National Retail Federation

NCCR Hosts Successful Immigration Lobby Day in Senate

NCCR hosted a lobby fly-in for our member companies in late February to lobby Senate lawmakers on the important issue of immigration reform. The event was particularly timely as the Senate Judiciary Committee in early March began the difficult process of considering legislation to overhaul the nation's broken immigration system. Lobby Day participants urged members of the Senate Judiciary Committee to take a comprehensive approach to immigration reform that includes tightening border security, creating a temporary worker program for the economy's workforce needs, as well as a path to legal residency for the estimated 11 million undocumented workers currently in the U.S. A considerable percentage of this estimated number of undocumented workers is widely believed to be working in the restaurant industry. NCCR's member companies are concerned that, without reasonable programs permitting employer access to authorized foreign workers, a massive workforce shortage could result. Despite paying wages that are considerably higher than the minimums required by law, the restaurant industry has and continues to experience challenges attracting workers to fill the jobs we create.

Some in Congress have called for deportation of the 11 million undocumented workers in the country, which represents some 5% of the workforce. Such disruptions to the labor supply would have severe economic consequences and would seriously hamper economic growth. In addition, some legislative proposals in Congress call for new penalties and punitive measures against employers, as well as mandates for employer compliance with a faulty, error-prone employee eligibility verification system. Lobby Day participants urged lawmakers to think through such proposals very carefully, to ensure that they are fair and workable for employers, do not impose heavy costs, and are phased-in over time so that bugs in the system can be worked out.

As you know, the House of Representatives in December passed a very punitive “enforcement only” immigration bill that imposed severe mandates and penalties on employers. We are working very closely with Senate lawmakers and staff to ensure that the bill that eventually emerges from the Senate is workable for employers. The Senate Judiciary Committee's work on this issue has gotten off to a slow and somewhat rocky start, however, as committee members are far from consensus on several key issues, and numerous amendments have been offered to Chairman Specter's draft bill.

For more information contact NCCR Vice President of Government Relations Scott Vinson at (202) 661-3059.
NRF Tells Commerce Secretary Retailers and Restaurants Have Serious Concerns about Immigration Bill

NRF President and CEO Tracy Mullin this week told Commerce Secretary Carlos Gutierrez that retailers and restaurant owners have serious reservations about immigration reform legislation pending in Congress.

New employment verification provisions in the bill would be unduly punitive for employers and need to be revised before the measure becomes law, Mullin said. Congress also needs to include a temporary worker program, as well as a provision allowing illegal immigrants currently working in the United States to become eligible for legal residency, she said.

Mullin said NRF supports improvements to border security but that the employment eligibility verification language in the legislation would expand a pilot program that is “error-prone and not ready for prime time.” The provisions “need to be addressed so that we get the reform we all want to see,” she said.

Mullin said the legislation is of particular concern to NRF's National Council of Chain Restaurants division.

Mullin and Gutierrez spoke by telephone on Wednesday as part of a series of calls the Cabinet member is making to trade association executives and other CEOs to seek support for Bush Administration immigration policy. Gutierrez has been a frequent participant in NRF activities, meeting with retail CEOs at Macy's in New York last November during the holiday shopping season and speaking before the NRF summer Board of Directors meeting last June.

The Senate Judiciary Committee last week began consideration of a broad immigration reform measure sponsored by Chairman Arlen Specter, R-PA, that would tighten border security, increase enforcement of immigration laws, designate illegal immigration as a criminal rather than civil offense, and increase penalties for a variety of immigration-related crimes. The bill includes provisions from a number of pending Senate bills and shares a number of provisions with narrower legislation passed by the House in December.

Of key interest to all employers is a provision in the bill that would expand the 10-year-old “Basic Pilot Program” for employment verification, making it mandatory for all U.S. employers. The program allows employers to either go on-line or place a telephone call to check whether a would-be worker has the proper legal documentation to work in the United States . The program has been in operation on a pilot basis since 1996, but only 3,600 of the nation's estimated 8.4 million employers have participated, and those that have joined have reported numerous delays, errors, inconveniences and other problems.

