We recently reflected on legal developments in franchising in 2024, along with anticipated changes to governing agencies and policies in 2025. Recent media coverage about state wage increases and the potential priorities of the incoming presidential administration can provide direction for NY franchisees and franchisors on how to strategize and prepare for the upcoming year.
NY’s Minimum Wage Increases Start January 2025
As per Gov. Kathy Hochul’s announcement during the FY 2024 Budget meeting, minimum wage in 2025 will hit $16.50 per hour in New York City, Long Island and Westchester County, and $15.50 in the rest of the state.
The minimum wage rate will further increase by $0.50 on Jan. 1, 2026, boosting the rate to $17/hour in NYC, Long Island, Westchester and $16/hour for the rest of New York. Employers should remember to address these increases in their payroll.
Judges To Take More Active Role In Policymaking
In July 2024, the United Sates Supreme Court struck down the “Chevron deference” precedent. This means that instead of deferring to the expertise of regulatory agencies when interpreting ambiguous statutes, federal judges can now independently decide whether an agency’s interpretation is correct.
The court’s ruling may result in limiting the ability of federal agencies like the Federal Trade Commission (FTC) to set rules and enforce penalties. Indeed, with Donald Trump set to begin a second presidential term and Republicans assuming control of Congress, it’s expected that the FTC will see significant changes in its structure and policies.
Expect New FTC Leadership
FTC Chair Lina Khan will resign leading up to President-Elect Trump’s inauguration. Known as an advocate for consumers and enforcing an antitrust agenda (particularly in the tech sector), Khan’s policies seem to differ vastly from Trump’s philosophies, which are rooted in deregulation. On December 11, Trump announced he would nominate Federal Trade Commissioner Andrew Ferguson to lead the agency. Ferguson would essentially receive a promotion, as the Republican was appointed by President Biden and currently serves as one of the FTC’s five commissioners. Since Ferguson has Trump’s endorsement, this change in FTC leadership could signal an end to certain Biden/Khan-era policies.
Polices to Consider
• Noncompetes in Play. The incoming Republican administration is expected to end the FTC’s attempt to ban noncompete agreements. As previously discussed, this ban has faced multiple legal challenges, with a federal court in Texas ruling in August that the FTC exceeded its authority. New leadership at the FTC could result in the withdrawal of the appeal filed by the FTC, allowing the Texas district court’s decision to remain in effect.
But remember, franchisees are not recognized as “workers” under the proposed federal rule. Thus, even if the FTC successfully appeals the lower court’s decision, the ban on non-competes proposed by the FTC would not operate to prohibit franchisors from enforcing the franchisee’s non-compete obligations which are typically found in a franchise agreement.
• Focus on Deregulation: Trump’s policy framework has emphasized deregulation, which might also impact FTC operations by potentially reducing the regulatory requirements for companies. Possible changes could involve streamlining compliance processes or reducing initiatives related to labor and consumer protection.
• Trade Policies and Tariffs. Franchise stakeholders are likely concerned about what could happen if tariffs are imposed on countries like Canada and Mexico. The imposition of the tariffs may impact supply chains worldwide and include everything from machinery and raw materials to food ingredients. With this in mind, franchisors and franchisees should brainstorm cost-saving measures, such as pooling resources to negotiate bulk purchases and better deals with suppliers.
Looking Ahead
As with any presidential transition, it is safe to expect some volatility. That is why franchisors and franchisees should collaborate with a qualified NY franchise lawyer to perform legal audits of their enterprises and review compliance with existing and forthcoming transparency laws.
The next four years are bound to have an impact on franchising in the U.S. Lusthaus Law will continue to cover federal- and state-level laws and developments impacting franchising.
Contact Lusthaus Law
Lusthaus Law’s website is a resource for New York franchisors and franchisees. We have published two downloadable and complimentary e-books and our Insights blog is regularly updated to reflect industry trends and recent achievements in client representation.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path for your franchise’s successful future.
