A month into the new political cycle, state and local officials are cranking out proposals that will raise restaurants’ labor costs and likely complicate their operations. The measures include a call for 18 weeks of paid family leave in Los Angeles, a ban on the sale of CBD-laced menu items, a hard look at several states’ tip credit and the proposed adoption of a nationwide $15 minimum wage.
Here are the particulars.
Hiking the federal wage to $15 an hour
With Democrats now controlling the U.S. House of Representatives, the Committee on Education and Labor began hearings Feb. 7 on raising the nationwide minimum wage to $15 an hour. A bill setting that new level—more than twice the current federal requirement of $7.25 an hour—has widespread support in the House but would almost certainly be scuttled in the Senate, where Republicans are still dominant. But spotlighting the measure will increase the chances of a $15 wage figuring prominently in the campaigning for the 2020 election.
The National Restaurant Association is already voicing its opposition. “An employee earning an hourly wage of $15 in New York lives in a different economic environment than an employee earning $15 an hour in Alabama. The economic landscapes are different in each state, and restaurants require flexibility to overcome those unique challenges and realities,” Shannon Meade, VP of public policy and workforce for the Association, said in a statement. “Should Congress drastically increase operating costs, then these small businesses will be forced to hire fewer people, reduce hours, or even close their doors.”
Proponents note the federal pay floor hasn’t been raised in a decade, and that the current minimum of $7.25 computes into annual pay of $14,500, or about half what the government has set as the poverty level.
States push for a higher wage
Regardless of what happens on the federal level, operators in several of the industry’s largest markets are facing a $15 minimum wage because of state increases. New Jersey’s new governor, Democrat Phil Murphy, signed a measure on Feb. 1 to raise the minimum to that level by 2024, starting with an increase to $10 on July 1. At the start of 2020, the rate will rise by $1 and continue to climb by a buck until it hits $15 in ’24.
The state is the fourth in the nation to enact a $15 minimum.
Illinois is likely to pass a similar measure in the next few days or weeks, though the minimum would not hit $15 until 2025. New Gov. J.B. Pritzker, the billionaire co-owner of Hyatt Hotels, has set that target as a key priority, and he’s finding full support in the Democratic-controlled state Senate. The current minimum of $8.25 an hour would rise by $1 on Jan. 1 and then gradually climb to Pritzker’s target in five years.
Both chambers of New Mexico’s legislature are considering increases in the minimum wage. The measures would raise the pay floor from $8.25 to either $12 or $15, and also differ at the speed of getting there. The first rung of the climb would be $10 an hour, with a start date of either July 2019 or April 2020.
Tip credit draws more fire
The bigger concern for full-service restaurants in New Mexico is a provision in several of the wage-hike bills to kill the tip credit, the portion of a minimum wage that servers earn in tips.
A proposal to kill the credit in Maine was defeated by the legislature on Feb. 5, with the noticeable support of servers in the state. Waiters and waitresses had succeeded earlier in overturning a 2016 ballot initiative that required restaurants to pay servers the full minimum wage, with no allowance for tips. The employees had explained in a highly visible campaign that their pay decreased during the short time the tip credit was dead.
18 weeks of paid family leave
Under the nation’s most generous family leave proposal to date, employees in Los Angeles would be entitled to 100% of their regular pay for up to 4 1/2 months if they needed time for such significant family matters as the birth of a child.
Not all of the money would come from employers. California has set up a worker-funded pool that pays 60% to 70% of an employee’s usual compensation for up to six weeks of leave. The Los Angeles measure extends the maximum leave period to 18 weeks and obliges restaurants and other employers to make up the 40% to 30% the system doesn’t cover.
Backtracking on CBD
State and municipal health officials are cracking down on the sale of cannabidiol-laced edibles by restaurants and retailers, according to local media reports. Maine, Ohio and New York City have decided nearly simultaneously, with virtually no explanation for the sudden reversal in policy, to seize foodstuffs containing the compound better known as CBD.
The derivative of cannabis is believed to have a number of medicinal benefits, which are delivered without getting the user high. The rub is that cannabis has not been approved by the Food and Drug Administration as something safe to eat, meaning CBD is technically an illicit substance. And cannabis is still illegal under federal law.
The irony: New York Mayor Bill de Blasio has called for legalizing the recreational use of cannabis, or ingesting it purely for the buzz from its other active ingredient, THC.
But that’s not the only facet of the situation to prompt some head scratching. The Trump administration has indicated that it does not intend to reinforce the federal prohibition against marijuana in states where its use for fun or medical purposes has been approved.
Although many retailers, health food places and even pharmacies have been adding CBD products, the availability of items within restaurants remains limited. In New York, for instance, officials have warned only five restaurants to yank the products or face fines.
Correction: A previous edition of this story erroneously stated the paid family leave period being considered in Los Angeles was 18 months, when in fact the correct period was 18 weeks.