Customer reviews should be exactly that and not misleading advertising messages. | Photo: Shutterstock

Welcome to Government Watch, a weekly Restaurant Business column focusing on regulation, legislation, labor mandates and other government issues relevant to the restaurant industry. This week’s edition looks at a new White House initiative that could mean good news for restaurants, and why the industry’s eyes should be on Michigan.

Advertising posts disguised as online reviews from real restaurant diners could finally be banned, implementing a proposal put forward by the Biden administration over a year ago.

The White House quietly announced Monday that it would crack down on business practices that have proven extremely annoying to consumers, such as customer hotlines that don’t reach a human or complicated processes for canceling gym memberships. Among the practices it hopes to ban is the use of fake online reviews to promote a product or service. Specifically, restaurants would no longer be able to hire people to write glowing reviews of a visit that never happened and post them online as if they were actual customers, or write similar promotional material themselves.

Nor could a restaurant suppress negative reviews or tone down the criticism so that it is not so biting.

The measures proposed in Monday’s announcement of the “Time is Money” initiative are already in the rulemaking phase. The Federal Trade Commission proposed banning bogus valuations in June 2023 and asked for public feedback. Normally, this public comment period lasts a few months at most. The White House’s mention of the upcoming changes suggests it could give the trade regulator a significant nudge to act.

The government has indicated that the “Time is Money” initiative is a complement to its earlier campaign to combat junk fees, the extra charges that some companies add to the listed price of a good or service. The FTC has indicated that as part of this effort, it intends to curb or ban restaurant surcharges such as service charges.

Other components of Time is Money include simplifying the processes for canceling subscriptions, obtaining reimbursement from airlines and filing health insurance claims.

Michigan restaurants are changing tactics to keep tip credit

After fighting for a decade to keep the tip credit, Michigan’s restaurant industry is now opting for Plan B.

Plan A was based on the state Supreme Court’s ratification of an unusual procedure known as “adopt and amend.” In 2018, unions launched a campaign to let voters decide the fate of the tax credit. The unions collected signatures to put an initiative on the ballot in the next election to raise the state minimum wage to $12 an hour and phase out the tip credit by 2024.

Lawmakers sympathetic to the industry used the “adopt-and-amend” maneuver to defeat the initiative. They passed a bill that adopted the provisions of the initiative and then amended the law to delay a minimum wage change until 2030 and to keep the tip credit at 38 percent of the proposed new wage floor.

Worker representatives sued against the move, and the case worked its way through the state’s judicial hierarchy. The Supreme Court ultimately ruled that the “adopt and amend” approach was not acceptable in this case. There is usually a choice between the adoption and amendment phases, and the legislature did not follow that custom in this case. The ruling essentially said that the changes called for by the popular initiative had to be adopted.

Because the time frame for those changes has already passed, no one is sure what timeline the state will use, said Justin Winslow, CEO of the Michigan Restaurant & Lodging Association (MRLA). “There are as many interpretations as there are people looking into it,” he said.

While that issue is being decided, the trade group is lobbying hard to pass legislation that would maintain a tip credit equal to 38 percent of the new federal minimum wage of $15 an hour.

“This ruling is no surprise,” Winslow said. “We were always prepared to have an alternative if the ruling did not go in our favor. We have been talking to legislators for the past two years, and a lot in the past two weeks. There is a lot of sympathy and understanding on the tipping issue.”

It is hoped that a law to maintain tipping will be passed at the next session of the state parliaments in September.

“I would describe it as an encouraging environment,” Winslow said.

Employees can disappear for up to 3 days

In addition to maintaining the tip credit, Michigan restaurant owners also hope to fend off an employer mandate that is believed to be the first of its kind in the country.

In addition to eliminating the tip credit, the 2018 referendum called for what Winslow describes as a very aggressive paid leave initiative. That provision would have given workers up to 72 hours of paid leave annually, at a rate of one hour for every 30 hours they work. The Supreme Court’s decision now makes that provision law.

The measure breaks new ground by setting new ground rules for cases in which employees are unable to attend their shifts. Under the so-called no-show/no-call rule, the employee can be absent for up to three days without having to contact the employer. Only after this three-day period has expired can the restaurant request a statement or a certificate from a doctor if the employee states that he or she has been ill.

The reason given is that the employee may have been too sick to report.

As far as Winslow knows, this benefit is not currently offered anywhere else in the country. He hopes Michigan will not introduce it either.

Face masks are now banned

One of the jobs restaurant workers loathed during the pandemic was policing state or local regulations requiring guests to wear face masks to prevent the spread of COVID. Now they have to keep an eye out for customers wearing those masks because they’re up to no good.

Protesters for or against Israel’s war against Hamas have begun wearing the masks to conceal their identities. At the same time, crooks are realizing that they can wear the masks to avoid being identified during or after a robbery.

That’s why, say politicians in New York’s Nassau County, this populous New York City suburb has banned the wearing of masks in public. Exceptions have been made for people who cover their faces for legitimate religious, health or cultural reasons, but there is no visual evidence that the masks are being worn for those purposes.

Nassau County’s mask ban is highly controversial, but that hasn’t stopped New York Governor Kathy Hochul from announcing that she might ban the coverings at least on the New York subway and possibly across the city.

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