Regulatory and Legal Affairs

💸 Sen. Ted Cruz and others introduced the “No Tax on Tips Act,” exempting cash tips from federal income tax starting in 2025. President Trump, at the Republican National Convention in Milwaukee, endorsed the act, citing a Nevada server's complaint about tax on tips. This act could impact restaurant industry employees, as tips comprise 71% of their minimum wage. Critics argue that about half of tipped workers don't earn enough to pay federal income taxes, and the act doesn't exempt employer payroll taxes or state taxes on tips.

📌 The National Labor Relations Board (NLRB) withdrew its appeal of a federal judge's ruling against the broadened joint employer rule in May. The rule, expanded last fall and struck down by multiple government branches, could have held franchisees and franchisors equally liable for labor terms. The NLRB still supports the legality of the rule despite the blocked appeal, which leaves the possibility of a future challenge open.

🚧 Announced on July 17, the UK Government's new Employment Rights Bill, to be introduced within the first 100 days of the new parliament, will ban zero-hour contracts and 'fire and rehire' practices, while ensuring workers receive contracts reflecting regular working hours. All workers to have 'reasonable notice' of shift changes with compensation for cancelled shifts. The bill also mandates sick pay, parental leave, and protection from unfair dismissal from day one, abolishing the lower earnings limit on Statutory Sick Pay and its three-day waiting period. Further protections for new mothers include unlawful dismissal prevention for six months post-return to work, and a 'genuine living wage' is planned. Additionally, the bill will streamline union recognition and access. Concurrently, reforms to the Apprenticeship Levy and improvements to the planning system aim to boost hospitality sector growth.

🍻 Eluned Morgan, Wales’s Health Secretary, proposes banning free sugary drink refills in hospitality businesses to encourage healthier living. Over 60% of Wales' population is obese or overweight. Other plans include ending promotions like buy-one-get-one-free on unhealthy foods. Consultation responses are due by September 23, 2024. Draft regulations may be laid before the Senedd in 2024, with a 12-month transition period, aiming for enforcement by end of 2025. Non-complying businesses could face £2,500 fines.

🥥 The Coconut Tree, claiming to be the 'largest Sri Lankan restaurant group outside Sri Lanka', underwent a Company Voluntary Arrangement (CVA) process overseen by Forvis Mazars, approved on 13 June, after facing financial challenges, including closing its Cardiff location in March. Founded in 2016, it operates eight UK restaurants. In January 2023, it sought a £1m equity-based crowdfund for expansion, targeting the London market, boasting a £10m pre-money valuation.

💸 One Fair Wage's initiative to raise Ohio's minimum wage to $15 and eliminate the tip credit failed to secure enough signatures for the November ballot. The constitutional amendment proposed a minimum wage increase to $12.75 by January 1, 2025, and $15 by January 1, 2026. Tip credit, which allows payment below the minimum wage to tipped workers, is a divisive issue. As of 2024, seven states and cities like Chicago and Washington, D.C., have abolished it. A survey revealed 91% of tipped workers in Ohio are satisfied with the current system.

🏦 Sir Keir Starmer becomes UK’s new Prime Minister on 5 July after Labour's victory, securing over 400 seats against the Conservatives' 120 in the general election. Labour commits to replacing England's business rates system and to reform the Apprenticeship Levy. UKHospitality CEO Kate Nicholls urges swift action on these commitments to aid the sector's growth. Industry voices like Sacha Lord and CAMRA's Nik Antona express optimism and call for government support, including fairer tax and protection for pubs.

🏨 HOTREC's 2024 Hotel Distribution Study highlights the dominance of Booking.com, which now holds a 71% market share, up 10% over the past decade. European hotels increasingly depend on Online Travel Agencies (OTAs), with direct bookings on the decline. The Digital Markets Act (DMA) aims to address this imbalance by implementing fair digital rules for a more equitable industry, potentially enabling hotels to offer better rates on their own channels. Key stats show OTA undercut prices in 40% of cases and electronic distribution accounts for 45% of overnight stays booked online. The study was conducted by HOTREC and HES-SO Valais Wallis, analyzing data from over 3,000 European hotels.

🗑 California Gov. Gavin Newsom signed SB 1524 into law on June 29, exempting restaurants from SB 478's junk fee ban effective July 1. The law, introduced by State Sen. Bill Dodd, mandates restaurants to disclose service fees and their purposes upfront on menus. Supported by the California Restaurant Association, the exemption applies to restaurants, bars, and food services, requiring clear fee displays within a year of the law’s implementation.