Category: Food & Hospitality

Governor Signs Bill to Exempt Certain Businesses from Fast Food Minimum Wage

On March 26, 2024, Governor Newsom signed Assembly Bill (AB) 610, which amends the definition of “fast food restaurant” to exempt restaurants in airports, hotels, event centers, theme parks, museums, and certain other locations from the requirements set forth under the Fast Food Council requirements.

Last year, Newsom signed AB 1228, which repeals the FAST Recovery Act but establishes a modified version of the Fast Food Council (Council) until January 1, 2029. The bill also sets forth the minimum wage increases for fast food workers, with an increase to $20.00 effective April 1, 2024.

The bill includes an urgency clause which means it takes effect immediately. As such the exempted businesses will not need to comply with the minimum wage requirements past in 2023.

Jackson Lewis P.C. © 2024
For more news on Fast Food Minimum Wage Laws, visit the NLR Labor & Employment section.

FDA Lists Regulations Under Development and Updates Priority Guidance Topics for Foods Program

  • The U.S. Food and Drug Administration’s (FDA’s) Foods Program has posted a new website listing regulations it plans to publish by October 2024 and long-term regulations it is prioritizing for publication at a later date. Additionally, FDA has updated the list of guidance topics it is considering and expects to publish by the end of 2024.
  • Regulations are officially announced in the Unified Agenda of Regulatory and Deregulatory Actions published each spring and fall. Some of the regulations FDA has listed on its website include use of the “healthy” nutrient content claim, the use of ultrafiltered milk in cheese and cheese related products, and front-of-package nutrition labeling, among others.
  • The following five topics have been added to the list of guidance documents the FDA expects to publish by the end of December 2024:
    • Notifying FDA of a Permanent Discontinuance in the Manufacture or an Interruption of the Manufacture of an Infant Formula; Draft Guidance for Industry;
    • Action Levels for Lead in Food Intended for Babies and Young Children: Guidance for Industry;
    • The Food Traceability Rule: Questions and Answers; Draft Guidance for Industry;
    • Hazard Analysis and Risk-Based Preventive Controls for Human Food; Chapter 12: Preventive Controls for Chemical Hazards: Draft Guidance for Industry; and
    • Voluntary Sodium Reduction Goals: Target Mean and Upper Bound Concentrations for Sodium in Commercially Processed, Packaged, and Prepared Foods (Edition 2): Draft Guidance for Industry
  • Public comments on the list of guidance topics can be submitted to www.regulations.gov using Docket ID FDA-2022-D-2088.
© 2024 Keller and Heckman LLP
For more on the FDA, visit the NLR Biotech, Food, Drug section.

FDA Announces Draft Supplemental Guidance on Menu Labeling

  • Today FDA announced an update to its Menu Labeling Supplemental Guidance which addresses implementation of menu nutrition labeling requirements. The menu labeling rules only apply to standard menu items offered by “covered establishments,” which are defined as restaurants and similar retail food establishments with 20 or more locations doing business under the same name and offering for sale substantially the same menu items, as well as restaurants and similar retail establishments that register to voluntarily subject themselves to the menu labeling requirements. (21 CFR 101.11).
  • The menu labeling regulations require disclosure of calories on menu and menu boards, and require that other nutrition information (e.g., fat, sugar, protein) be available in written form on the premises and provided to the customer upon request. Notably, the menu labeling regulations do not require disclosure of “added sugars” as is now required on packaged foods.
  • The draft update includes two new Q&As which (1) clarify that nutrition information can be provided on third party platforms (TPPs) through which food is ordered and delivered and (2) that added sugars may voluntarily be declared.
  • Although FDA accepts comments on any guidance at any time, comments on the draft new Q&As are due by February 12, 2024, to ensure they are considered before FDA begins work on final versions.
© 2023 Keller and Heckman LLP
For more news on FDA Menu Labeling Regulations, visit the NLR Biotech, Food, Drug section.

