A minimum-wage increase, paid sick leave, the health-care law, environmental issues and a possible excise tax on sugar sweetened beverages are some of the legislative issues state restaurant executives will be tackling in California, Pennsylvania and Minnesota this year.
In California, the potential increase of the state’s minimum wage to $9.25 an hour could be a huge challenge for the industry, said Jot Condie, president and chief executive of the California Restaurant Association.
“For the last four years, the economy sucked the oxygen out of a lot of policymaking arenas,” he said. “California’s budget deficit really preoccupied lawmakers, and many of them were given direction to focus on the budget crisis at hand. But now that mentality has changed. The state's budget deficit has largely been eliminated so they’ll be focusing on labor and employment issues, like the minimum wage.”
Condie said a bill introduced by Assemblyman Luis Alejo could raise the minimum wage to $9.25 by 2017.
“That is a challenge for us that will play out through the year, especially since we now have the lowest minimum wage on the West Coast,” he noted. “The unions will use that fact as an argument to raise the wage.”
He also said the Consumer Price Index, or CPI, which is the inflation measure used to set Social Security benefits, could cause issues going forward.
“There’s going to be a big push for CPI Indexing,” he said. “All around us, states are indexed, but we’re not so that’s going to be big, too. Similar to the [situation with] wage rates, unions will point to neighboring states as an example that California is not keeping up."
Separately, Condie said the CRA is working to help its members better understand the Patient Protection and Affordable Care Act and ensure they have all the information they need to comply with the law.
“Health care, obviously, is an issue for us,” he said. “We’re doing a lot with our public exchange, which is called Covered California. There will be extensive outreach in order to educate our industry here and we will work to help our industry get their workers qualified on the public exchange.”
In addition to minimum-wage and health-care, Condie said he also is looking at dealing with environmental measures, such as increased debate on packaging as well as the Global Warming Solutions Act that former Gov. Arnold Schwarzenegger signed into law in 2006. That legislation looks to significantly reduce greenhouse gas emissions in the state by the year 2020. Condie said state legislators have targeted restaurants as a source of greenhouse gas emissions because of the industry's organic waste material.
“Organic waste has been identified as a source of greenhouse gas in the landfills, and legislators and environmentalist have begun to look at the less obvious sources like restaurant waste,” he said. “As the state continues to implement the law, we expect we will be drawn into the policy debate and regulatory process. If they’re going to require businesses – restaurants – to separate out the trash, it’s going to end up as another cost of operating the business.”
According to Pat Conway, president and chief executive of the Pennsylvania Restaurant & Lodging Association, operators in Philadelphia and Pittsburgh are facing some local legislation that could cause some issues.
In Philadelphia, Conway said city councilman Bill Greenlee is planning to introduce paid sick leave legislation Jan. 24. The bill would be markedly similar to the one introduced in the last session. At that time, it passed on a 9-8 vote, but Philadelphia Mayor Michael Nutter vetoed the legislation based on how it would affect the poorly performing economy and employment.
In its current iteration, the legislation states that any business with five or more employees is subject to the law, and that any full or part-time employees would be counted. The only exclusion would be federal or state workers and contractors and seasonal workers who are hired for less than six months. All employees would accrue one hour of sick time for every 40 hours worked and could earn up to 56 hours in a calendar year. Furthermore, the paid sick leave could be used for anything from being physically sick to caring for a sick family member or friend, or a doctor’s appointment. In addition, employees are requested to give notice for time off, but are not required to do so.
“If a vote was taken right now, we would expect it to be very close,” Conway said. “If this bill passes, it will be a huge financial and logistical burden for businesses in the city,” he said. “It would increase the cost of doing business significantly and reduce the investment in jobs, which would be unfortunate since our industry is the one that continues to create jobs during these tough economic times.”
In Pittsburgh, Conway said, the Allegheny health department is once again proposing a letter-grading inspection system.
“They would post a letter grade on the door that is merely a snapshot in time and not a reflection of how the restaurant is consistently run,” he said. “Noncritical violations would cause operators to lose points here and there and that would not fairly reflect their overall scores.”
Conway said the PRLA is implementing a grassroots campaign to fight the measure, and members of the association are part of a workgroup of government officials and business owners that will analyze the potential proposal.
In Minnesota, a tipped employee provision to the state’s minimum-wage law will hold hourly wages to $7.25 for those employees who earn $12 or more an hour in wages and tips on a pay period by pay period basis, according to Dan McElroy, executive vice president of the Minnesota Restaurant Association.
“This is the closest we’ve come to having a tip credit,” McElroy said.
Besides the tipped employee provision, Minnesota also is watching an excise tax on sugar-sweetened beverages, which currently is under discussion.
“An excise tax on sweetened beverages has been proposed, but nothing has happened officially,” he said. “The governor’s commission on health and healthy living has recommended it, but we think this is a fight we can win.”
McElroy added that his association is monitoring a proposed tax on alcoholic drinks as well.