On Tuesday, August 23, 2016, the Wisconsin Institute for Law & Liberty (WILL) filed a lawsuit in Vilas County Circuit Court on behalf of plaintiffs Krist Oil and Robert Lotto challenging the constitutionality and legality of s. 100.30 of the Wisconsin statutes, Wisconsin’s Minimum Markup Law. Krist Oil is an independent, family-owned Michigan corporation having its principal place of business in Iron River, Michigan. Mr. Lotto is a Wisconsin citizen who regularly purchases gasoline, including gasoline from Krist Oil.

The lawsuit alleges the state’s Minimum Markup Law

(1) violates the Wisconsin Constitution’s Due Process Clause, which states “[a]ll people are born equally free and independent, and have certain inherent rights; among these are life, liberty and the pursuit of happiness,” because the law “arbitrarily and irrationally prevents Plaintiff Krist Oil from charging appropriate and non-predatory prices in connection with its business and from freely operating an otherwise lawful business in a manner that is in its own best interest and the best interest of its customers” and that “Wisconsin has no compelling, substantial, or legitimate government interest in regulating minimum prices, even prices below some measure of costs, except where such prices could result in an actual and persistent adverse effect on competition.”

(2) violates the Wisconsin Constitution’s guarantee of equal protection of the law because the law “creates irrational and arbitrary classifications. Businesses that sell gasoline must mark that product up 9.18%. Businesses that sell alcohol or tobacco must mark those products up 6%. Businesses that sell any other product only have to sell their products above “cost.” There is no rational reason for forcing retailers to sell certain products at a specified percentage above “cost” when other products do not have the same requirements. There is no reasonable basis for those classifications and they serve no legitimate government purpose.”

Matt Hauser, on behalf of the Wisconsin Petroleum Marketers & Convenience Store Association(WPMCA), expressed confidence the law will be upheld and said the law “ensures that Wisconsin’s independent petroleum retailers can continue to provide their customers with a competitively priced product.”

A spokesman for Wisconsin Attorney General Brad Schimel said the Department of Justice plans to defend the state in the lawsuit.

Under s. 100.30 of the Wisconsin statutes, sales of merchandise below cost are generally prohibited. In addition, alcohol or tobacco products may not be sold less than cost, with the definition of cost including, as paraphrased by the Department of Agriculture, Trade and Consumer protection, “a presumptive 3% markup by wholesalers and presumptive 6% markup by retailers.”  Sales of motor vehicles fuels, again as paraphrased by the Department of Agriculture, Trade and Consumer protection, “the definition of ‘cost’ relies on the ‘average posted terminal price’ and includes a 9.18% markup over this amount.”

Related Items:

WILL Video Overview of Lawsuit

WPMCA Press Release

The Obama Administration’s new overtime rule will double the salary threshold for “white collar” workers to $47,476. The current exemption, set in 2004, is $23,660. The new threshold that will impact 4.2 million salaried workers goes into effect on December 1, 2016. Under the new rule, the threshold will automatically increase every three years.

Business groups say the new rule will force millions of salaried professionals to be reclassified as hourly wage workers. They argue that small businesses, nonprofits, and public sector employers will be specially hurt. The U.S Department of Labor estimates businesses will end up paying workers an additional $1.3 billion a year.

The final overtime rule was published on May 23 by the U.S. Department of Labor.

Under the final rule, an automatic escalator to the salary threshold will occur every three years, beginning on January 1, 2020. The benchmark for the salary adjustment is the 40th percentile of full-time salaried workers in the lowest-wage census region, which is currently in the south. Based on that formula, the Department of Labor estimates the new threshold will be $51,168 in 2020.

The rule also updates the total annual compensation level above which most white-collar workers will be ineligible for overtime. That level is set to the 90th percentile of full-time salaried workers nationally, or from the current $100,000 to $134,004 per year.

For workers with salaries above the new threshold, employers will continue to use the same duties test to determine whether or not the workers are entitled to overtime pay.