Giving Thanks for Thanksgiving

Until President Abraham Lincoln proclaimed a national day of thanksgiving during the Civil War, thanksgiving holidays were a matter of state and local concern.   California mentions Thanksgiving Day in 18 separate statutes, including those in the Code of Civil Procedure, Civil Code, and even the Fish & Game Code.  The last statute, however, has nothing to do with turkeys.  Rather, Fish & Game Code Section 5523 concerns the timing of the opening of the Dungeness crab season.

California may have more than one day of thanksgiving.  Government Code Section 19853 provides that all state employees are entitled to various specified holidays, including  every day appointed by the Governor of this state for a public fast, thanksgiving, or holiday.

© 2010-2023 Allen Matkins Leck Gamble Mallory & Natsis LLP

By  Keith Paul Bishop of Allen Matkins Leck Gamble Mallory & Natsis LLP

For more news on California Holidays for Employees, visit the NLR Labor & Employment section.

NYC Council Passed Bill to Require Added Sugar Icons for Chain Restaurant Menu Items

  • On November 2, the New York City Council passed a bill that will require chain restaurants with 15 or more locations to post added sugar icons and factual warning statements on menus or menu boards next to menu items and on or near food items on display that exceed a specified level of added sugars. The icon must be displayed on food items that exceed 100% or more of the daily value for added sugars as determined by the FDA (i.e., 50g) or another amount as specified by the Department of Health and Mental Hygiene (DOHMH).
  • This new legislation, Int 0687-2022, builds on the “Sweet Truth Act,” which was passed in 2021 and requires the same added sugar notifications on certain prepackaged food items at covered NYC establishments.
  • The bill has been sent to the Mayor for a hearing and signature, to be held on November 17. If signed, covered establishments will be required to display the added sugar icons no later than one year after the DOHMH issues its rules for the bill. Any covered restaurant that violates the provisions of the bill is liable for a civil penalty of $200.
© 2023 Keller and Heckman LLP
For more news on Added Sugar Notifications, visit the NLR Biotech, Food, Drug section.

Patenting a Nice Cool Glass of Nicotinamide Riboside? Claims Covering Milk Invalid under § 101

The US Court of Appeals for the Federal Circuit found that claims covering a naturally occurring composition were not patent eligible under 35 U.S.C. § 101 merely because one component of the composition had been “isolated.” ChromaDex, Inc. v. Elysium Health, Inc., Case No. 2022-1116 (Fed. Cir. Feb. 13, 2023) (Chen, Prost, Stoll, JJ.)

ChromaDex sued Elysium (a former ChromaDex customer) for infringement of its patent directed to dietary supplements containing nicotinamide riboside (NR). Elysium moved for summary judgment, arguing that the asserted claims were invalid under the § 101 prohibition against patenting natural phenomena. After the district court granted summary judgment, ChromaDex appealed.

The asserted claims were directed to a composition comprising:

  • Isolated NR
  • One or more of tryptophan, nicotinic acid or nicotinamide
  • One of 22 carriers
  • Increased NAD+ biosynthesis after eating.

Both parties conceded that milk satisfies every element of the asserted claims with the exception that its NR is not “isolated.” Both parties also conceded that milk is a naturally occurring material and thus not patent eligible under § 101.

On these facts, the issue presented was whether the claim limitation that the NR must be “isolated” (which does not occur in nature) was sufficient to make the claims patent eligible. The Federal Circuit responded “no.”

The Federal Circuit analyzed the asserted claims under two tests: the “markedly different characteristics” test set out in Chakrabarty, and the Alice two-step test (unsure whether Chakrabarty remains controlling precedent).

Under the Chakrabarty test, a claimed composition is not a natural phenomenon if it has “markedly different characteristics” from what occurs in nature. The Federal Circuit found that ChromaDex’s claimed composition had no markedly different characteristics from natural milk. While ChromaDex argued that isolation potentially allowed for unnaturally high concentrations of NR, the claims did not require such concentrations. The claims included compositions structurally and functionally identical to milk and therefore failed the “markedly different characteristics” Chakrabarty test.

Proceeding to the two-part Alice test, under step 1 the Federal Circuit found that the claims were directed to a product of nature because there were no structural differences between the claimed composition and natural milk. Under step two, the Court found that there was no “inventive step” because the claims were merely directed to increasing NAD+ biosynthesis, which was a natural principle that resulted from drinking milk.

