InTouch | February 2024

SCRLA Annual Meeting Recap

The Association’s Annual Meeting took place on Monday, January 22nd at the Hilton Columbia Center Hotel. During this meeting, Tony Tam, Vice President of IMIC Hotels, was elected as the Chair of the 2024 Board of Directors. Afterward, there was a membership and legislative forum where Susan Cohen, President and CEO, and Hank Davis, Vice President of Governmental Affairs and Community Relations, discussed the progress the Association has made on several bills under consideration at the State House. Thomas S. Mullikin, President and General Counsel of the South Carolina Coalition for Lawsuit Reform, provided an update on the Justice Act and ways for members to become more involved. Furthermore, Derek M. Underwood, Assistant Commissioner of the Consumer Protection Division at the South Carolina Department of Agriculture, informed the members about the ongoing transition of the DHEC Food Safety team to their agency, which is scheduled to occur on July 1 of this year. More information on this transition will be shared in the upcoming March Insider magazine.

Employee or Independent Contractor Classification Under the Fair Labor Standards Act

All businesses that employ independent contractors will need to evaluate a complex “totality-of-the-circumstances” assessment according to the final rule recently issued by the U.S. Department of Labor. This rule is scheduled to come into effect on March 11, 2024. However, the NRA and AH&LA strongly object to this new regulation, stating that it presents difficulties for small businesses such as hotels and restaurants. They argue that the test results in inconsistent categorizations and heightened risks of legal disputes.

Until the rule can be reversed, employers are required to comply with the rule starting on March 11th. The new rule, however, reverts to a “totality-of-the-circumstances” test with six complex factors. The factors in what is known as the “economic realities” test include:

1. Opportunity for Profit or Loss: Evaluation of managerial skill affecting economic success.

2. Investments: Comparison of worker’s and employer’s capital or entrepreneurial investments.

3. Permanence of Relationship: Assessment of the work relationship’s duration and exclusivity.

4. Control over Work: Consideration of the employer’s control, including reserved rights, over work performance and economic aspects.

5. Integration into Business: Determination of the work’s importance to the employer’s main business.

6. Skill and Initiative: Analysis of specialized skills and business-like initiative used by the worker.

Impact on the hospitality industry:

• This change undermines the clarity and predictability essential for our industry to thrive. The complexity of the new rule will likely necessitate legal consultation, imposing a significant burden on small operators.

• The ambiguous nature of the “totality of circumstances” test and the potential for additional undefined factors could lead to inconsistent classifications and increased litigation risks.

• Notably, platforms in the gig economy, such as appbased rideshare and delivery services, do not expect the new rule to alter the classification of their drivers.

Looking Ahead:

The Association continues to advocate for regulations that support the operational realities of the hospitality industry. We believe reinstating the 2021 Final Rule would provide much-needed certainty and ease of compliance.

• The Association supports the Employee Rights Act for its streamlined definition of “employee” across federal law. It promises to preserve the flexibility crucial to our industry and the broader gig economy.

• Legislative efforts are underway to challenge the rule. The House of Representatives approved H.J. Res 98, a joint resolution to nullify the NLRB’s joint employer rule, with a 206-177 vote tally. At the time of print, the focus is now on the Senate.

The Payment Card Settlement is the biggest antitrust classaction settlement in history and sets aside at least $5.54 billion and a maximum of approximately $6.24 billion for millions of U.S. merchants who for years paid artificially inflated Visa and Mastercard interchange fees.

Why it matters: If your restaurant accepted Visa and/ or Mastercard at any time between January 1, 2004, to January 25, 2019, then you are likely a member of the class settlement and entitled to a share of the settlement.

Go deeper: The settlement ends a 2013 lawsuit in which the National Restaurant Association and the Restaurant Law Center played leading roles. The lawsuit alleged that merchants paid excessive fees to accept Visa and Mastercard, while these two companies violated antitrust laws by price-fixing interchange fees. This same lawsuit also established today’s credit card surcharging rules implemented by Visa and Mastercard.