Under the legislation, employers would be required to use the new system in addition to following the I-9 process already required under current law. The expanded program would initially apply only to new hires, unless the employer is determined to be part of the "critical infrastructure." The program would be phased in, and after five years, all employers would be required to participate. In addition, the legislation permits the Department of Homeland Security to levy fees on employers for using the mandatory system. Employers who fail to use the system or knowingly hire or retain an illegal alien would face fines as high as $5,000 per employee.

NRF and NCCR recognize that some form of employee eligibility verification must be part of the solution to the illegal immigration problem, but have encouraged Congress and the Administration to craft a system that is reasonable and fair to employers and employees, and proven effective before it is implemented for all employers. Current databases at the Social Security Administration and Department of Homeland Security should be purged of faulty data before being used as the basis for a new program. The Basic Pilot Program should not be used as the foundation for a new program, and any new program should be phased in and shown to have a minimal error rate before all employers are required to use it. In addition, the cost to employers of any new equipment such as magnetic card readers or biometric devices should be taken into consideration.

The Senate bill also includes a temporary worker program that would allow an employer to apply for a foreign worker if he is unable to find a U.S. worker in his geographic area. This new temporary "H-2C" work visa would allow a foreign worker to enter the U.S. and work for 3 years, renewable for another 3 years, so long as the foreigner is working the entire duration of his stay. In addition, the bill would allow illegal aliens who have been in the U.S., working since January 2004, to apply for a temporary visa that would allow them to work legally. The illegal alien would have to come forward, acknowledge that he is illegal and subject to deportation, provide evidence of employment and payment of taxes and undergo a medical exam. In addition, his current employer must submit a signed affidavit and pay a $500 user fee. The applicant would have to leave the U.S. if he is ever without work for more than 45 days. Moreover, participation in this program would not put an undocumented worker on a path to legal permanent residency and would, in essence, confer upon applicants a sort of second-class status. NRF and NCCR are concerned that few of the estimated 11 million undocumented workers in the U.S. would come forward and participate in this program, and that it would therefore be ineffective in dealing with the 5% of the workforce estimated to be here illegally.

The House in December passed its own version of the bill, H.R. 4437, the Border Protection, Antiterrorism and Illegal Immigration Control Act of 2005, sponsored by House Judiciary Committee Chairman James Sensenbrenner, R-WI. The House bill includes similar employment verification provisions, but is far more punitive, and fails to address employer's temporary and long-term workforce needs.

For more information contact NCCR Vice President of Government Relations Scott Vinson at (202) 661-3059.

Schlosser Strikes Again with New Book Targeted to Children, Movie

Eric Schlosser, author of 2001's “Fast Food Nation,” which unfairly tarred the chain restaurant industry, has written a new book targeted to a younger audience. The book, “Chew on This,” is expected to hit bookshelves in early May, and is based on “Fast Food Nation,” but is intended to be read by school age children in grades 6-8.

Moreover, Schlosser appears to be meeting with school districts around the country in an effort to push his new book to be made part of schools' curriculum – in essence, required reading for pre-teens and teens. His recent attempt to manipulate a Chicago-area suburb's curriculum was rebuffed, but he may be successful in other districts. We are monitoring this situation, and if you hear about any such efforts around the country, please let us know.

Even worse, we have learned that Schlosser and film director Richard Linklater have collaborated to produce a new fictional movie that maligns the chain restaurant industry, set to be released sometime later this year. Styled as a “punk rock thriller” by it's star Ethan Hawke, the film's director admits that the “facts and figures had to be set aside” in order to create controversy. Far from an honest depiction of the industry, the movie is expected to twist the truth and cast food processors and chain restaurant companies in a very unfavorable light. Moreover, the movie will attempt to stir up several hot-button issues, including food safety, illegal immigration, animal welfare, and abuse of workers. In addition to Hawke, other prominent cast members include Kris Kristofferson, Patricia Arquette, Avril Lavigne, Greg Kinnear, Wilmer Valderrama and Bruce Willis.