Practice Note: During claim drafting, care should be taken to avoid claims that encompass all structural and functional components of a naturally occurring material.

Article By Alexander Piala, PhD of McDermott Will & Emery

For more intellectual property legal news, click here to visit the National Law Review.

© 2023 McDermott Will & Emery

USDA Finalizes the Strengthening Organic Enforcement Rule

  • USDA’s Agricultural Marketing Service (AMS) administers the National Organic Program (NOP) as authorized by the Organic Foods Production Act of 1990 (OFPA).  The USDA organic regulations, which were published on December 21, 2000, and became effective on October 21, 2002, govern the production, handling, labeling, and sale of organically produced agricultural products.  On August 5, 2020, in response to mandates in the Agriculture Improvement Act of 2018, as well as pressure from the industry and recommendations from the National Organic Standards Board (NOSB), USDA published a proposed rule called Strengthening Organic Enforcement (SOE) that is aimed at preventing loss of organic integrity—through unintentional mishandling of organic products and intentional fraud meant to deceive—and strengthening trust in the USDA organic label.
  • On January 19, 2023, USDA published the SOE final rule.  The final rule includes clarifications and additional examples in response to comments received on the SOE proposed rule.  Key updates include:
    • Requiring certification of more businesses, like brokers and traders, at critical links in organic supply chains;
    • Requiring NOP Import Certificates for all organic imports;
    • Requiring organic identification on nonretail containers;
    • Increasing authority for more rigorous on-site inspections of certified operations;
    • Requiring uniform qualification and training standards for organic inspectors and certifying agent personnel;
    • Requiring standardized certificates of organic operation;
    • Requiring additional and more frequent reporting of data on certified operations;
    • Creating authority for more robust recordkeeping, traceability practices, and fraud prevention procedures; and
    • Specifying certification requirements for producer groups.
  • The compliance date for the SOE final rule is March 19, 2024, or 12 months after the effective date of March 19, 2023.

Article By Food and Drug Law Practice Group at Keller and Heckman

For more biotech, food, and drug legal news, click here to visit the National Law Review.

© 2023 Keller and Heckman LLP

FDA Finalizes FSVP Guidance for Importers of Human and Animal Food

On January 10, the FDA issued a final guidance for the Foreign Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals. As our readers know, under the Food Safety Modernization Act (FSMA), FSVP requires that importers verify that the food which they import provides the same level of public health protection as the preventive controls or produce safety regulations (as appropriate) in the U.S. and to ensure that supplier’s food is not adulterated and is not misbranded with respect to allergen labeling.

The guidance is intended to assist importers in developing and implementing FSVP records, and following FSVP requirements for each food they import. The guidance includes recommendations on the requirements to analyze the hazards in food; how to evaluate a potential foreign supplier’s performance and the risk posed by the food; ways to determine and conduct appropriate foreign supplier verification activities; and how importers of dietary supplements or very small importers can meet modified FSVP requirements.

The guidance finalizes a 2018 draft guidance, and addresses comments received regarding what food the FSVP regulation applies to, what information must be included in the FSVP, and who must develop and perform the FSVP activities.

For more Biotech, Food, and Drug Legal News, click here to visit the National Law Review.

© 2023 Keller and Heckman LLP

Companies Gear Up For Mass Production of Cultured Meat

Could cultured meat be available in your U.S. grocery store in the new year? A previous article focused on the topic of “cultured meat” – meat made from the cells of animals and grown in a nutrient medium. While no cultured meat has yet been approved for sale in the U.S., companies are positioning themselves for mass production once needed approvals, licensing, inspections, etc., are obtained.

Earlier this month, Believer Meats broke ground on a $123 million plus facility in Wilson, North Carolina. The facility will be able to produce 10 metric tons of meat a year and will be the largest cultured meat facility in the world. The new facility will be Believer Meats’ second production facility. Last year it opened its first facility in Rehovot, Israel, with the capacity to make 500 kilograms of cultured meat a day. Believer Meats has developed processes to create cultured chicken, beef, pork, and lamb.

