Helping Protect The Viability Of Oregon's Restaurant Industry

2017 is upon us and with it comes another significant legislative session chalk full of debates around the budget, labor laws, and transportation funding. If you haven't made plans on February 28, please set aside the date for our industry. We have an opportunity to connect you with your legislators that day in Salem's Capitol building.

We know there are real issues on the horizon in Salem and we will not be able to be effective without your engagement and commitment to stay educated as priorities emerge. Front and center will be paid family leave legislation and restrictive scheduling laws that create even more pressures on Oregon's small businesses in the wake of new minimum wage laws and paid sick leave. We must be involved in these conversations to protect the viability of Oregon's restaurant industry.

As you may have heard, we have our own proactive priorities we hope will be considered including more balance in compensation between kitchen staff and wait staff as well as a comprehensive transportation package to improve mobility and access to Oregon's restaurant scene. In addition, you probably know we are in the middle of filing appropriate paperwork to the United States Supreme Court to fight for the rights of our members to implement a tip pooling policy between wait staff and kitchen staff here in Oregon.

The 91 people in Oregon's Capitol building over the next six months have their hands full and they'll need our help to make wise and thoughtful decisions that benefit Oregonians. The biggest issue continues to be balancing Oregon's budget and making sure spending is reined in based on resources available. Our state budget continues to grow (over eight percent growth) but spending is growing at a more rapid pace. In order to be effective, Oregon's legislators will first be challenged by the give and take of Oregon's budget balancing process.

We expect the upcoming legislative session to be one of the most challenging in recent memory. The politics at the national level could create a more abrasive environment at the state level. Those dynamics will make your business story and your willingness to show up in Salem more important than ever.

Take us up on our February 28 invitation. Make a difference in 2017 for Oregon's hospitality industry and as always, thank you for making the decision to be in business and employ your fellow Oregonians.

For more information on ORLA's Day at the Capitol, email Greg Astley, director of government affairs at Astley@oregonrla.org. RSVP at OregonRLA.org/CapitolDay. | Jason Brandt, President & CEO, 
Oregon Restaurant & Lodging Association

Changes Are At Your Doorstep

We have a monumental change in the White House as Donald Trump prepares to take the reins of leadership in Washington D.C. No matter how you participated in this year’s election process, there are a number of realities that should be discussed in lodging circles as a result of Donald Trump’s rise to the presidency.

First off, Mr. Trump is a hotelier. This fact should give the lodging community some reason to believe there will be a receptive ear to the issues facing the industry and that the United States will continue to promote the growth of international travel experiences to our country with the assistance of our President-elect.

Secondly, it seems clear that infrastructure investment will be made a priority as part of Mr. Trump’s presidency. You may have noticed that infrastructure investments was the second thing mentioned in his victory speech. Here in Oregon that commitment should come as welcome news as we all understand the correlation between transportation investments and travel.

Another element of note is Mr. Trump’s commitment to keeping American jobs at home. As a hotelier, Mr. Trump realizes that the hospitality industry is full of positions that cannot be outsourced effectively and although technology may change that in some respects our industry remains full of growth opportunities for domestic job creation.

According to U.S. Travel, inbound international travel is ranked second as an industry export and accounts for 10 percent of all U.S. export dollars. This reality showcases how key it will be that international travelers continue to receive value for the dollars they bring and spend in our country.

As advocacy efforts ramp up here in Oregon, I hope you will make the decision to get out on the field and join us for ORLA Day at the Capitol on Tuesday, February 28. That afternoon is our opportunity to mobilize for the hospitality industry and make sure your businesses are further understood by those we choose to elect as lawmakers in our state. If you would like more information, email me at JBrandt@oregonrla.org or visit OregonRLA.org/CapitolDay. | Jason Brandt

The Big Wheels Keep on Turning for Oregon Tip Pooling

The Oregon Restaurant & Lodging Association owes a debt of gratitude to our partners at the National Restaurant Association and our friends at Jackson Lewis law firm for working together to cover all costs for a petition of the United States Supreme Court in our case, Oregon Restaurant & Lodging Association v. Perez. If the Supreme Court takes the case, both parties have also agreed to cover all costs associated with necessary deliberation of our position. So, fingers crossed that the U.S. Supreme Court does in fact take the case and grant our petition for rehearing.

