The City of Minneapolis is getting ready to propose a regulatory body to oversee workplace labor standards, an effort which has put the hospitality industry, for one, on edge. Designed to replace the city’s ineffectual workplace advisory committees (WAC), the Labor Standards Board (LSB) would supervise the study of specific industries and propose regulatory change to the city council. The concept has the support of Mayor Jacob Frey, whose office is formulating the function and structure of the LSB.

“The city is looking to be properly advised,” said Frey in an interview this week. “We have roughly 50 advisory boards but there has been a drop-off in participation by business who feel they lacked a voice.” The WACs were an outgrowth of the city’s sick and safe time policies but have failed to accomplish their goal, says Frey, who hopes a more “formalized process” will do so.

An LSB, and the WACs before it, were priorities of organized labor and certain layers of city and elected governance, not business. Though unstated, some are interpreting Frey’s advocacy and leadership as an effort to short-circuit an effort with more draconian impacts on business that might come out of the increasingly leftist, socialist-tilting city council.

Though the proposal is not yet complete, it is expected to be presented to the council as early as next month. The board would function as a clearinghouse of sorts, accepting feedback from stakeholders on specific workplaces or industries, and subsequently deciding whether to convene an industry specific body (a “sectoral work group” balanced among stakeholders) to investigate and make recommendations. The LSB would then have the authority to interpret those recommendations and make policy proposals to the city council, which could choose to act or not act on them. “This is much better than politicians making policy on the fly,” Frey says.

Once implemented the policy apparatus will be nearly unprecedented in its breadth. Labor representatives point to New York City’s longstanding wage standards boards or Minnesota’s Nursing Home Workforce Standards board. But only Detroit appears to have passed legislation (in 2021) analogous to what Minneapolis has in mind.

The city says it is yet unable to offer an exact structure for the LSB or sectoral working groups but emphasized it would be a mix of labor, business, and third parties, which could theoretically be government professionals or outside experts. Business is understandably wary.

“Our stand is what is the problem we’re trying to solve?” asks Angie Whitcomb, president and CEO of trade group Hospitality Minnesota. “Let’s work with city leaders to address them. Minneapolis already has robust worker protections.” Hospitality executives have been meeting with the city because they believe the LSB’s sights are trained on them. Craft & Crew restaurants co-owner David Benowitz penned an op-ed in the Star Tribune stating as much.

Benowitz met with Frey in December and “realized this was not an idea but a formed plan about to happen.” Benowitz believes organized labor, which made efforts in the mid-2010s to try to regulate hospitality at the city and state level, has targeted the hotel and restaurant industry for reform. “They are focused on wage theft, overtime pay, scheduling practices,” says Benowitz. He said Frey assured him the city is mostly interested in problematic workplaces that fail to offer proper training, benefits, and safe and sick time adherence. Frey used safety for window washers as an example of an appropriate use of an LSB.

So this seems to be the distinction: whether the city is merely looking to root out workplace abuses or find ways to micromanage business from a utopian workplace perspective.

Fixed scheduling is a potential point of focus. Restaurants and some hotels practice demand-based scheduling, adjusting work hours on the fly to react to occupancy, weather, and other factors that affect customer counts. Employees who are “cut,” do not get paid. It strikes organized labor as exploitive but is baked into the way the industry operates in the US. Scheduling staff weeks out and then having to pay workers to staff a patio closed by rain adds overhead without revenue. “Our industries operate on razor-thin margins,” notes Whitcomb.

Progressives believe fixed scheduling is just something restaurants would absorb from reduced profits, but the more likely reaction would simply be fewer jobs – a scenario that has already played out in the wake of minimum wage increases. Restaurants would react by running patios using QR codes rather than servers, simplifying menus to reduce kitchen staff, or simply choosing not to expand or operate in Minneapolis, though Whitcomb fears Minneapolis’s rulemaking could become a template that’s adopted in St. Paul and other metro municipalities.

Many Minnesota restaurateurs remember the anti-tipping efforts of a decade ago, led by organized labor, rooted in a theoretical historical orthodoxy which argued tipping was created to exploit women and remained an intolerable practice of bias in the workplace. Tip-based restaurant workers came out broadly opposed to the bans. Subsequently during the pandemic rampant expansion of tipping proved the tide that lifted many service workers toward a better standard of living. Organized labor is no longer broadly advocating for its abolition.

The concern is unintended consequences of well-meaning policies rooted in a utopian sense of how workplaces function, but the labor side insists it’s just the opposite. “It’s really a creative step forward,” says Greg Nammacher, president of SEIU Local 26, which represents 8,000 service workers—predominantly janitors, security, and airport workers in the metro—and has been an enthusiastic advocate for the LSB within the city policymaking apparatus. “Businesses will be at the table with us.”

Nammacher, perhaps with an eye to his audience, presents the concept less as a solution to a problem, than an opportunity for a renaissance for the city, and especially downtown. “The only way downtown thrives going forward is as a high-value experience. Attracting the best workers is not just about the middle class but the service sector, who work for low wages.” Though his workers have collective bargaining, he says there are some topics which either can’t be successfully bargained or require government intervention.

But he insists the LSB concept is an attempt to avoid “one size fits all” rulemaking. Should the idea of fixed scheduling be mandated in the city, industries where it did not benefit stakeholders could be exempted, he says. Nammacher acknowledged the city already has more protections for workers than probably any other municipality in Minnesota but believes an LSB “is good policy” whether workers have representation or not.

Another concern of employers like Benowitz, who does business in both Minneapolis and several suburbs, is dealing with a growing disincentive to do business in the city. This is especially true in downtown, where the surviving restaurants are stressed due to the impacts of work from home. The question is whether additional burdens for hospitality and other stressed sectors would create a renaissance or just deepen the malaise. Nammacher views it as an opportunity to create policy with local flexibility, “because what works in Shoreview may not work in Minneapolis.”

The city and organized labor seem to be asking business to trust them. Were business backgrounds not so widely absent in the council chambers and in much of the policy making side of city hall, they might be seeing a different level of dismay. Frey is quick to push back, noting “my office has been working extensively with business,” on the LSB. He disputes that business lacks an influential voice with the city, noting he spent years as a lawyer for business and believes “we have that perspective in city hall. Does that commentary always work its way to the council? That’s another question.”

Ultimately, Frey says the greatest protection for business in an LSB universe will be that the entity simply won’t work without the participation of business, and business won’t participate if it feels the policy apparatus isn’t fair. “We want the [businesses] that are doing things right to be appointed [to the LSB] and help us find common standards.”