Regulatory and Legal Affairs

💸 The California Supreme Court unanimously upheld Proposition 22, which classifies drivers for companies like Uber and DoorDash as contractors, not employees. The decision, confirming a previous appeals court ruling, maintains the outcome of the $200 million lobbying effort by delivery apps for the bill passed in November 2020. This follows the AB5 bill, effective January 1, 2020, which aimed to consider such drivers as employees. Critics argue this contractor status denies drivers employee benefits, while proponents cite work flexibility. The recent ruling is seen as the final say after over four years of legal battles.

🏖 Gotham Restaurants LLC, known for operating Gotham Restaurant (previously Gotham Bar and Grill), filed for Chapter 11 bankruptcy in New York on Wednesday. The company owes nearly $484,000 to its largest creditor, the NY State Department of Taxation Finance Bankruptcy/Special Procedures Section. Other debts include nearly $97,000 to Dairyland and approximately $84,000 to Baldor Specialty Foods. The 40-year-old restaurant, a Manhattan dining landmark, closed in June due to a $45,000 cyberscam. Founded in 1984 by Alfred Portale, it became a trendsetter in the late '80s with "tall food". Portale left in 2019, and Ron Paprocki led as executive chef before the filing, which reported assets between $1 million and $10 million.

🍝 U.S. Sen. Dick Durbin and Rep. Rosa DeLauro introduced legislation to establish the Federal Food Administration, transferring food safety oversight from FDA. Hazel Analytics data from 2023 shows increased food safety violations post-pandemic. In 2022, the CDC reported a rise in consumer risk to foodborne illnesses. The new agency would include FDA's current food programs and operate under the Department of Health and Human Services. The initiative aims to prevent illness and death from contaminated food.

💸 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.