The author and director's callous disregard for truth, misuse of facts, and attempts to manipulate public sentiment for their own financial gain are likely to create public relations challenges for chain restaurant companies and their employees in the coming months. This is obviously a very serious and alarming development for our industry, and we will be working to counter the misinformation that is certain to circulate upon release of this book and movie.

For more information contact NCCR Vice President of Government Relations Scott Vinson at (202) 661-3059.

FTC Seeks Information from Companies Who Market to Children

The Federal Trade Commission (FTC) on March 1 published notice in the Federal Register [click here for link http://www.ftc.gov/os/2006/02/frnP064504FoodMarketingtoKids_022406.pdf ] requesting information and comments on food industry marketing practices to children and adolescents. The FTC action is pursuant to language inserted into an appropriations conference report from Sen. Tom Harkin (D-IA), which directed the FTC to collect information and submit a report to Congress by July 1, 2006 on the marketing activities and expenditures of the food industry targeted toward children.

The FTC specifically seeks “relevant information, including empirical data, on the nature and extent of marketing activities and expenditures,” including “publicly available information that can be used to prepare the report.” However, the agency makes clear that “because it is unlikely that information sufficient to prepare the report is publicly available, [they] likely will later issue orders (emphasis added) . . . to obtain needed information from food industry members.”

We expect that interest groups opposed to our industry will submit their own comments containing anecdotal information on the industry's marketing practices. The Federal Register notice states that comments should be submitted to the FTC by April 3, 2006.

For more information contact NCCR Vice President of Government Relations Scott Vinson at (202) 661-3059.

Senate Approves Two-Year Extension of WOTC

The Senate voted in February to extend both the Work Opportunity Tax Credit and Welfare-to-Work programs by two years rather than the one year approved earlier. The legislation has a number of conflicts with the House version of the same bill, however, so negotiators from the two chambers will need to draft a compromise measure before it can go to President Bush. It is unclear whether the programs will ultimately be extended for two years or just the one year originally proposed in each chamber.

The Senate's amended version of H.R. 4297, the Tax Relief Extension Reconciliation Act, was approved 66-31. The wide-ranging tax-cutting measure provides $70 million of relief under the Senate version but $60 million under the House version. The House bill would give a two-year extension to a tax cut for capital gains and dividend income currently scheduled to expire in 2008, but the Senate bill does not. In another major difference, the Senate bill includes language to reduce the impact of the Alternative Minimum Tax on middle-income families while the House has passed its AMT relief as a separate bill.

WWTC/WOTC offer businesses a tax credit equal to 40 percent of the individual's first-year wages up to $6,000 (for a maximum of $2,400 per employee) to hire welfare recipients and other disadvantaged individuals, and have been widely used by chain restaurant companies to help those individuals move into the workforce. NCCR has been a longtime supporter of the programs. Both tax credits expired at the end of 2005 and are in limbo until they are extended retroactively.

For more information contact NCCR Vice President of Government Relations Scott Vinson at (202) 661-3059.

NRF/NCCR Create International Trade Panel on Food

NRF and NCCR have created a new panel to address international trade issues involving food. The NRF/NCCR Trade Subcommittee on Food Products will function as a subcommittee of NRF's International Trade Advisory Committee and will also operate as an NCCR working group.

The subcommittee will provide a forum to discuss and establish industry positions on issues affecting trade in agricultural and processed food products, an area of increasing relevance to restaurant chains and food retailers. The subcommittee will be chaired by Yum! Brands Inc. Senior Director of Government Affairs Bill Ehrig. Members will meet on an ad hoc basis by conference call and in person when necessary. Companies interested in being represented should contact NCCR Vice President for Government Relations Scott Vinson.

