The small-business legislation we are seeing come forward is a national issue, and it impacts more than just the franchise sector. It has an effect on all small business.
I was recently at the National Franchise Association/Burger King Corporate Summit, in Washington, D.C., earlier this month. They held it there, so that business owners could talk about these legislative issue, impact to small businesses, and specifically, the franchise sector.
A lot of the meetings we had with various legislators surrounded decisions made by the Department of Labor and the National Labor Relations Board. Three major points that were discussed were overtime regulations, minimum wage and what they call the “40-hour bill”.
We spent most of the day on Capitol Hill, where we were divided into groups, by state, led by multiple franchisees to meet with senators and congressmen to discuss these plights. It was interesting to go there, and basically lobby directly with the representatives on these topics. I was with a three Burger King franchise owners, one with which we do a lot of business (Meridian Restaurants Unlimited, LC), and we met with legislators from Minnesota, where they operate several restaurants.
It was interesting to sit in on these meetings and listen to business owners talk about their issues. They were peeling back the layers of the onion, so to speak, of their business operations, and their ability to manage their businesses successfully.
The overtime regulations, specifically, was discussed a lot. A franchise owner can put an employee on salary for anything over $23,660 a year, giving them benefits, and there may be some honor being a salaried employee versus an hourly worker. But where the owner might put them on salary to work 40 hours a week, the employee might opt to work 50 hours per week because they want to get ahead. But the legislation being proposed right now, is taking that $23,660, and more than doubling it, and taking it to $47,476. So a small-business owner, or franchisee, looks at that, realizes that they don’t have that many employees, and have all of these employees being paid between $23,000 and $47,000, will then instead switch them over to hourly wages. If the employee might have been working 40 or 50 hours a week, they would now have to pay them overtime, which is a big hit on the employer side. On the employee side, if they go back to hourly, they might lose their benefits.
A lot of the franchisees say: “One size doesn’t fit all.” That may be fine for California, but it doesn’t really apply to Idaho. The economies are completely different.
In the case of the 40-hour bill, the legislation says that anyone who works 30 hours a week is going to be considered full time, and as a result of that, the employer needs to offer them benefits. That’s going to increase the employer’s costs, so they will likely cut back the employee’s hours under 30. So that will hurt the employee. And on the employer end, they will now have to pay overtime on more than 30 hours a week instead of 40 hours. And with having to pay for benefits for more than 30 hours, the cost will likely be passed on to the consumer because there is an increased cost of their operations.
In addition to the 40-hour bill, there is also the national issue of an increase in minimum wage. It would change it to between $10 and $12 per hour nationally, but a lot of people feel it should be a state-by-state decision instead, or even locales smaller than that, such as individual cities. The minimum wage in New York City probably isn’t enough, in Denver it might be enough. But what about Paducah, Ky.? Twelve dollars is probably way too much. It’s hard to make global change because it doesn’t impact everyone in the same way.
In most instances, lawmakers were receptive to hear the concerns at the event. Most of the meetings we had went very well, both on the Republican and Democrat sides, in listening to our concerns. All in all, the lawmakers were receptive overall, and it was a good experience.