Investment in the cultured meat industry has been massive. For example, Believer Meats has $600 million in funding, and its investors include ADM Ventures, part of Archer-Daniels-Midland Co., and Tyson Foods.

Investment in the cultured meat industry has been massive.

So, with all of the investment and building of facilities, is the sale of cultured meat in the U.S. imminent? Cultured meat was first introduced in 2013. The eventual sale of cultured meat in the U.S. seems inevitable, but the timing is not yet clear. Before any cultured meat can be sold in the U.S., the FDA and USDA must approve the processes, license the facilities, inspect the facilities, inspect the meat, and approve labeling for the meat. Recognizing the rapid development of cultured meat products, the FDA established a premarket consultation process for companies to work with the FDA to start the process of regulatory approval for their cultured meat products. This premarket consultation process permits the companies to, voluntarily, work with the FDA, and to share information about their processes. The FDA premarket consultation does not, itself, “approve” the products, but evaluates the information shared by the companies – in order to determine if the meat is safe for human consumption. Specifically, as part of the premarket consultation, the FDA considers the cells used to make the cultured meat, the processes and materials used to create the cultured meat, and the manufacturing controls under which the cultured meat is created.

Recently, UPSIDE Food Inc. became the first cultured meat company to complete the FDA’s premarket consultation process. In November of this year, the FDA issued a No Questions letter to UPSIDE Food Inc. for its cultured chicken. The letter stated that information provided by UPSIDE Food Inc. to the FDA demonstrated that UPSIDE Food Inc.’s cultured chicken is safe and its production process prevents the introduction of contaminants that would adulterate the product. Last year, UPSIDE Food Inc opened a facility in Emeryville, California capable of producing 50,000 pounds of meat per year.

UPSIDE Food Inc.’s No Questions letter from the FDA is just the first step in the regulatory process. Pursuant to a 2019 agreement between the FDA and USDA, the FDA and the USDA will share oversight of the production of cultured meat. In addition to the premarket consultation, FDA will oversee the creation of the cultured meat up until the time of harvest, including licensing facilities, and inspecting the creation of the cultured meat. Inspections will ensure approved processes are being used and that the cultured cells are grown in a fashion that complies with Good Manufacturing Processes and food safety regulations.

When the cultured meat is harvested and processed into its final form, regulatory oversight will shift to the Food Safety Inspection Service (FSIS) of the USDA. As with traditional meat producers, cultured meat producers will have to apply for Grants of Inspection and be subject to similar inspections and food safety requirements. Labels for the cultured meat will also have to be preapproved by FSIS.

Before Believer Meats can sell any of its products manufactured in the North Carolina facility, Believer Meats will have to navigate the regulatory hurdles necessary to obtain approval of its products for sale to consumers. Believer Meats has indicated that it has been working with the FDA, but the FDA has not yet issued any statement on Believer Meats’ processes or products. However, with the start of construction on the world’s largest cultured meat facility, Believer Meats will be well-positioned to begin commercial production when regulatory approvals are obtained. We will be following this emerging new market and the regulatory rubric designed to oversee these cutting-edge food products.

Article By L. Christine Lawson of Womble Bond Dickinson (US) LLP

Click here to read more biotech, food, and drug legal news from the National Law Review.

Copyright © 2022 Womble Bond Dickinson (US) LLP All Rights Reserved.

District of Columbia to Eliminate the Tip Credit: a Specter of the Future?

Currently, employers in the District of Columbia (like the majority of states) are permitted to count customer tips toward the minimum hourly wage they must pay to certain service employees. This practice is often referred to as taking a “tip credit.” Said differently, an employer is allowed to pay particular service employees a cash wage that is less than the minimum wage by relying on tips the employee receives from customers to make up the difference between the subminimum wage paid directly by the employer and the applicable federal or state minimum wage. In the District of Columbia, employers currently are allowed to pay their tipped workers a subminimum wage of $5.35 per hour, with the expectation that customers’ tips will cover the balance of the $16.10–per-hour minimum wage.

