Federal Issues Impacting North Carolina Hospitality
NCRLA, in partnership with the National Restaurant Association and the American Hotel and Lodging Association, is closely monitoring federal rules and legislation that could impact the hospitality industry. NCRLA remains committed to advocating for North Carolina’s hospitality industry in the face of these federal challenges.
Legal liability and labor organizing issues will be shared among separate companies per a new federal “joint employer” rule taking effect on Feb. 26, 2024. Under the rule, “indirect” control by one company over a worker employed by a different company can trigger joint employer status. This has implications for any hospitality business’s third-party contracts with onsite service providers (such as a janitor or linens service) and franchisee-franchisor relationships. NCRLA is working with our federal partners to restore a workable standard and we are considering legislative and legal actions.
In a move that could save restaurant operators and other merchants billions annually, the Federal Reserve voted in favor of issuing a proposed rule to lower the debit fee cap for the first time since 2011. If the proposal advances, the current debit interchange rate could be cut by around 33% and would be updated on a biennial basis in accordance with Fed data. NCRLA is working with our federal partners to support the change while the financial institutions will lobby hard against this proposal.
- Restaurant and hotel pricing would no longer be able to include fees or other surcharges under a new rule from the Federal Trade Commission (FTC). Branded as “junk fees”, the FTC wants to ban mandatory service fees, living wage fees as well as credit card transaction fees, local taxes, resort fees, and other charges that may appear on a customer’s receipt.
In August, the US Department of Labor (DOL) announced a Notice of Proposed Rulemaking (NPRM) about employer obligations related to overtime pay. If enacted, the new rules would put significant new burdens on restaurants and hotels and other businesses to offer overtime pay (time-and-a-half) to a much larger portion of their employees. The proposed rule increases the minimum salary threshold for an individual to be eligible for overtime pay to $55,068, up from the current $35,568—a nearly 55% increase. The proposal also implements automatic increases to the threshold every three years. NCRLA along with our federal partners at the National Restaurant Association and the American Hotel and Lodging Association are working together to help mitigate harm to North Carolina’s hospitality businesses.
After Congressional Democrats debuted a plan boosting the minimum wage to $17/hour and eliminating the tip credit, Senate Republicans floated a new proposal to raise the minimum wage to $11/hour and index future wage increases to inflation. While the Republican plan preserves the tip credit, it includes mandatory e-verify requirements. NCRLA and the National Restaurant Association will continue to lead the effort to preserve the tip credit.
Swipe fees cost US businesses over $160 billion in 2022 when debit cards are included. A lack of competition between the major credit card processing networks is why swipe fees continue to skyrocket. The bipartisan, bicameral Credit Card Competition Act (CCCA), S. 1838/H.R. 3881, would require at least two competing processing networks to be enabled on every credit card. By enhancing competition in the market, this legislation would drive down swipe fees, improve security and service, and save businesses—including restaurants—and consumers an estimated $15 billion a year. Opponents argue the Credit Card Competition Act is designed solely to benefit behemoth retailers, and that lower interchange fees may mean less money for funding credit card rewards programs. Either way, the legislation is unlikely to pass this session, which means that businesses will have to find a way to deal with increasing costs.
- Secure the border and promote legitimate travel and tourism. The United States needs stronger security at its borders. However, any steps to increase security should also facilitate travel and tourism to the United States. Travel and tourism drives approximately one-fifth of all restaurant sales and boosts economic activity across all sectors.
- Provide a pathway to legalization. More than 11 million undocumented individuals are living and working in the United States. Many are paying taxes and contributing to the economy and their communities. Numerous polls show that the public strongly supports a clear path to legalization for these workers. Restaurants support this too.
- Create a viable essential worker program to meet workforce needs. Immigrants play a key role in the restaurant industry’s growth and diversity. We support a new program that would legally match willing workers with willing employers — a viable year-round temporary worker visa program for the service sector. Such a program would play a key role in addressing the workforce needs of restaurants and other hospitality employers. It is time to create a visa program that allows legal foreign-born workers to come into the United States under a controlled process to work year-round.
- Implement a reliable and efficient federal employment verification program. Many states and localities have passed their own employment verification laws. This patchwork of laws creates an untenable system by forcing restaurants and other employers to comply with different laws across multiple jurisdictions. The Association supports a consistent national standard that helps employers hire in a timely, efficient and respectful manner. Employers should not be held liable or face penalties if they use and rely on a national verification system in good faith, and should be given an adequate opportunity to rectify errors.
Youth employment is under greater scrutiny on Capitol Hill and at DOL. Republican and Democratic lawmakers have introduced multiple bills that would strengthen penalties for violations of child labor laws and DOL has pledged to step up enforcement. NCRLA will continue to monitor these efforts and share resources on this issue.
Both the Kids Online Safety Act (S. 1409) and the Children and Teens Online Privacy Protection Act (S. 1418) in the Senate appear to have lost some momentum due to a recent lawsuit preventing California’s new kids’ online privacy law from going into effect. NCRLA is watching as both federal bills expand online protections for those under 18 years old, but they may hamper a business’ advertising and marketing practices.