The election of a new US president will afford the restaurant industry a chance to open the debate on the key issues that it faces. “We are looking at a new administration and Congress – whether Clinton or Trump is elected – with great excitement; just like the first day of school,” says Cicely Simpson, executive vice president of government affairs and policy for the National Restaurant Association (NRA). “After the election, we know we have about six to nine months of runway to set the agenda and work with new players. We have a great opportunity to educate a new Congress about our industry and some of the top issues we face.”
So what are the chief concerns? And how might the new Democratic or Republican president impact on those outcomes in Congress and federal law?
Overtime rule
The Department of Labor’s final rule updating federal overtime regulations, published on 23 May, doubles the current salary threshold for overtime-exempt employees, guaranteeing time-and-half pay to any salaried employee earning under $47,476 a year ($913 a week) and who works more than 40 hours in a week. The new rule takes effect on 1 December; however, at the time of going to press, proposals for a longer phase-in period continued to remain pending in both the House and Senate.
“The question we are looking at is whether the Bill will be passed before the election,” says Simpson. If Hillary Clinton is elected, the NRA anticipates that the December date will stand. But if Donald Trump is elected, his administration could make changes. Restaurants should, however, plan for the upcoming effective date, the association says.
Tax reform
The election could have a significant affect on tax reform, regardless of party politics, according to Simpson. House Republicans have released their blueprint on tax reform and what they would like to see happen, but there is currently no legislation pending around that proposal. As such, there has been a significant amount of work by the NRA in preparing for a new administration, because it’s likely Congress will visit this issue in early 2017.
“We had a huge victory on tax reform when the House, Senate and president signed into law the Tax Extenders Bill in December 2015,” says Simpson.That series of changes included: the 15-year tax depreciation schedule for restaurant improvements and new construction; the Work Opportunity Tax Credit; the enhanced tax deduction for the food inventory that restaurants donate to charity; bonus depreciation; and Section 179 expensing that allows companies to immediately deduct up to $500,000 in purchases of qualifying equipment and property.
Over the longer term, as US lawmakers have been talking about a comprehensive rewrite of the federal tax code, the NRA asks legislators to recognize the restaurant industry’s diversity. Many restaurant owners and investors pay at individual tax rates, including sole proprietors and owners/investors who pay taxes on income that come through partnerships, S corps, LLCs and other flow-through entities. Corporate reforms alone won’t help the sector.
The American Jobs Act
Part of president Obama’s $447bn American Jobs Act offers tax credits to restaurant owners who hire US veterans. Other aspects of the Bill, if passed, that could impact the restaurant industry, include: cutting payroll taxes in half for 98% of businesses; expanding small business administration loan limits; and tax credits for employers who hire long-term unemployed workers. The GOP has fought against this Act, even introducing its own, the Jobs Through Growth Act, which seeks to create a simplified tax system that could allow restaurants to be able to deduct more expenses for taxes.
Joint employer
The National Labor Relations Board has moved to amend a long-running franchisor/franchisee model that would hold franchisors responsible for more business decisions, such as hiring, firing, promoting, and others once handled primarily by the franchisees. The NRA has argued to maintain the current status quo, which, it says, provides franchisees with more freedom to run their businesses. This joint employer issue will continue to spur debates into 2017. “We don’t expect Congress to pass legislation this year, but there have been many conversations about the issue, and both small and large restaurant businesses have certain concerns, so we are preparing to educate a new Congress and a new president about [it],” Simpson says.
Immigration reform
A Trump victory could introduce major revisions to immigration reform, given he has suggested sweeping changes, including mass deportation of illegal immigrants and building a wall between Mexico and the US. Currently, there are about 38 million immigrants in the US, of which an estimated 12 million are here illegally, while 8.3 million undocumented aliens have been part of the nation’s workforce since 2008. Further, 700,000 undocumented workers are employed in the restaurant industry. The main issue facing restaurants is the inconsistency of immigration reform: the lack of reform at a federal level has led to state and local governments taking matters into their own hands, creating an increasingly complex and fragmented approach to immigration.
Minimum wage
A new administration will be tasked with determining if there should be an ongoing fight to raise the federal minimum wage, or even if there should be reversals or other changes. The minimum wage has remained at $7.25/hour since 2009, but president Obama’s call to raise the rate in 2013 saw 18 states, 50 cities and localities and Washington DC pass laws to do so.
Amelia Levin
