Welcome to Government Watch, a weekly Restaurant Business column focused on politics, regulation, legislation, and other governmental issues of relevance to the restaurant industry. This week's edition looks at the federal government's latest success in combatting mislabeled fish, why restaurants in Missouri will have to sit out the THC boom for at least awhile, and how Michigan is trying to preserve the tip credit.
A supplier believed to be the largest seafood wholesaler serving the Mississippi Gulf Coast has pleaded guilty to selling trash fish as premium species to restaurants and other establishments over a 17-year stretch.
Prior to sentencing, Quality Poultry and Seafood, or QPS, has agreed to pay the United States $1 million in forfeited sales from what the U.S. Department of Justice described as a deception that continued even after federal authorities began investigating the Biloxi, Mississippi-based company. It also agreed to pay a $150,000 fine.
Simultaneously, QPS Sales Manager Todd Rosetti and Business Manager James Gunkel pleaded guilty to misbranding seafood to sustain the deception.
All three parties—QPS, Rosetti and Gunkel—face criminal sentences from a federal judge on Dec. 11.
The company was charged with importing frozen cheap white fish from Africa, South America and India, then wholesaling it to restaurants as well-known premium species, priced accordingly. The fish would be identified on menus as the species it mimicked.
The Justice Department indicated that at least one landmark Gulf Coast restaurant, Mary Mahoney’s in Gulfport, Mississippi, was complicit in the scheme.
The restaurant pleaded guilty in May to selling more than 29 tons of misidentified fish between December 2013 and November 2019. The restaurant and co-owner Anthony Cvitanovich are scheduled to be sentenced on Sept. 12. The establishment faces a maximum penalty of five years of probation and a $500,000 fine. Cvitanovich could be sentenced to up to three years in prison and a $10,000 fine.
Federal authorities say Quality was importing cheap species like African perch and Indian unicorn filefish and then passing it along as pricier seafoods from 2002 through 2019. The fish was usually frozen but apparently sold as fresh.
Even after QPS was served with a search warrant to investigate its operations, the company continued to misbrand seafood for a year, according to the Justice Department.
“These convictions should serve as a warning: Restaurants and wholesalers will face criminal prosecution if they are not honest with customers about what they are actually buying,” Todd Gee, U.S. attorney for the Southern District of Mississippi, said in a statement.
The department said it would continue to pursue wholesalers and restaurants that sell mislabeled seafood. That effort has been underway at least since redfish became a popular menu item in the 1980s, leading to a depletion of the Gulf Coast species and efforts to con patrons with substitutions.
Missouri governor blocks sale of THC-infused foods and beverages
Restaurants in Missouri can forget about capitalizing on the growing popularity of THC-infused foods and beverages, at least for now. Under an executive order issued last month by Gov. Michael Parsons, establishments within the state were prohibited as of Sunday from selling edible “psychoactive cannabis products,” such as sodas or baked goods laced with THC.
The order did leave an out: Cannabis-infused products from what the state deems “acceptable sources” may be sold by retail establishments, including those that currently hold liquor licenses. But, in a classic Catch-22, the order notes, “Currently, neither the Food and Drug Administration nor the State of Missouri recognize any ‘approved sources.’”
Parsons said he was motivated by a 600% increase in the number of children under age 5 who were treated in hospital emergency rooms throughout the state for cannabis poisoning. He noted that many of the THC-loaded products could be confused with mainstream unadulterated products, including candy.
He left open the possibility of revisiting the ban once the production and marketing of weed-infused products is adequately regulated.
The Missouri Hemp Trade Association filed a lawsuit on Friday to halt the ban.
Michigan bill aims to preserve the tip credit
With the fate of Michigan’s tip credit in play because of a controversial court decision, a state lawmaker has introduced a bill to preserve the concession for restaurant employers.
The measure would in effect allow full-service restaurants to directly pay servers and other tipped employees 38% of the state minimum wage if gratuities bring them up to that threshold. It also calls for gradually raising the pay floor to $12.05 by 2030.
It would also exempt businesses with fewer than 50 employees from a paid leave mandate vehemently opposed by the restaurant industry. Local establishments are particularly troubled by what’s called the no show/no call provision, a component that would allow employees to miss three consecutive days of work without having to alert their employer that they’d be absent. Only afterward can the restaurant solicit an explanation, or a note from a doctor if the worker reports having been ill. The mandate is believed to be the first of its kind in the nation.
If the bill introduced by state Sen. Thomas Albert or similar legislation should not pass, Michigan’s tip credit could be phased out starting in February, the result of a recent decision by the Michigan Supreme Court. In that ruling, the state’s highest court decided that lawmakers weren’t acting in accordance with Michigan’s unique pass-and-amend policy when they tried to blunt an effort to kill the tip credit via a 2018 ballot initiative.
The state allows the legislature to pre-empt a ballot measure by passing legislation that would have the same effect. In the instance of the 2018 ballot, lawmakers passed a bill to kill the credit, then quickly amended the measure to keep the concession. The court ruled that the pass-and-amend effort wasn’t valid because the whole process unfolded during one legislative session, not the usual two.
The ballot initiative had set a timeline for killing the credit and raising the state minimum wage. Because several start times have already passed, new adoption dates and processes needed to be set, but little clarity was provided. “There are as many interpretations as there are individuals looking into this,” Justin Winslow, CEO of the Michigan Restaurant & Lodging Association, told Restaurant Business in the wake of the court’s decision.
Amid the confusion, Michigan Attorney General Dana Nessel has asked the Michigan Supreme Court to clear up the confusion by no later than Sept. 15.
The expected start date for phasing out the credit was deduced to be sometime in February.
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