Merchant Innovation

Retail Labor Law Changes Leave Murky Ground Behind

If modern retail pits merchants against each other in a battle for survival, then it makes sense to draw some lessons from military strategists who do just that all the time. It’s common sense for generals to want to avoid conflicts where they must fight on two fronts – it wastes resources and doesn’t generally yield a high probability of victory.

When it comes to changes to labor law, retail might want to think of its current circumstances in the same way.

This summer alone brought several regulatory and cultural changes that have shifted the normally steady ground labor groups and retailers share. In June, the Department of Labor amended automatic overtime laws to make an extra 5 million workers eligible. In August, the National Labor Relations Board issued a ruling that extended liabilities for workplace conditions and joint-employer status for organizations that use a franchise-franchisee structure. The New York Times also published an influential piece detailing the demanding working conditions at Amazon’s offices across the country, which was received with plenty of attention from the general public.

With so many pro-labor wins in the past few months, it can be easy to think that a wave of anti-retailer sentiment is on the rise, as Jon Hurst, president of the Retailers Association of Massachusetts, told the National Retail Federation.

“There is a very troubling message coming out of left-wing activist groups and certain politicians, and this message is very anti-employer,” Hurst said. “They seem to be saying that employers – including small businesses – are not to be trusted, while employees are always right and taken advantage of.”

Hurst may be protecting his group’s best interests with black-and-white talk, but there’s no question that the evolving nature of retail necessitates a workforce that can handle whatever changes come. Target announced that it is hiring 70,000 seasonal employees for the holidays, while video game retailer GameStop plans to bring on 28,000 temporary employees as well.

However, the day is fast approaching – and in some ways already here – when a majority of retailers and employers aren’t engaging in traditional environments. In fact, the U.S. House of Representatives’ Energy and Commerce Committee held hearings Sept. 29 to discuss what role a company that relies on the burgeoning sharing economy like Uber has when it comes to employer protections and assurances. As Amazon and other retailers become more involved with on-demand workers to grow same-day delivery services across the U.S., Dean Baker, co-director of the Center for Economic and Policy Research, made it clear that the labor and retail will have as many if not more issues to work out in this new area.

“It makes little sense to require traditional employers to meet minimum wage standards and pay overtime premiums if we don’t apply comparable rules to sharing economy competitors,” Baker told the committee, as quoted by Biz Journals. “Not only does this put law-abiding firms at a disadvantage; it is basically giving them a back-door way around rules they choose not to follow. If we require traditional employers to meet wage and hour rules and but allow sharing economy companies to ignore them, we can expect to see rapid growth of sharing economy companies.”

Even with the advent of automation in retail, employees will remain a significant part of the process driving customers toward conversions. As consumers continue to grow and develop not only new interest but also new ways to express them, retailers will need all of their attention focused on developing technology and compelling marketing strategies to beat their competitors to the punch.

If retailers can’t find common ground with their employees, though, they might be in for a fight in the trenches on two fronts.

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