Creation of the subcommittee is a direct result of last year's joint membership arrangement between NCCR and NRF, and an example of the emerging synergies of the new relationship.

For more information, contact NRF Vice President and International Trade Counsel Erik Autor at (202) 626-8104 or NCCR Vice President for Government Relations Scott Vinson at (202) 661-3059.

White House Seeks NRF Input on Health Care

The Bush Administration recently sought retailers' aid in efforts to make health care more affordable, calling NRF to a private White House meeting to seek support for an effort to make information about medical services and pricing more readily available. NRF President and CEO Tracy Mullin and a small group of other influential trade association heads representing a range of industries concerned about health care costs participated in a discussion with National Economic Council Director Al Hubbard.

Citing statistics on employers' skyrocketing costs for providing employee health benefits and the growing number of uninsured individuals and families, Hubbard said finding ways to make health care more affordable and available is one of President Bush's top priorities. Bush pledged to "help people afford the insurance coverage they need" in January's State of the Union address, outlining a variety of initiatives including Association Health Plans, medical malpractice reform and expansion of Health Savings Accounts.

HSA's require consumers to make more decisions about their own health care, but to do so effectively consumers need far more information than is currently available, Hubbard said. Asking consumers to choose whether to have medical procedures done without knowing the cost or other factors is like asking them to buy merchandise in a retail store without knowing the price, he said.

White House officials are meeting with health care providers and health insurance companies to ask that a wide range of information be made more available, Hubbard said. Prices for services, for example, could be made available on the Internet, and other information could compare effectiveness of treatment options or address quality of care, all leading toward competition that would help bring costs under control.

Hubbard called on NRF, other business associations and their member companies to support the push for increased transparency. Employers should urge disclosure of more information so their employees can make better-informed choices, he said.

Health care has been a top issue for NRF and NCCR in recent years, and Mullin agreed to support Hubbard's request.

In other health care activity, NRF explained retailers' and restaurateurs' concerns about health care mandate legislation pending in several states during appearances before the Heritage Foundation and the ERISA Industry Committee (ERIC). Director of Government Affairs Alison O'Donnell participated in a Heritage roundtable discussion February 10, and described the Tax on Jobs Coalition NRF has formed to fight the state legislation. NRF is concerned that the legislation would drive up costs for employers while doing nothing to address the rising costs of health care, requiring layoffs of workers in some cases in order to meet the new expense. O'Donnell reiterated these concerns during a smaller ERIC meeting the same day.

A number of states are currently considering legislation similar to a measure recently enacted in Maryland that requires companies with 10,000 or more employees to spend at least 8 percent of payroll on health care benefits. The AFL-CIO is pushing similar legislation in 30 other states, and some of the pending bills would go significantly beyond the Maryland legislation, applying to smaller employers and/or setting higher percentage requirements.

For more information, contact NRF Vice President and Government and Industry Relations Counsel Maureen Riehl or Director of Government Relations Alison O'Donnell at (202) 783-7971.

Congress Holds First Full Hearing on Credit Card Interchange

A House subcommittee recently held Congress's first hearing specifically addressing credit card interchange rates, with both merchant and consumer representatives testifying that credit card companies have tried to keep the fees secret from consumers and that the fees take billions of dollars out of the economy each year.

"Most consumers have no idea that they pay these fees," National Association of Convenience Stores President and CEO Henry O. Armour said. "Our concerns here are similar to our concerns about excise and sales taxes, but at least those taxes are publicly debated and our customers can vote based on their views about their relative costs and benefits. Credit card companies work hard to keep their fees hidden and even if our customers knew about them they can't vote on them."

Armour's testimony came before the House Energy and Commerce Committee's Subcommittee on Commerce, Trade and Consumer Protection, which held a hearing on "The Law and Economics of Interchange Fees." The panel touched on interchange's role in rising gasoline prices during a hearing last fall, but this session was the first full hearing on the broader effect of interchange throughout the economy.