If you’re just now getting up to speed, we continue to fight for the rights of our restaurant members to implement mandatory tip pooling policies amongst staff working within the line of service as they see fit. We feel tip pooling amongst staff (not management) to be a right of employers when they are already meeting the full requirements of minimum wage law for all staff they employ.

There are seven states in our country (including Oregon) that do not have a tip credit, meaning all employers in these states are meeting all minimum wage obligations of all staff regardless of tip income being received by employees from customers. In a controversial decision on February 23, 2016 the Ninth Circuit, to the surprise of many, disregarded its own precedent in a previous case ORLA was involved with in Cumbie v. Woodie Woo to hold that the United States Department of Labor (DOL) had lawfully promulgated a rule under Section 203(m) of the Fair Labor Standards Act (FSLA) that restricts employers from implementing “tip pooling” arrangements that require employees that are customarily and regularly tipped (such as restaurant servers) to share such tips with their fellow employees who are not customarily or regularly tipped (such as kitchen staff).

On September 6, 2016 our case was denied a rehearing which upheld the February 23 decision. We were however granted a stay of the Ninth Circuit, meaning the government will not enforce the February 23 decision until either the Supreme Court denies our petition for certiorari or the Supreme Court reaches a final resolution on the merits of our case (if it takes the case).

Our lawsuit, Oregon Restaurant & Lodging Association v. Perez, is based on our belief that principles established in previous court cases that established the rights of our members to create tip pools between front of the house and back of the house staff were intentionally supplanted by a federal bureaucracy that didn’t like the decision judges made in our case.

If we look back at where we started on this issue and where we are to date, it has been quite the journey full of crucial questions that must be addressed about what separation of powers look like in the United States of America. Should the U.S. Department of Labor have the right to create a new rule that applies to employers operating in states that are already paying the full obligations of minimum wage outside of tip income and tell those employers how tips can and cannot be dispersed amongst employees within their private business? Should the U.S. Department of Labor be able to circumnavigate clear judicial direction given to us in our district court case allowing tip pooling in our state through a stroke of their rulemaking pen?

We certainly don’t think so. And we hope the U.S. Supreme Court agrees that a closer look at our case is deserving as they make tough decisions about what cases to accept with their limited time. Keep your fingers crossed – it is possible your statewide association in the northwest corner of the country will have its day in court amongst the most highly regarded court in the land.

In the meantime, please review your available tip pooling options here as we await more clarity on tip pooling through the judicial process. | Jason Brandt, President & CEO

No on 97 – Oregon’s Largest Tax Proposal Ever

In a few short weeks it will be hard to miss the battle taking place on Oregon’s ballot between those
advocating for more tax revenue for state government versus those against it. The $6 billion tax increase proposal is the largest in state history and would be paid on the sales of products and services that Oregonians buy every day. The projected cost for the average Oregon household totals over $600 a year.

For months, Oregon Restaurant & Lodging Association has been officially opposed to Measure 97 (previously known as Initiative Petition 28). In partnership with consumers, families, small and large businesses, and organizations from across Oregon, ORLA will fight hard against this tax proposal and the harmful impacts it would have on our great state. Our biggest concern continues to be the impacts the measure will have on disposable income given the industry’s reliance on the ability of Oregonians to eat out on a regular basis. In addition, direct increased costs relating to food and utilities in particular will further disrupt the fragile profit margins our members are working hard to protect.

 We want all industry members to take the time to learn more about the proposal and engage in conversations with friends and family to discuss what’s at stake. In one of the most glaring mistakes, you will see proponents in favor of the measure praising the tax for its ability to boost dollars for education when nothing in the structure of the measure guarantees that any of the tax revenue would actually be spent for that purpose.

Given our recent track record with Cover Oregon and other wasteful government programs, my hope is that there is common agreement across party lines that cutting a blank check for over $6 billion to our state government might not be the wisest decision.

There is a wealth of information available online to digest at your own pace as you prepare to make decisions about your views on Measure 97 this election year. For me personally, the independent study conducted by the Legislative Revenue Office takes the cake. It concludes that if Measure 97 were to pass, Oregon would lose over 38,000 private sector jobs.

 These facts may give you confidence that Measure 97 has very little chance of passing but we cannot rest on our laurels or become complacent about the real threat it poses to disposable income flexibility for Oregon families and increased costs for your business. In order for our industry to continue its impressive pace of growth and success, damaging measures like Measure 97 must be defeated and defeated soundly. It is time to send a message that massive tax increases on the backs of working Oregonians will not result in a better Oregon. Instead, it creates larger rifts between private sector businesses who churn our state economy and the Oregonians working hard as part of the public sector.

