The Rush by Toast - September 6

By: Tyler Cumella

6 Minute Read

Sep 06, 2019

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Welcome to the sixth edition of The Rush, where we cover notable happenings in the restaurant industry. This week's coverage includes incoming regulations from the Labor Department, the latest round of tariffs in the trade war between the U.S. and China, and sexual harassment prevention laws in the #MeToo era.

⏳ Here's what you need to know this week in 10 seconds or less:

  • The Labor Department is expected to roll out new regulations around overtime, tip pooling, and the “80/20 rule” in the next few weeks.
  • The latest round of tariffs in the ongoing trade war between the U.S. and China took effect on Sunday, September 1.
  • Sexual harassment prevention laws – in the form of mandatory sexual harassment training for businesses – have been passed in 15 states. Restaurant employers are getting ready to meet the new deadlines for program participation or completion.

⏰ If you have more time:

Get Ready for Incoming Regulations from the Labor Department

  • With the Labor Day holiday came an update on incoming rules from the Labor Department on overtime pay, tip pooling, and the 80/20 rule.
  • According to The Wall Street Journal, the Trump administration is pushing the Labor Department to make action on setting regulations following the departure of Labor Secretary Alexander Acosta.
  • The department wants to move quickly in preparation for a replacement Labor Secretary so these new rules could be rolled out by the Labor Department as early as this month.

It’s important to note that details could still change, as the administration makes final changes and approvals need to be made. Here are the potential new regulations coming from the U.S. Labor Department:

Overtime pay: The Wall Street Journal reports that a new rule would increase the annual salary threshold to around $36,000 to determine who qualifies for time-and-a-half overtime pay. This means that the rule would boost the salary threshold to nearly $700 per week, which would positively impact shift workers in the food and beverage space. The new rule could make millions more Americans eligible for extra pay.

Tip pooling: Restaurant Hospitality reports that, in July, the Labor Department submitted a proposed rule to the U.S. Office of Management and Budget that would ease restrictions on tip pooling for employers that pay the full minimum wage and decline the tip credit. The goal of this new rule is to allow back of house workers, like line cooks and dishwashers, to participate in tip pools, which are now only available, legally, to front of house employees.

The 80/20 rule: According to Bloomberg Law, the new package of rules being introduced by the Labor Department would also put regulations on a policy from the Obama administration: the 80/20 rule — a policy that forced restaurants and other businesses to pay minimum wage to tipped workers for time spent on tasks that don’t generate tips, like side work. Federal law allows tipped workers like servers to be paid $2.13 per hour, rather than the standard $7.25 minimum rate for other workers. Because tasks like side work don’t generate tips, the Department of Labor had previously said those tasks should be paid at the higher minimum wage.

The Latest Wave of U.S.-China Trade War Tariffs Takes Effect

  • The latest round of tariffs in the ongoing trade war between the U.S. and China took effect on Sunday, September 1.
  • According to Bloomberg, this new round of tariffs adds import taxes on about $112 billion in Chinese imports, including food products and certain spices.

These new tariffs are the latest escalation in ongoing trade conversations between the U.S. and China and the rest are due to hit in December. This round of tariffs is the first to directly impact consumer goods like food, apparel, footwear, and electronics.

According to CBS News, in retaliation for some of the U.S. tariffs, China cut off imports of U.S. agricultural products like soybeans and corn, which has negatively impacted American farmers. Other agricultural products like lobster, nuts, and wine have also been hit by China's tariff.

Sexual Harassment Prevention Laws in the #MeToo Era

  • In the wake of the #MeToo movement, fifteen states have adopted laws protecting workers from sexual harassment.

  • Of those fifteen states, ten — and New York City — have prevention measures that include mandatory sexual harassment prevention training and workplace policy requirements for employers.

  • Last week, California Governor Gavin Newsom extended the deadline for required sexual harassment prevention training to January 2021. Employers in other states like New York and Illinois must be compliant over the next few months.

According to a recent report by the National Women’s Law Center, “Fifteen states have passed new laws protecting workers from sexual harassment and state legislators across the country have introduced close to 200 bills to strengthen protections against workplace harassment.”

In addition, the same report says ten states — including California, Connecticut, Illinois, and Louisiana — and New York City have enacted key prevention measures, including mandatory training and policy requirements for employers.

In the news this week, California Governor Gavin Newsom extended the deadline for required sexual harassment prevention training to January 2021. This was a relief to employers like restaurateurs since the original January 2020 deadline was seen as a tight timeline to get all employees trained and compliant.

Other states are still being held to 2019 and 2020 deadlines for required sexual harassment prevention training.

How These Trends May Impact Your Restaurant

Keep a close eye on labor costs

The cost of labor is constantly rising. The federally mandated minimum wage has increased substantially, and with the new adjustments proposed by The Labor Department, you may soon need to pay qualifying workers extra for overtime — not to mention the other changes coming in the pipeline. It’s important to stay up to date on how these new Labor Department rules will impact your local restaurant community and start looking for ways to offset this increased labor overhead. Calculate your labor cost percentage, and learn how you can reduce labor costs in your restaurant with better staff scheduling.

Prepare your restaurant for the effects of tariffs

Few industries have benefited from free trade the way the food and beverage industry has and the current tariff trade war happening between the U.S. and China — along with a number of other countries — will affect both our general food supply, the ingredients available for restaurants and bars, and their operational overhead. To prepare yourself and stay ahead of any changes that could occur, stay informed, talk to your distributors regularly, and be conscious of product usage — and those are just for starters. For more information on the tariff trade war and how to create an action plan for your restaurant, read our article How To Prepare Your Restaurant for the Effects of The Tariff Trade War.

Know your local laws, take the necessary steps to be compliant

As sexual harassment protections and prevention laws become more common, do your research and stay informed about the laws and requirements in your state. These new laws vary by state, and staying informed will give you enough lead time to ensure you and your team are compliant and not risking fines or citations. There are sexual harassment trainings you can offer your staff online, but learn how Erin Wade of Homeroom built out a robust anti-harassment policy and prevention program for her restaurant.

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