NACS is a founding member of the Merchants Payments Coalition, which was formed last year by NRF and other trade associations representing businesses concerned about rising interchange rates.

NRF Senior Vice President and General Counsel Mallory Duncan, who serves as chairman of the MPC, said afterward that the hearing was an important step in focusing public attention on the once-secret fees. "Consumers know about the interest they pay and late charges and over-limit charges," Duncan said. "What they don't know is that credit card companies are collecting a secret checkout fee every time they use their cards. This hearing is going to help bring that secret fee into the spotlight and let consumers know just how much money credit card companies are taking out of their pockets without telling them. The more consumers learn about these fees, the more they're going to demand that credit card companies be honest about them. And once consumers know how much they're paying, competition can help drive these rates down."

In addition to merchants, the subcommittee heard from consumer groups angered by the rising fees. "As consumer advocates, we are gravely concerned about the fairness and legality of bank schemes to increase credit and debit card fee income," U.S. Public Interest Research Group Consumer Program Director Edmund Mierzwinski said, testifying on behalf of his own organization and the Consumer Federation of America. "We agree with merchants' concerns and commend the committee for its inquiry."

Former Federal Trade Commission Chairman Timothy Muris, testifying on behalf of Visa and MasterCard's Electronic Payments Coalition, defended interchange fees as "essential to the existence of the electronic payment card market."

Interchange is a fee of about 2 percent that Visa, MasterCard and their member banks charge retailers each time a credit or debit card is used, and effectively require retailers to pass on to consumers. Visa and MasterCard's non-negotiable contracts with merchants require that the fee be built into the advertised price of merchandise, forbid the fees from being shown on receipts, and effectively block cash discounts from being offered in most situations. Other credit card companies don't charge interchange as such because of differences in the way payments are handled, but nonetheless charge similar fees to process transactions.

Visa and MasterCard kept interchange fees largely secret for years, but the issue has emerged as a major public policy concern in the past year. The Federal Reserve held a conference on the subject last May, and the House last fall passed legislation -- still pending in the Senate -- that would require a Federal Trade Commission investigation into interchange's role in rising gasoline prices. Nearly 50 lawsuits have been filed in federal court claiming that interchange practices violate federal antitrust law.

Visa and MasterCard alone collected $27.6 billion in interchange fees during 2004, while transaction fees charged by other credit card companies brought the total to $39.2 billion, according to MPC figures.

For more information, contact NRF Senior Vice President and General Counsel Mallory Duncan or Senior Director and Government Relations Counsel Elizabeth Treanor Oesterle at (202) 783-7971.

FTC Says Gift Card Fees, Expiration Dates Must be Disclosed

The Federal Trade Commission has warned that failure to disclose dormancy fees, expiration dates and other restrictions on gift cards could be considered an unfair or deceptive trade practice. The FTC's opinion came in a February 14 letter to House Energy and Commerce Committee Chairman Joe Barton (R-TX) written after Barton asked the commission to examine gift card practices.

"I share your concern that companies fully and clearly disclose all material terms and conditions of their gift cards," FTC Chairwoman Deborah Platt Majoras said. "Consumers are entitled to know all material terms relating to these cards." The existence of an expiration date or fee on a gift card is a "material" fact that would influence a consumer's decision whether to buy a card, and therefore is subject to Federal Trade Commission Act prohibitions on omitting such information or being misleading, Majoras said. Failure to "clearly and conspicuously" disclose such information therefore "may constitute a deceptive act or practice" under the law, she said.

Majoras' letter didn't criticize the use of fees or expiration dates, only the non-disclosure of the terms. The FTC also issued an alert urging consumers to ask about terms and conditions when purchasing gift cards and explaining how to file a complaint with the FTC or their state Attorney General if disputes cannot be resolved with the store or financial institution that issued the card.

