Government watch: A roundup of new laws and regulatory actions affecting restaurants

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While the restaurant industry contends with the usual summertime rush, lawmakers and regulators have taken up a number of measures that affect the business in small and large ways. Here are a few of the developments a busy operator might have missed.

New Jersey sets higher liabilities in wage dispute

Restaurants accused of underpaying servers or supervisors will face higher potential penalties under a law that was quietly passed this month in the Garden State. If authorities decide that a server should have been paid a full wage instead of the lower amount allowed under tip-credit regulations, or a salaried employee is adjudged to be entitled to overtime pay, restaurateurs can now be required to pay the wages that were owed, plus damages equal to 200% of the underpayment, a fine of $500 and 20% of the wages owed, and an administrative fee of $250. The fines increase for second-time offenders. 

Those amounts are set for civil disputes. The Wage Theft Act also exposes employers to criminal charges of disorderly behavior, a charge that carries financial penalties of $500 to $1,000 and possibly up to 100 days in jail.  

If an employee is fired within 90 days of formally accusing an employer of underpaying or stealing a wage, the dismissal is presumed to be an act of retaliation, which carries its own set of criminal charges and financial liabilities. The only rebuttal, according to the law, is “clear and convincing evidence that the action was taken for other, permissible, reasons.”

The measure also extends the statute of limitations on wage disputes to six years, from the current cap of two years.

Because of the potential awards for employees who contend they’ve been stiffed on pay, the Wage Theft Act is expected to make New Jersey a choice location for filing unpaid-wage claims, according to a host of legal experts. “It will likely have seismic repercussions for employers operating in New Jersey, and will make New Jersey a destination venue for wage and hour class-action litigation,” the law firm Morgan, Lewis & Bockius wrote in a news alert to clients and the legal community.

New overtime rules expected

The U.S. Department of Labor is expected to release a final version next week of the regulations determining when restaurant managers and other salaried employees are entitled to overtime pay for hours exceeding 40 per week. The regulations will expand eligibility for time-and-a-half pay to salaried individuals earning less than $35,308 annually or $679 per week, a significant step up from the current thresholds of $23,660 and $455, respectively. Employers will also be permitted to count nondiscretionary bonuses and incentive-based pay toward as much as 10% of an individual’s salary when deciding who’s eligible for overtime.

While those regulations are being finalized, California, New York and Pennsylvania have moved forward with new overtime rules of their own, and Washington is expected to join them. This month, lawmakers in Maine suggested their state act as well. A proposed bill would raise the threshold of overtime eligibility in stages, starting with an increase to $33,000 per year as of October and rising to $55,224 as of 2022. 

New Mexicans urged to focus on crime, not paid sick leave

As paid sick leave proposals pop up in jurisdictions across the country, restaurateurs in New Mexico are trying a different and decidedly controversial way of fending off the mandate within their state. A new website recounts several violent crimes that have recently occurred within New Mexico, from a kidnapping and rape to the shooting of an 8-year-old girl. “Government’s first duty and highest obligation is public safety,” screams a headline on the site, Crime Matters ABQ. “Violent crime is rampant, car theft is out of control, good people are leaving but the Bernalillo County Commission and Albuquerque City Council work to pass plastic bag bans and complicated sick leave rules,” the copy continues.

The website’s host, according to local media reports: the leadership of the New Mexico Restaurant Association.

The site urges citizens to contact their elected officials and encourage them to focus on the more important matters of fighting crime. 

Washington state keeps up the pressure to kill anti-poaching clauses

Washington Attorney General Bob Ferguson has been one of the more zealous opponents of the provision routinely included in franchise agreements to prevent units within a chain from recruiting one another’s employees. He and other legal authorities contend that the anti-poaching stipulations hold down wages by preventing chain employers from bidding for choice job candidates. Ferguson’s stated goal is to eliminate the clauses nationwide, not just in his state.

His office kept up the pressure this month by securing agreements from four more chains to avoid a lawsuit by dropping the anti-poaching provision from their standard agreements and halting enforcement of the clause under contracts that were struck earlier. In addition to big-name franchise systems such as H&R Block and The UPS Store, the four included Mio Sushi, an Asian fusion restaurant chain with three locations in Washington and 13 nationwide. 

Ferguson says his efforts have led to agreements from 66 chains nationwide to drop their no-poaching policies.

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