Welcome to Government Watch, a weekly Restaurant Business column focused on regulation, legislation, labor mandates and other governmental issues of relevance to the restaurant industry. This week's edition looks at a new White House initiative that could be good news for restaurants, and why the industry's eyes should be on Michigan.
Promotional posts masquerading as online evaluations from actual restaurant guests may finally be outlawed, fulfilling a proposal aired by the Biden administration more than a year ago.
The White House disclosed with little fanfare on Monday that it’s cracking down on business practices that have proven a maddening annoyance for consumers, like customer help lines where you can’t rouse a human, or complicated processes for canceling gym memberships. Included in the practices it hopes to ban are the use of bogus online reviews to promote a good or service. Specifically, restaurants would no longer be able to hire someone to craft glowing evaluations of a visit that never happened and post it online as if they were truly guests, or to draft a similar piece of puffery themselves.
Nor could a restaurant suppress negative reviews or spin-doctor the criticisms to make them less biting.
The measures suggested in Monday’s announcement of the Time is Money initiative are already at the rule-setting phase. The Federal Trade Commission proposed the ban on bogus reviews in June 2023, seeking feedback from the public. Usually that public-comment period runs a few months at most. The White House’s mention of the pending changes suggests it may be giving the commerce watchdog a sharp nudge to take action.
The administration suggested that the Time is Money initiative is a complement to its earlier campaign to combat junk fees, or the extra charges some businesses try to add on to the stated price of a good or service. The FTC has indicated that it intends to curb or outlaw restaurant surcharges, like service fees, as part of that effort.
Other components of Time is Money include simplifying the processes for cancelling subscriptions; getting refunds from airlines; and filing health insurance claims.
Michigan restaurants switch tactics to preserve the tip credit
After struggling for a decade to preserve the tip credit, Michigan’s restaurant industry is going with Plan B.
Plan A pivoted on the ratification by the state’s Supreme Court of an unusual move known as adopt and amend. In 2018, organized labor mounted a campaign to let voters decide the credit’s fate. Unions collected signatures to put an initiative on the ballot of the next election to raise the state’s minimum wage to $12 an hour and phase out the tip credit by 2024.
Lawmakers sympathetic to the industry used the adopt-and-amend maneuver to thwart that effort. They passed legislation adopting the provisions of the initiative, then amended the law to delay a change in the minimum wage until 2030 and keep the tip credit at 38% of the proposed new pay floor.
Labor advocates sued to challenge the move, and the case ascended up the state’s judicial hierarchy. The Supreme Court finally decided the matter by ruling that adopt and amend wasn’t acceptable this go-round. Usually an election falls between the adoption and the amendment stages, and the legislature didn’t follow that custom in this instance. The ruling essentially said the changes warranted by the ballot initiative would have to be adopted.
Since the timeframe for those revisions has already passed, no one is sure what schedule the state will use, said Justin Winslow, CEO of the Michigan Restaurant & Lodging Association, or MRLA. “There are as many interpretations as there are individuals looking into this,” he said.
While that matter is being decided, the trade group is lobbying hard to pass laws that would keep a tip credit equal to 38% of what will be the state’s new minimum wage of $15 an hour.
“This ruling is not a surprise,” Winslow said. “We’ve always been prepared if it didn’t go our way that we’d be ready with alternative. We’ve been talking to legislators for the last two years, and a lot in the last two weeks. There’s a lot of sympathy and understanding on the tip issue.
The hope is to push through tip-preserving legislation when state lawmakers reconvene in September.
“I would describe it as an encouraging environment,” Winslow said.
Employees can disappear for up to 3 days
In addition to preserving the tip credit, Michigan restaurateurs hope to beat back an employer mandate that’s believed to be a first of its kind in the nation.
In addition to ending the tip credit, the 2018 ballot initiative called for what Winslow describes as a very aggressive paid-leave initiative. That provision called for granting workers up to 72 hours of paid leave annually at the rate of one hour for every 30 they work. With the Supreme Court decision, that mandate will now become law.
Where the measure breaks new ground is in setting new ground rules for instances where employees can’t make their shifts. Under what’s called the no show/no call provision, the worker can be absent for up to three days without having to contact the employer. Only after that three-day window can the restaurant solicit an explanation, or a note from a doctor if the worker reports having been ill.
The rationale is that the employee might have been too sick to reach out.
As far as Winslow is aware, that benefit is not currently being offered anywhere else in the nation. It’s his hope that it won’t land on the books in Michigan, either.
Now facemasks are being banned
One of the tasks loathed by restaurant employees during the pandemic was policing state or local requirements that guests wear facemasks to prevent the spread of COVID. Now they have to be on the lookout for customers wearing the coverings because they’re up to no good.
Protesters for or against Israel’s war against Hamas have taken to wearing the masks as a way of hiding their identities. Simultaneously, crooks are realizing they can wear the coverings to prevent being identified during or after robbing a place.
That, say politicians in New York’s Nassau County, is why the heavily populated suburb of New York City has outlawed wearing the coverings in public. Exceptions were carved out for individuals who might have obscured their faces for legitimate religious, health or cultural reasons, but there’s no visual cues to the masks being worn for those purposes.
The Nassau County mask ban is highly controversial, but that hasn’t stopped New York Gov. Kathy Hochul from acknowledging that she may ban the coverings at least on New York City subways, and possibly throughout the city.
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