2015’s Five Business Headlines With Biggest Impact for 2016

As the 2015 business calendar comes to a close, many are reviewing the events of the year with an eye toward what they mean for 2016.  Yet there were a few key news events that have significant implications for labor practices in the coming year– especially for employers of hourly-paid workers like retail, restaurant, bar, and hospitality employees.  Here’s my roundup:

$15 Minimum Wage Activity

Nationwide, organized walkouts, pickets, and union actions have been focused on a “Fight for $15.”  The hourly wage paid to McDonald’s workers has been a key focus of the pressure groups, and the New York passed an increase in the minimum wage to $15 for fast food workers in the state.  Later in the year, Governor Cuomo raised the minimum wage for all State employees to $15.

More broadly, the L.A. County’s Board of Supervisors voted to increase the minimum wage to $15, as did Seattle.

In the wake of Seattle’s increase, some were quick to note that the restaurant industry’s job losses (-1,300 from January to June), was the largest since the Great Recession.  In New York, some reports also indicate that reductions in labor will be a piece of the strategy restaurants use to deal with a 70% increase in payroll costs. 

Looking to 2016, the continued conversation around a $15 minimum wage will be one for employers of hourly wage earners to keep an eye on, as it can have a significant impact on business operations - with a variety potential strategies in response. 

National Labor Relations Board Joint Employer Ruling

Also of interest to franchised businesses like McDonald's was the National Labor Relations Board’s August ruling in the case of Browing-Ferris Industries (BFI), which has the potential to significantly alter the relationship between franchise owners, their employees and the franchising corporation.

In this case, the argument was made that since franchisors “effectively control wages by controlling every other variable in the business except wages,” the franchisor should be involved in collective bargaining actions occurring with the franchisee.

Because the ruling redefines the standard by which joint-employer relationships are recognized, employees of an individual franchisee who unionize can potentially bring the corporate franchisor to the bargaining table to negotiate labor and wage issues – which can have a wide variety of implications for operators of franchisees related to minimum wage, scheduling, paid vacation, and other employment agreement issues.

Coming into 2016, employers should be prepared to receive a variety of these requests as employees realize their potential new power they have under this ruling.

Retail Worker Bill of Rights Goes Into Effect

On July 3rd, San Francisco’s Retail Workers Bill of Rights went into effect, requiring many employers in retail, hospitality, and restaurant industries to provide workers with two week’s notice of work schedules, and either eliminate “on call” scheduling or pay significant financial penalties for using the practice.

Compliance with the law required process change for many national chains who operate in the city, and a variety of other cities and states have begun exploring similar legislation in their localities. 

This trend will be one to watch closely in 2016, as it has significant implications for payroll costs and scheduling practices in locations that adopt San Francisco’s practices.

New York Attorney General Questions “On Call” Scheduling

In a related headline, the New York Attorney General questioned 13 retailers around their use of “On Call” scheduling, including Target, The Gap, JC Penny, TJX COs, Urban Outfitters, Ann Inc, Sears Holdings, Williams-Sonoma, Abercrombie & Fitch, J Crew, L Brands, and Burlington Coat Factory. 

Following the inquiry, a number of retailers announced that they are voluntarily making efforts to make workers schedules more predictable.

In 2016, we should expect to see more pressure on employers to adopt practices like those in the Retail Workers Bill of Rights – whether mandated by law, or as a voluntary practice.

Overtime Exemption Rule

Coming into 2015, salaried workers were not eligible to receive overtime for time worked beyond 40 hours per week if their normal pay was $23,660 (or $455 per week).  On July 6th, 2015, the DOL proposed an update that would raise the threshold to $50,440 (or $970 per week) before workers become ineligible for overtime pay.

The announcement estimated the that nearly 5 million workers may see increased eligibility for overtime pay.  A 60-day public comment period collected comments, and a final rule is expected to be issued in July 2016.

Some believe that the regulation “will be sticker shock for most manufacturing, retail, fast food and millions of small business employers.”

 Coming into 2016, I’d expect these sorts of employers to implement new strategies for scheduling and hours management to counteract potential costs. 

 In my review of 2015, I see these as the five biggest business headlines that will impact labor strategies in 2016. Yet I’m curious to year your views.  Are they the right five?  What were the biggest business headlines from 2015 that impacted your world? How do you see 2016 strategy changing as a result?  Please share your thoughts in the comments section below. And if you found this post interesting, let me know by giving it a “Thumbs up!” and sharing it with your network.

About:  JD Miller is a senior technology executive with a career spanning small startups and large public companies.  He uses this expertise to help organizations increase and sustain sales performance.  He is also active in Chicago’s philanthropic community, with a special interest in issues related to hunger and homelessness.

You can follow Dr. Miller on Twitter @JDM_Chicago