federation. Restaurant managers are presumed to be a large group among the 5 million salaried-and-exempt workers who would get the steep raise. At least Labor adjusted its timeline. A final version of the new pay regulations is not expected now until late 2016.