Barton asked the FTC to examine gift cards in December, alleging that "consumers are not being given all the appropriate information about their use." Barton's demand for an investigation drew no distinction between gift cards issued by retailers or restaurants and those issued by banks and shopping centers. The bank/shopping center cards are often confused with traditional retail gift cards by consumers, but are far more likely to carry the high fees and quick expiration dates that have drawn criticism.

A number of states ban or restrict expiration dates and dormancy fees, and federal legislation requiring the FTC to issue regulations declaring expiration dates and dormancy fees "unfair" or "deceptive" was introduced more than a year ago by Representative Rodney Frelinghuysen (R-NJ). The bill was assigned to Barton's committee but has seen no action.

Many retailers have moved away from dormancy fees and expiration dates, but NRF has argued against restrictions, saying decisions on fees and expiration dates should be left to the retailers who issue the cards. NRF has long urged consumers to shop carefully when buying gift cards and to ask about terms and conditions. NRF also urges consumers to purchase cards only from reputable retailers and not from online auction sites where cards are more likely to be counterfeit or obtained through fraudulent means.

For more information, contact NRF Vice President and Government and Industry Relations Counsel Maureen Riehl or Senior Director and Government Relations Counsel Elizabeth Treanor Oesterle at (202) 783-7971.

NRF NEWS

Register Today for NRF's 2006 Loss Prevention Conference and Exhibition
and Save
Join industry peers in Minneapolis at the National Retail Federation's Loss Prevention Conference and Exhibition – the nation's leading retail specific event for loss prevention. The three-day conference will cover leading LP topics, including organized retail theft, gift card fraud, LP metrics and management and Homeland Security. This year's exhibit hall will showcase more than 200 suppliers of products, technologies and services, developed to help retailers improve shortage program results and to design custom solutions for asset protection needs.

Download Materials from NRF Conferences
NRF members, which under a new joint membership arrangement now include all NCCR member companies, can access event handouts and materials for NRF conferences from the past two years through the Members Only section of the NRF website. Materials from NRF's Annual Convention, NRFtech and other events are included. In addition, presentation materials and handouts from the 2005 NRF Loss Prevention Conference are now available for download. Joint NRF/NCCR members are invited to access these materials. To obtain your copies, visit: www.nrf.com/MemberAccess/LogonForm.asp . If you would like to obtain a password for the Members Only section of the NRF website, please contact Angelica Rodriguez, Manager of Member Relations, at (202) 626-8142.

Top Retail Advertisers Win Big At Retail Advertising Conference
The Retail Advertising and Marketing Association, which is open to chain restaurant members, hosted its annual RACie (Retail Award for Creativity Innovation and Excellence) Awards Dinner in Chicago, where the retail industry's top creative minds were honored. One of the industry's most sought-after and coveted awards, the RACie is given out each year at the Retail Advertising Conference to retailers that exhibit true ingenuity and creativity throughout the year in their advertising and marketing campaigns.

RAMA Names Best Buy's Ric West as New Chairman
The Retail Advertising and Marketing Association named a new Chairman during its recent 2006 Retail Advertising Conference (RAC). Ric West, a Marketing Vice President at Best Buy, will serve a two-year term as RAMA Chairman. West succeeds Brad Davis, former Executive Vice President and Chief Marketing Officer at Washington Mutual.

MARK YOUR CALENDARS!

NCCR Food Safety Task Force Meeting in conjunction with the Food Safety Summit,
March 22-24, 2006, Mandalay Bay Hotel, Las Vegas, NV

NCCR Board of Directors Meeting, March 24, 2006, Mandalay Bay Hotel, Las Vegas, NV

NCCR Annual Lobby Days in conjunction with the National Retail Federation 71st Annual Washington Leadership Conference, May 16-17, 2006, Washington, DC

NCCR Fall Membership Meeting, October 16-18, 2006

For information or copies of materials regarding any of the above issues call NCCR at (202) 626-8183.