How to claim your share: You can submit a claim through the official court-authorized Payment Card Interchange Fee Settlement website. Claim forms began mailing on December 1, 2023, and will continue until all are sent out. If you received a Claim Form in the mail and want to file a claim online using the Claimant ID provided, you can click the “Submit a Claim” button found in the Payment Card Interchange Fee Settlement website.

There will also be a unique QR code on your mailer that will bring you to the claims submission page which should populate with your relevant information. If you do not receive a claim form and are uncertain as to whether you are a merchant that is eligible to file a claim in this settlement, also click the “Submit a Claim” button found in the Payment Card Interchange Fee Settlement website and, after providing your Taxpayer Identification Number along with some additional information, the Class Administrator will attempt to determine whether you qualify.

Third Party Operators: Many members have already been approached by third-party companies that offer to file a claim on your behalf and these solicitations will increase, but some of these firms will often create a false sense of urgency or complexity around the filing process and can take as much as 40% off the top of the award”. While you may choose to use such companies, you should know that you can file with the Claims Administrator on your own, free of charge following the instructions above. Additionally, you are entitled to contact the Claims Administrator or Class Counsel for assistance with understanding and filing your claim form—again, at no cost to you.

We do not have any estimates for what the awards per class member might look like, and we don’t want to over or under promise on any numbers. And note that if a business is closed now but was operational for some point during the Jan 2004 – Jan 2019 window, then the business will still be eligible for some portion of the award pool.

The South Carolina General Assembly has returned to Columbia to kick off the second half of the 125th legislative session. One issue in particular that has yet to make any significant legislative progress this session is the topic of bringing fairness to South Carolina’s unfair tort system.

Over the last several years, we’ve seen numerous headlines in the state’s most prominent newspapers decry that the skyrocketing cost of doing business in South Carolina is growing at an alarming rate and unless immediate action is taken by the General Assembly, many of South Carolina’s small businesses may suffer a grim fate. News articles addressing South Carolina’s liquor liability insurance crisis may be receiving the bulk of today’s headlines, but this is a problem that is not just impacting restaurants and bars – our state’s manufacturing, trucking, and insurance sectors, just to name a few, are also suffering.

South Carolina’s civil justice system is severely out of balance. According to the Institute for Legal Reform, South Carolina’s lawsuit climate ranks 37th in the nation and our tort costs are 2.5% of the state’s gross domestic product (GDP), costing South Carolina households approximately $3,181 annually.

South Carolina’s existing legal climate is harming growth and prosperity across the state because businesses and individuals are vulnerable to massive financial burdens for situations in which they may have only had a small connection. The current system is not fair for South Carolinians who are working hard to create jobs and grow our state’s economy and adversely impacts businesses that cannot survive a hefty lawsuit – leading to increased premiums, reduced availability of insurance coverage, and a target on entities that are perceived as having “deep pockets”.

In legislation adopted in 2005, the General Assembly set out to establish a modified joint and several liability system in South Carolina. The intent of this system was to eliminate situations where parties that were less than 50% responsible for alleged harms were forced to pay the entirety of damages in a lawsuit. Subsequent decisions by the South Carolina Supreme Court in 2017 found that this system was not established in the 2005 law and put the onus on the General Assembly to fix this unintended problem.

In response to this, South Carolina’s business community came together to establish the South Carolina Coalition for Lawsuit Reform (SCCLR). Working in partnership with SC Senate leadership, the SCCLR authored S. 533 – the SC Justice Act. Introduced in 2023, the bill has garnered 24 Senate co-sponsors and would clarify that the policy of the General Assembly is for South Carolina to have a “modified joint and several liability” system that does not hold parties responsible for the entirety of damages when they are less than 50% at fault. A House companion bill, H. 3933, has also been introduced and has over 46 cosponsors.

While the SC Justice Act received two subcommittee hearings last session, no further legislative action has been taken on the bill since then. With so little time remaining, now is the time for our elected officials to act – the survival of South Carolina’s business community depends on it! To learn more about the SC Justice Act and what the SCRLA is doing in this space, please visit our website at https://www.scrla.org/page/liquorliability and contact your elected officials TODAY.