This fight at the ballot box will further sever those relationships so please take the time to educate yourself on the realities of Measure 97 without becoming part of the animosity or ill will that pits Oregonians versus Oregonians.

Please take the time to visit Defeat97.com to learn more about the coalition we are officially a part of and how you can be involved. Let’s stand together against harmful proposals and continue building a stronger Oregon for our children and grandchildren. | Jason Brandt, President & CEO

The Changing Face of American Business

Changes in our country relating to overtime work are finally upon us. As of December 1, 2016
employers will be required to pay employees classified as exempt from overtime a salary of at least $47,476 a year or $913 a week. If an employee currently defined as exempt does not make $47,476 a year then they will be eligible for time and a half pay for all hours worked in a week over 40 hours just like non-exempt employees. The new federal law is putting immediate pressure on the hospitality industry to determine what changes to make, if any, to labor structures within their operations.

Recently the Oregon Restaurant & Lodging Association conducted an online survey of members to provide insight to operators on how their peers plan on handling such a significant change in labor law requirements.

A staggering 45 percent of respondents will be reclassifying current “exempt” employees as “non-exempt” employees and will pay overtime for any work in a week over 40 hours. Over 41 percent responded to our question relating to labor changes by clicking “other” with the majority saying the new rule will not apply to their current business as they do not employ exempt employees. The second most popular answer of those clicking “other” appears to be a hybrid approach. For exempt employees close to the new $47,476 a year threshold they may move them up to that new salary standard to keep intact their salaried position and the flexibility to work over 40 hours as needed in the business without a labor cost obligation of paying time and a half for those additional hours. For others not close to the threshold, they may be reclassified and held to 40 hours a week of work or less. And lastly, 14 percent of respondents will continue classifying their managers as “exempt” employees and raise their salaries to the $47,476 threshold so overtime pay does not apply.

As the results show, very few operational tactics are one-size-fits-all in their execution. We are an industry filled with wide ranging business models, target audiences, operational margins, and company cultures. We continue to hold the rank of being the second largest private sector employer in Oregon behind healthcare. These changes in how business is conducted can and will have unintended consequences. One of the more concerning outcomes are any changes made to those in transitional positions working hard to acquire the skills to become a manager.

It begs the question, who is ultimately responsible for professional development? The overtime rule was implemented by the U.S. Department of Labor to create forceful direction to employers who were “underpaying” managers while working them 50-60 hours a week without overtime pay. But what about the hard working 20-somethings eager to work those extra hours as an assistant manager to develop professionally? Who is responsible for the new limitations put on their ability to pursue that general manager position? Will they hold the government responsible or their employer for their unwillingness to pay them overtime to develop those skills?

Like most things in life, I believe the answer lies in the middle. Businesses will adjust as they always do and sacrifices will be made to employee morale when reclassification to hourly positions from salaried positions takes full effect. But those that will succeed will find creative ways to create professional development opportunities in place for employees looking to move up the ladder. Some will choose to incorporate aspects of managerial training within the constraints of the 40 hour work week while others may choose to pay the new $47,476 a year salary or simply pay overtime from now on for any necessary training hours beyond 40 hours a week.

The face of American business is changing and we are committed to doing our part to share helpful information about how savvy businesspeople are choosing to adapt to those changes.

Keep informed at Oregonrla.org | Jason Brandt, President & CEO

Thumbs Up To City Of Seaside For Their Lodging Outreach Efforts

Tourism continues to flourish along Oregon’s coastline and with that success comes efforts by some communities to double down on tourism related investments that can further drive their local economies. The City of Seaside is a prime example of a local government doing it right by proactively engaging their lodging operators at the front end of lodging tax increase discussions.

Due to the success of lodging sales, lodging tax revenue in Seaside has gone up substantially, resulting in double digit increases the past several years. In order to build off that success, the City has proactively reached out to lodging operators about a sizeable renovation to the Seaside Convention Center.

“For the most part our larger hotel and motel properties are very supportive,” said Seaside City Manager, Mark Winstanley. “We have been in discussions about a two percent increase in the tax. All of that money would go towards debt retirement of the facility.”

By focusing on debt retirement, the City would be able to move forward with a desired $15 million renovation of the convention center to add capacity and further expand tourism performance.

