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Labor Rules, Industry Taxes Top MRA Issues List

Ensuring uniform state labor standards in Minnesota and maintaining the principle of “one state—one rule” sit atop the Minnesota Restaurant Association legislative agenda. Tax issues are also at the forefront. The association approved its priorities January 5, just two days after the session got underway.

The session, which ends in May, is expected to be contentious. A broad statement in this year’s MRA agenda reads, “We support employer policies that help our employees avoid working when they are sick and prevents their losing work time and wages. We have concerns about a mandate that is inflexible and doesn’t recognize the great differences between various types of businesses in our diverse economy.”

Allowing cites to set minimum wage levels and earned sick and safe time policies creates the potential for more than 850 different labor laws across Minnesota. MRA Executive Vice President Dan McElroy said about 20 states already have “one state—one rule” measures in place, including states bordering Minnesota.

Some legislators agree with the business community concerns about state control of labor issues. In turn, city council members in St. Paul and Minneapolis are already keeping wary eyes out. Both cities approved earned sick and safe time proposals in 2016 and are phasing them in for 2017. Duluth city leaders are studying earned sick and safe time this year.

Minneapolis and St. Paul are also studying implementation of their own minimum wage levels, with St. Paul council members discussing the issue at a recent policy session. 

“The concern is that we’d lose local control over these issues,” said St. Paul City Council Member Chris Tolbert.

Tipped employees are at the center of another MRA issue. McElroy noted that although the Federal Fair Labor Standards Act allows for changes, Minnesota is one of only seven states that does not have a tipped employee level to its minimum wage. McElroy said legislation is sought to address the longtime inequity between workers in the dining room and bar, and those in the kitchen. 

Yet another key issue is the so-called nuisance lawsuits based on the federal Americans with Disabilities Act. At least two Minnesota attorneys have filed dozens of lawsuits against businesses demanding modifications or a financial settlement. Business groups worked closely in 2016 with the Minnesota State Council on Disability on the access issues. Margot Imdieke Cross, accessibility specialist for the council, said much of the focus has been on hospitality-related businesses.

Several legislative efforts center on taxes. One focus is on exempting restaurants from paying sales tax on capital equipment, complimentary guest drinks and free employee meals, and as McElroy noted, “Restaurants are some of the only businesses paying sales taxes on equipment.”

State law currently allows manufacturing companies to purchase tax-free the equipment used to manufacture products that are later resold and taxed at the point of sale. The MRA argument is that restaurants manufacture meals, which are then sold to the consumer and taxed. The elimination of sales tax on restaurant equipment could drive the purchase of major kitchen items such as walk-in coolers and ovens and result in economic benefit to the state.

Restaurateurs are required to pay a tax on every drink, whether a customer was charged or the drink given away it away. In addition, free or reduced priced meals are a strong benefit to employees. Eliminating this sales tax would be a strong incentive to provide meals to employees. 

Minnesota restaurants currently pay 100 percent of the costs associated with collecting and remitting state taxes, which include payment card fees, employee training, point of sale system programing, accounting, remitting and auditing. A collection allowance would provide some compensation for businesses, as is allowed in 28 other states. An allowance would only be authorized when taxes are remitted on time and paid online. 

The association is also part of a larger and diverse “business immigrant coalition,” including immigrants and labor advocates to speak for a restricted driving credential for immigrant workers who are undocumented. 

Another effort is to establish a non-refundable tax credit for the donation of prepared foods to charitable institutions including food banks and shelters. This would be similar to a federal enhanced deduction. While many food programs and shelters already use donated food, it comes at a cost to properly package, refrigerate and document the donated food. A state tax credit would provide more of an incentive, the MRA said.  

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