A Closer Look Before Session Ends
March 2, 2016
 
Dear WH&LA Lodging Member:   

First, some good news to share. In 2015, both AH&LA and WH&LA advised members about the National Labor Relations Board's (NLRB) decision in mid-2015 to consider the franchisor/franchisee relationship in a completely different way than in the past. The new decision would hold franchisors accountable for the employment-related actions of a franchisee (hiring, terminating, eligibility for unemployment, discrimination, etc). The impact of this decision on the current independence of franchisee owners relating to employment actions would be dramatic, as franchisors would be forced to protect themselves and change the dynamic of the relationship. AH&LA, NRA and other organizations with franchises have worked hard to inspire changes at the federal level, but progress has been slow, forcing the issue to the state level to speed protections up.

The good news is that yesterday, Governor Walker signed into law SB 422, the Franchise Protection bill (also known as the Joint Employer bill), after passage in both houses of the state legislature. What this means is that a franchisor is excluded from classification as the employer of a franchisee or the franchisee's employees for state laws relating to employment, unless they agree in writing to assume this role or if the DWD finds control exists that is beyond normal. Specifically mentioned is worker's compensation, unemployment insurance, employment discrimination, minimum wage and wage payments. While this cannot include federal laws, it is a major success to become one of the early states to provide relief at the state level until a federal remedy can succeed. WH&LA, which had registered in support in both houses, was invited to and attended the official bill signing yesterday with the bill sponsor Sen. Kapenga.

Today we are also sharing a closer look at two issues of interest to our industry that remain on the table for the State Senate to consider on March 15, their last day of session. We have had a number of questions on both, as the issues can be considered complex, and difficult to capture in just a sentence or two. Hopefully you will find our analysis helpful in understanding how both could impact your property and the industry.  Should you wish to have your opinion known on either, now is the time to contact your State Senator, making sure to include your name and address in their district, the bill number, and whether you are asking them to support the legislation or other. It is helpful to add a sentence or two explaining why.

Please do not incorporate this WH&LA Capitol Insider in your note to legislators - this communication is  for WH&LA lodging members only. 
SB 578/AB 714 "Tourism Entity" Legislation

  Changed Languange Part 1

   A. "Tourism Entity" is a non-profit organization that: 
        - Came into existence before January 1, 2015
        -
Spends at least 51% of its revenues on tourism promotion & tourism development
        -
Provides destination marketing staff & services for the tourism industry in a municipality
(Changes: Changes existence requirement from current 1992 to 2015 to allow CVBs that were created after 1992 to be recognized AND removes the language that required the organization to be physically located in the municipality serviced, to allow CVBs contracting with multiple communities to not have to be physically located in each one.)   
  
   B. If no such organization fits this definition, then a "tourism entity" can be a non profit organization that provides destination marketing staff & services for the tourism industry in a municipality plus either:

     
1. Spends at least 51% of its revenues on tourism promotion and tourism development, OR
(Changes: Removes the required existence date, allowing new organizations to fit the definition in the future.) 

      2.
Was incorporated before January 1, 2015, and spends 100% of the room tax revenue they receive on tourism promotion and tourism development   
(Changes: Continues the new 2015 existence date, but removes the requirement that over half of the organization's revenues must be spent on tourism promotion and tourism development, which means existing chambers of commerce would almost all be eligible to be a tourism entity. This is because the requirement to spend all of the room tax revenue they get on tourism promotion and tourism development is required by law. An exception would be if a chamber also receives some room tax revenue [from the municipality's portion] to be used for other purposes. If so, they would not be eligible to be a tourism entity under this bill.)  
 
Changed Languange Part 2
The current law requires a tourism entity that operates in a zone to retain on their governing board one lodging owner or operator from each participating municipality in the zone. This legislation allows a second option just for zones, where a minimum of four total lodging owners or operators from municipalities in the zone would be required instead.              
(Changes: Tourism entities in a larger zone could just select a total of four lodging owners/operators who could be from any participating municipality, instead of one from each. An example would be a zone with 15 participating municipalities could have four lodging representatives instead of 15.)
SB 446/AB 450 Residential Dwelling Rentals
With two amendments passed in both committees: Amendment #1, Amendment #3 
 
Current Law
Most structures fitting the "residential dwelling" definition must be licensed as either a "tourist rooming house" or a "bed & breakfast." A tourist rooming house is defined as any lodging place or tourist cabin or cottage where sleeping accommodations in 1-4 units are offered for pay to tourists or transients, excluding a private boarding house not accommodating tourists/transients, a hotel (covers all five or more sleeping units), or a B&B. A B&B is defined as any place of lodging that satisfies all of the following: offers a maximum of eight rooms for rent to a maximum of 20 tourists/transients at a time, provides no meals other than breakfast and only to paying guests, is the owners' residence and they reside there during rental, and was originally built and occupied as a single family residence or was converted to this prior to rentals. 
 
Proposed definition of "residential dwelling" in the bill 
"A
ll or part of any building or structure that is primarily used and occupied for, or intended to be used for human habitation, and includes any appurtenances belonging to the dwelling and usually enjoyed with it."
    NOTE: In our analysis, this appears to include homes (in whole or in part), second homes, investment properties sometimes called "vacation homes," owned condo units such as cottages & cabins as well as separately owned condos in a resort property/hotel, apartments and more.

Changed Languange Part 1: Limitations on Municipality & County Restrictions 
The following would only apply to rentals of at least seven consecutive days. A municipality or county CAN
do the following in a local ordinance: 
  • Require local inspection and inspection fees for residential dwelling rentals of any duration
  • Require annual local license fees for residential dwelling rentals of any duration
  • Impose a municipal room tax on residential dwelling rentals, as authorized by state statute
  • Regulate nuisances related to residential dwellings
  • For residential dwellings rented for periods of less than 28 consecutive days, limit this to an annual duration of no more than 180 consecutive days beginning with the first rental day  (Amendment #3). This basically says that other than monthly rentals, the local governments can cap rentals of 7-28 consecutive days to only occur within a 6 consecutive month timing
  • Restrict or prohibit residential dwelling rentals of less than 7 consecutive days as they wish.
But, a municipality or county CANNOT do the following in a local ordinance under this bill: 
  • Prohibit or unreasonably restrict the rental of a residential dwelling for 7 consecutive days or longer.
Any such
existing ordinance would no longer apply, effective May 1, 2016 
 
Changed Language Part 2: Exception to State Licensing/Regulations/Inspection/Fees
This part allowed the broadly defined "residential dwellings" to be exempt from licensing, regulations, inspections, and fees at the state level (frequently implemented by local public health agents), which also would make it easier for them to not remit state sales tax as they would not be as visible at the state level.
    NOTE:
This entire part was eliminated by Amendment #1 after negotiation between WH&LA and the bill sponsor. In order to achieve this critical removal, WH&LA has agreed to take a neutral position on the remainder of the bill, but only if Amendment 1 is passed. As it was passed in the Assembly before they adjourned, the Senate must also pass both amendments, or the entire bill dies. The only alternative is if the Assembly decides to come back for a special session to address a few negotiated changes on bills with the Senate, which is currently not predicted.
 

Contact: Trisha Pugal
Wisconsin Hotel & Lodging Association
pugal@wisconsinlodging.org
262/782-2851