In early November 2022, nearly 74 percent of D.C. voters approved Initiative 82, the “District of Columbia Tip Credit Elimination Act of 2022,” which will gradually eliminate use of the tip credit in the District of Columbia by 2027. In 2027, the District will join the small group of states that currently prohibit use of the tip credit (Alaska, California, Minnesota, Montana, Nevada, and Oregon). In 2018, 55 percent of D.C. voters approved a different initiative, which would have phased out the tip credit, but the Council of the District of Columbia overturned the voter-approved initiative. Since then, the composition of the D.C. Council has changed, and the council is expected to implement Initiative 82.

Under Initiative 82, starting in January 2023, the District of Columbia’s minimum cash wage (i.e., the subminimum wage paid by the employer when an employer utilizes a tip credit) of $5.35 will increase by a dollar or two every year until it reaches minimum wage. Correspondingly, the maximum tip credit an employer can take in the District of Columbia will be reduced gradually until 2027 when the tip credit is eliminated. It is worth noting that the D.C. Council has not yet implemented Initiative 82, so employers may want to monitor what cash wage rates and tip credits are officially implemented to ensure compliance with the District of Columbia’s wage laws and tip credit notice requirements. As the end of the year approaches, employers may also want to review any changes to state minimum wage and minimum tip credit amounts that may become effective on December 31 or January 1.

The “DC Committee to Build a Better Restaurant Industry” was the campaign committee behind Initiative 82. The fact that voters approved the tip credit elimination initiative by nearly 20 percentage points more than the 2018 initiative shows that the campaign committee may indeed impact the fate of the tip credit. Other groups like “One Fair Wage” have also taken aggressive lobbying action to convince lawmakers and voters in other states to eliminate the tip credit. In early 2022, One Fair Wage announced a $25 million campaign to try to convince twenty-five states to remove the tip credit by 2026. According to One Fair Wage’s website, “One Fair Wage policy would require all employers to pay the full minimum wage with fair, non-discriminatory tips on top.” In addition to the District of Columbia, the group has campaigned in Illinois, Maine, Massachusetts, Michigan, and New York.

As we discussed in a June 2021 article, employers already are under siege with respect to the tip credit at the federal level. One of President Biden’s objectives has been to eliminate the tip credit on a nationwide basis, but because the tip credit exists in the statutory text of the Fair Labor Standards Act (FLSA), the U.S. Congress would need to amend the FLSA to accomplish that goal. However, through regulatory action that was finalized late last year, the U.S. Department of Labor (DOL) burdened the service industry with a harsh standard for maintaining compliance with tip credit regulations. In late 2021, the DOL released a rule that restored the pre-Trump-era 80/20 rule and added a new thirty-minute rule. Compliance with the new rule effectively created its own deterrent against continued use of the tip credit.

Ironically, a significant percentage of service industry employees actually oppose these initiatives to eliminate use of the tip credit because of the potential negative impact it will have on their total income. The U.S. Bureau of Labor Statistics indicates that, as of May 2021 (the most recent data available), individuals working as waiters and waitresses earned on average nearly $14 per hour. This is nearly twice the current federal minimum wage $7.25.

Many service industry employees advocate against elimination of the tip credit because they anticipate that employers may seek to offset the additional hourly labor costs by shrinking the workforce, decreasing hours, or recovering the added expense through higher menu prices or service charges, which may eat into the tips customers are willing to leave their servers. Many employers that have stopped utilizing the tip credit pay full minimum wage by automatically tacking a service fee onto customer bills. Unlike tips, employers can keep all, or portions of, an automatic charge, so long as the employer complies with local or state laws requiring adequate notice to customers about how the charge will be used.

Once the 118th Congress is sworn in this coming January, it is unlikely that employers will see much change regarding use of the tip credit at the federal level. Nevertheless, some state legislators may press forward with their efforts to eliminate use of the tip credit at the state level. For service industry employers that operate nationwide, there are mounting challenges to complying with federal and state tip regulations. Employers may want to continue to monitor states where legislation is targeting elimination of the tip credit and may wish to consider measures to address the additional labor costs that will follow.

© 2022, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.
For more Labor and Employment Law news, click here to visit the National Law Review.