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Whack-a-mole: Cities emerge as frustrating target


Beth Ewen

A proposal in Minneapolis called for workers’ schedules to be posted 28 days in advance, with fines for employers if changes were made. After the mayor unveiled it with a flourish in October, business owners shouted it down—she neglected to ask any of them to weigh in beforehand.

The city of Berkeley, California, is proposing a minimum wage of $19 an hour, the highest we’ve seen to date, pushed by a wage board without a single business owner on it. My colleague Nicholas Upton believes the rate will never make it into law, but it’s a great way to get low-wage workers to make a lot of noise at City Hall.

And Madison, Wisconsin, in May passed what is believed to be the first statute prohibiting discrimination against—wait for it—atheists, which seems an unlikely group needing protection given blatant bias against so many others (see Trump vs. Muslims).

Yes, employers, cities across the country are becoming the new ground zero for regulations that could be called revolutionary or ridiculous or anything in between. People who try to beat back such rules are challenged mightily—just when they shoot down one, another pops up here, there and everywhere.

‘Incredibly unpredictable’

The phenomenon is “completely new,” says Robert Cresanti, the new CEO of the International Franchise Association and a long-time lobbyist.

The federal government once stood alone as the primary source of workplace law-making and lobbying. Then states got into the act, starting about eight to 10 years ago. “Now you’re seeing cities light up in an incredibly unpredictable fashion,” he says.

“A lot of actions in the city are spawned by a single, simple meeting, and the ramifications of the decision-making—there aren’t as many systems in place to assess what the second bounce of the ball or the third bounce of the ball might be,” Cresanti says, showing off his diplomacy chops.

I’ll say what a pro like Cresanti never would: Many of these proposals are so demented that when you first read them you think they’re a joke.

Well-meaning people with a cause often dream them up, and they’re slapped together without a single conversation with anyone who signs the paychecks rather than simply cashes them.

That was the case in Minneapolis, where Stephanie Shimp is co-owner of Blue Plate Restaurant Co., which owns and operates eight restaurants around the Twin Cities. She told me in early November her company was pausing its expansion plans until the city council figures out what’s next.

Although the scheduling proposal is gone for now, she wouldn’t be surprised if it comes back in another form. Meanwhile, the city has turned its attention to requiring employers to provide sick pay for workers. Shimp didn’t give her opinion of the proposals per se, but was exasperated that small employers—any small employers—had so far been left out of the discussion.

That’s the problem with the typical city process. Proposals that have merit—and paid sick leave certainly falls in that category—are fashioned without including those who have to pay for them, and so become unworkable or too expensive or fail. It’s too bad when goofy government causes business owners to put on the brakes.

John Ella, a labor and employment law attorney in Minneapolis, calls the sick-pay requirement still alive in Minneapolis “one example of a rising tide of municipal employment laws that are imposing a huge burden on employers.” Writing in The Wall Street Journal, he noted in Washington, D.C., the city council is mulling legislation to require up to 16 weeks of paid family and medical leave every 24 months for certain qualifying events.

“The existence of multiple minimum wages from city to national levels, phased in over time, with special rules for certain occupations and certain employers, creates a lot of complexity,” Ella writes, stating the obvious. “But non-compliance is risky and potentially expensive, especially when employers face large class-actions over technical wage-and-hour issues.”

In other words, it’s awfully pricey to play whack-a-mole city by city, as the IFA’s Cresanti knows well. “It poses a challenge for an organization like us. We’re starting to have to fly to different localities. That obviously multiplies costs of engagement for us, and it’s not something that you can phone in.”

Biggest mole of all

If you think this city stuff is ultimately a local problem, consider what Cresanti told me in December about the IFA’s lawsuit against the city of Seattle, which was filed in June 2014.

The issue isn’t the minimum wage itself, which will be $15 an hour, but rather that it treats franchisees as large employers rather than small because they are part of a large franchise system. Small businesses have more time, seven years, than large, three years, to raise the wage. The suit claims the “discrimination violates the Commerce Clause of the Constitution,” and high-profile attorney Paul Clement, a former U.S. solicitor general, is pressing the case for the IFA.

In other words, it’s a very costly effort for the IFA, and Cresanti revealed they’re doubling down on the effort. “We’re filing for cert. with the U.S. Supreme Court,” Cresanti says, meaning trying to get the highest court in the land to take the case. “There is a divergence in the circuits right now,” he says, referring to circuit courts of appeal. “So we have a chance in the Supreme Court of getting this heard.

“I cannot lie to you and say it hasn’t been an incredible drain financially and staff resource-wise for us internally, but it’s an issue that has to be taken up,” Cresanti says. “It’s been an enormous amount of money. It’s been an enormous amount of money because of the complexity and the folks involved.”

So an issue in the city of Seattle being pressed all the way to the Supreme Court? That would be the biggest mole to whack of all.

Beth Ewen is editor-in-chief of Franchise Times, and writes the Continental Franchise Review® column  in each issue. Send interesting legal and public policy cases to bewen@franchisetimes.com.

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