Over the past week, industry organizations like the National Restaurant Association and the International Franchise Association have been busy staking out positions on a raft of federal measures they say will have a far-reaching impact on the foodservice industry.
Those measures include (click to go directly to each topic):
Tip credit: The NRA, together with the Council of State Restaurant Associations and National Federation of Independent Business, sued the U.S. Department of Labor over an amended Fair Labor Standards Act regulation, which they claim would impact hundreds of thousands of businesses that employ tipped staffers.
The regulation, which was issued April 5 and took effect May 5, requires restaurant employers to appropriately inform tipped employees of their tip-credit practices. Opponents are suing for declaratory and injunctive relief, claiming that employers were not given the opportunity to comment on the new requirements and that the DOL allowed them only 30 days to comply.
The NRA previously attempted to have the rule withdrawn or delayed for 120 days to ease what it called a “negative impact on U.S. restaurants with tipped employees.”
The NRA says about 2.4 million servers and 500,000 bartenders — along with staffers who receive tips indirectly — already should have received notice of their employers’ tip-credit practices. Operators who do not adhere to the new regulations could lose the right to apply tip earnings toward the wages of tipped employees.
The NRA says operators must now face “an unanticipated, increased and unnecessary regulatory burden and expense in complying with the new tip-credit notice requirements.”
NRA president and chief executive Dawn Sweeney said, “We believe the Department of Labor’s new rules — put into effect with just one month’s notice and without properly considering their impact on the nation’s nearly 1 million restaurants — are confusing and will expose our members to regulatory violations and enforcement actions.”
Opponents also maintain that the DOL ignored President Barack Obama’s requirement that federal agencies assess the effect of new regulations on businesses.
E-Verify: Appearing on behalf of the NRA, restaurateur Craig Miller testified before a House Judiciary Committee hearing, where he told lawmakers that it was critical that the federal government employ a single E-Verify system rather than permit states to enact their own rules.
The proposed Legal Workforce Act, or H.R. 2164, would repeal the paper-based I-9 system and phase in mandatory E-Verify participation for most employers.
The E-Verify system enables employers to check the eligibility of new hires against Social Security Administration and Department of Homeland Security records.
“The National Restaurant Association believes that designing an employment authorization verification system is a federal role,” said Miller, a former president and chief executive of Ruth’s Chris Steak House.
“Actions by 50 different states and numerous local governments in passing employment verification laws create an untenable system for employers and their prospective employees.”
Corn-based ethanol subsidies: The NRA praised U.S. Senators for voting to repeal tax credits worth about $6 billion annually for producing ethanol, a liquid fuel additive derived chiefly from corn. The bipartisan vote of 73 to 27 repealed a 45-cent per gallon tax credit to blend ethanol in gasoline.
Scott DeFife, executive vice president of Policy and Government Affairs for the NRA, said: “Subsidies for corn-based ethanol for fuel distort the market and divert resources away from the food supply, the result is a real-life impact on the cost of food and restaurants’ bottom line.”
Health care reform: The NRA and IFA also submitted comments to the U.S. Department of Treasury and the Internal Revenue Service, stating that businesses require a clearer definition of a full-time employee than what was submitted as part of the law.
According to the NRA a full-time employee is one who averages 30 or more hours a week in a “a given month.”
The NRA, which is a member of the Employers for Flexibility in Health Care coalition, also told the Treasury Dept. and IRS that it supports a “look-back stability period safe harbor,” a 60-day administration period, and a 90-day waiting period that would be applied to all employees, including new hires and newly eligible employees.
The International Franchise Association, also a member of the EFHC also urged the IRS to ensure that employer-sponsored health care coverage “remains a competitive option for all employees” under the Patient Protection and Affordable Care Act.
Steve Caldeira, president and chief executive of the IFA, said, “We greatly appreciated the willingness of the IRS and the Obama administration to carefully evaluate the impact of the health care law’s employer mandate provision will have on the ability for franchise small businesses to continue to be the job-creating engine they have been historically.”
Lending regulations: The IFA urged Treasury secretary Timothy Geithner and others to ease financial regulations that adversely affect the lending environment for small businesses like restaurants. The IFA asked policymakers to redirect the $30 billion Small Business Lending Fund to “proven and successful programs,” like the SBA loan guarantee initiatives. The IFA also requested that Congress look at capital reserve requirements and regulatory scrutiny by the FDIC, the Federal Reserve and the Office of Comptroller of the Currency that may be holding back credit access.
“We urge Secretary Geithner and lawmakers to consider reversing burdensome financial regulation that are creating significant uncertainties in the credit markets, which are holding back franchise small businesses ability to access capital necessary to create jobs,” Caldeira said.
Contact Paul Frumkin at [email protected].