In its fact sheet explaining the rule, Labor provides businesses a “choice” under the new rule:

1. Increase their employees’ salaries to the $47,476 threshold.
2. Pay workers the time-and-a-half overtime premium for every hour beyond 40 per week.
3. Limit workers to a 40-hour work week.

Some groups assert that market considerations over time will prove the paycheck benefits an illusion. To curb costs, some businesses will simply forbid employees from working over 40 hours. They may also have to cut back other expenses such as non-cash benefits or suppress the base pay itself.

Beyond frustrating ambitious individuals willing to tackle longer hours in efforts to rise into management ranks, the rule will “force millions of workers into time-clock or hourly-tracking arrangements even if they themselves prefer the freedom and perks of salary status.” See The High Cost of Obama’s Overtime Edict, Cato Institute, May 20, 2016.

The US Chamber of Commerce issued the following statement on the new rule:

Despite the modifications, the dramatic escalation of the salary threshold, below which employees must be paid overtime for working more than 40 hours a week, will mean millions of employees who are salaried professionals will have to be reclassified to hourly wage workers. Small businesses, nonprofits, and public sector employers will be especially impacted as they will have the hardest time finding more income to cover the increased labor costs, even if they will have a longer time to implement the new requirement. Furthermore because the threshold will increase every three years, the impact on these employers will continue to ratchet up. This will result in charities providing fewer services to those in need, local governments having to reduce services and raise taxes, and small businesses having to curtail operations or plans to expand. The Department of Labor failed to accurately assess the impact this regulation would have on these, and other, employers.

Friday, April 8, Dane County Circuit Court Judge C. William Foust struck down 2015 Wisconsin Act 1, Wisconsin’s right-to-work law, concluding that labor unions have a property right to a portion of a worker’s wages. Under 2015 Wisconsin Act 1,

No person may require, as a condition of obtaining or continuing employment, an individual to do any of the following:

1. Refrain or resign from membership in, voluntary affiliation with, or voluntary financial support of a labor organization.
2. Become or remain a member of a labor organization.
3. Pay any dues, fees, assessments, or other charges or expenses of any kind or amount, or provide anything of value, to a labor organization.
4. Pay to any 3rd party an amount that is in place of, equivalent to, or any portion of dues, fees, assessments, or other charges or expenses required of members of, or employees represented by, a labor organization.”

   Wis. Stat. s.  111.04 (3).

Attorney General Brad Schimel has filed an appeal with the Wisconsin Court of Appeals, District III, and is seeking a stay of Judge Foust’s decision.  A stay, if granted, would allow Act 1 to remain in effect during the appeal.

In his filing, because the State has made a strong showing that it is likely to succeed on appeal, Attorney General Schimel asked for expedited consideration of his motion seeking a stay. He noted 26 states have enacted right-to-work laws and, similar to these other states, Wisconsin’s law will ultimately be upheld as constitutional.

Read Attorney General Schimel’s memorandum in support of his motion to stay Judge Foust’s judgment.

On February 29, 2016, Governor Scott Walker signed the Worker’s Compensation “Agreed Upon” Bill for 2016, Assembly Bill 724, into law as 2015 Wisconsin Act 180. Originally introduced by Sen. Steve Nass (R-Whitewater) and Rep. John Spiros (R-Marshfield) in January 2016, the bill is a result of a consensus recommendation from labor and management representatives on the Wisconsin Worker’s Compensation Council. Most provisions in Act 180 became effective on March 2, 2016; however, certain provisions relating to judicial review and administrative review of Worker’s Compensation decisions will become effective on July 1, 2016.

A more controversial Worker’s Compensation bill, Assembly Bill 501, was also authored by Rep. Spiros. Developed outside of the Worker’s Compensation Council, the bill contained controversial provisions, including contributory negligence concepts that some believed undermine the foundation of a Worker’s Compensation program. AB 501 did not advance this session and is dead.