“We have been encouraging local governments to reach out proactively to their local lodging operators to discuss tourism investments as a first step,” said Greg Astley, director of Government Affairs for the Oregon Restaurant & Lodging Association (ORLA). “That commitment is playing out in Seaside which we hope other cities will learn from.”

Lodging tax creep across Oregon is something being tackled as a top tier advocacy priority for ORLA. The association recently opposed a lodging tax increase proposed in the City of Beaverton due to a questionable claim that a new Center for the Arts would drive tourism traffic and justify an unprecedented new four percent tax on operators inside the city limits. The city also illustrated a lack of engagement with local lodging operators to obtain support for this coveted center.

“The lack of direct outreach by the City of Beaverton to lodging operators located inside the city limits is shameful,” said Jason Brandt, ORLA’s President & CEO. “There is no proof or data available to suggest the proposed Beaverton Center for the Arts will have a ‘substantial purpose of driving tourists’ to the City of Beaverton.”

State law requires that 70 percent of all increases in tourism taxes be used for tourism promotion or tourism related facilities. The City of Beaverton plans to spend the new four percent tax on the Beaverton Center for the Arts, which seems to fail the test of being labeled as a tourism-related facility. Currently, there are no lodging operators in Beaverton supportive of the increase in lodging tax to help pay for the construction of the arts center.

“The contrast between Seaside and Beaverton in their approach to lodging operators is evident,” said Brandt. “On one hand you have a city proactively reaching out to their lodging operators to confirm an increase in the lodging tax would benefit their businesses and the tourism economy. This outreach ultimately led to general support from operators for the increase and investment plan. On the other hand, you have a City pushing through a lodging tax increase with no lodging operator support on an investment that is deeply questionable in regards to its ability to actually generate substantial tourism traffic.”

If you are aware of lodging tax creep in your community, please contact us at Advocacy@OregonRLA.org.

Help Defeat the $6 Billion Tax on Oregon Sales

As you know, Initiative Petition 28 (IP28) – a proposed new tax on Oregon sales that would cost Oregon consumers and Oregon businesses billions – will be on the November 2016 statewide ballot.

IP28 would impose a huge new $6 billion tax on sales – the largest tax increase in state history – and would increase costs for Oregon businesses, working families and consumers with no guarantee where the money would be spent. If passed, this extreme measure would make our industry less competitive and make lodging and dining out costlier for our Oregon customers.

Defeating IP28 is a priority for the Oregon Restaurant & Lodging Association. We’re asking you to join the Defeat The Tax On Oregon Sales coalition and help spread the word about this costly and damaging proposal.

Some important facts about IP28:

• IP28 would tax sales, not profits. Businesses would be required to pay the new tax whether they have a large profit, small profit, or no profit at all. 

• IP28 does nothing to guarantee the new tax revenues would go to schools, healthcare, or senior services. All of the new taxes would go to the General Fund, giving politicians and bureaucrats a blank check to spend billions of dollars as they please with no accountability to the public. 

• IP28 would impose the worst kind of tax on sales because it would be added at multiple steps in the production process – a “tax on a tax” – cascading into much higher prices for items Oregonians buy every day, without any exemptions. Electricity, fuel, insurance, food and many other items and services we rely on would be subject to the tax – making Oregon products more expensive and Oregon companies less competitive.

• A study by the nonpartisan Oregon Legislative Revenue Office (LRO) concluded that about two-thirds of this tax on sales would end up being paid by Oregon consumers, costing the average Oregon household more than $600 every year.  

• The LRO estimated passage of IP28 would result in the loss of more than 38,000 private sector jobs, impacting Oregon’s overall economy, small businesses and multiple industries.

Here’s where you come in. 

If you haven’t already, please join the coalition. Once you’ve joined, you will receive news and updates about the efforts to defeat IP28 and what you can do to help.

Visit the campaign website, DefeatTheTaxOnOregonSales.com, where you can read news and information about the negative impacts of IP28, and donate to the campaign. 

Also, like the coalition on Facebook and follow them on Twitter to share the word on social media about why IP28 is a bad idea for Oregon.

We need your commitment to help our industry by joining the effort to defeat the most egregious tax increase in Oregon history.

If you would like more information about the campaign to oppose IP28 or want to get involved in other ways, please contact the campaign at info@DefeatTheTaxOnOregonSales.com or (877) 575-9950.