Can You Fire an Employee for Not Returning to the Office?
Gene Marks thinks the NLRB is making it harder for business owners to enforce RTO policies.
Here are today’s highlights:
A son who just wanted his aging parents to have a place to live creates a retirement community.
All retailers want for Christmas this year is to sell out their inventory.
The recent litigation over broker fees could eliminate a lot of real estate agents.
Amazon is finally delivering packages by drone, but the service does have a few limitations.
Here’s how a son accidentally created a growing chain of retirement communities: “When Arun Paul’s parents were in their 70s, he began searching for a duplex in his neighborhood in the Bay Area where they could live. The plan was that Mr. Paul would be close by, but his parents would also share the duplex with their friends, another older couple. It was important to Mr. Paul that his parents, who emigrated from India in the 1960s, would have other Indian people to be around, especially as they aged. ‘Growing up, I could always feel that there was something they left behind, like a really important piece of who they were,’ said Mr. Paul, 49. Word of the duplex plan spread among other members of the Indian community, and Mr. Paul started to think that it could be something bigger.”
“So instead of creating a home for just two couples, in 2012, he began Priya Living — an elder-living community that centers Indian culture through its activities, design, food, and residents themselves.”
“Priya Living started off with just one 26-unit location in Santa Clara, Calif., where Mr. Paul’s parents moved in. But now, it has four locations in California and is opening its first location in India near New Delhi on Nov. 8. Mr. Paul also said that the company has acquired land for future development in Michigan and Texas. In total, Priya Living has over 530 residents in the United States.”
“But there is no age requirement for Priya Living communities, and you don’t have to be Indian to live there. The average age of a Priya Living resident is 61, but there are residents in the 35 to 50 range too, Mr. Paul said. Living units are condo-style residences, each with one or two bedrooms, and rents range from $2,000 to $3,000 a month.” READ MORE
THE 21 HATS PODCAST: DASHBOARD
Can You Fire Employees Who Won’t Return to the Office? This week, Gene Marks warns business owners that the National Labor Relations Board has taken an action that could make it harder to fire employees who won’t come back. But is that really the case? Gene’s also concerned about a new rule proposed by the Equal Employment Opportunity Commission that makes it even more important that business owners review their policies and training regarding harassment of employees. And then Gene reviews the case of an employee who filed some relatively minor misrepresentations in an expense report and then lied about it. Should the employee be fired?
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Mark Zandi was pretty happy with the latest jobs report:
This holiday season, retailers would really like to avoid getting stuck with excess inventory: “In 2021, shipping delays meant retailers didn’t have enough stuff on their shelves to meet demand. And last year, scarred by those experiences, shops made the mistake of over-ordering merchandise—sending their shelves overflowing and forcing them to sell goods at margin-eroding discounts. A basket of retailers in the S&P 500 saw operating margins fall to 4.4 percent in the fourth quarter of 2022, down from 5.6 percent a year earlier.”
“Inventory discipline is showing up in cargo numbers. From January through August, there was about 20 percent less import cargo volume at major container ports than the same period last year, according to the National Retail Federation and Hackett Associates.”
“Meanwhile, certain input costs have been moving in retailers’ favor, which should help pad margins. Ocean container-shipping rates from China to the U.S. West Coast are down about 41 percent as of late October compared with a year earlier, according to Goldman Sachs, and the producer-price index for general merchandise retailers has been on a declining trend since May.” READ MORE
The pandemic boom for home goods is definitely over: “Contemporary furniture retailer Z Gallerie filed for Chapter 11 in October citing liabilities and assets between $50 million and $100 million. That same month, high-end furniture retailer Mitchell Gold + Bob Williams started its liquidation process as the company owed between $10 and $50 million to its creditors. Meanwhile, Furniture maker Noble House Home Furnishings filed for bankruptcy in September blaming high inflation and soft sales. The home category’s woes are another example of a pandemic boom that turned into a bust. Furniture and home furnishings’ retail sales climbed as high as 20.3 percent in 2021 and just 4 percent in 2022, according to data from Insider Intelligence. This year, Insider Intelligence expects the category to grow just 2 percent.”
“‘During that part of the pandemic, 2020 and into 2021, we saw a boom in the housing market. That also boosted demand because consumers are more likely to upgrade their furniture and home furnishings when they move homes or renovate homes,’ said Sky Canaves, senior analyst at Insider Intelligence. ‘The fortunes of the home furnishing market are very closely tied to the activity in the residential housing market in the U.S.’”
“‘Demand for new furniture will be highest when people are buying new homes and moving in,’ she said. ‘People are not buying as many homes and people are not moving as much because it’s very expensive to buy a home right now with the high interest rates.’”
“Only a few years ago, these companies were riding the home goods wave. Prior to its bankruptcy, Mitchell Gold + Bob Williams rolled out efforts to expand and become a lifestyle brand in 2021 by launching bedding, bath accessories, and home-fragrance products. The company entered new categories that were in high demand during the pandemic.” READ MORE
Retailers say an outdated trade law is putting them at a disadvantage: “American retailers have faced an existential crisis since e-commerce disrupted the industry’s traditional business models. But their latest threat, a group of retailers and policymakers say, is coming from a nearly century-old trade rule that has given their e-commerce rivals — many of them founded in China — an unfair advantage. The rule, known as de minimis, allows companies to ship packages worth less than $800 into the United States without paying duties and fees that Customs and Border Protection enforces. Nearly three million de minimis shipments enter the United States each day, and about half of those shipments are textile and apparel products.”
“Critics of the rule said it disadvantages American companies. They said Chinese-founded companies like Shein and Temu, both budget-friendly retailers, would ship merchandise directly from their overseas warehouses to shoppers’ homes, and few of those packages were worth at least $800.”
“But products made overseas and then shipped to U.S. retailers in bulk — where they are stored in warehouses before being shipped to customers — are less likely to fall under the $800 threshold.”
“U.S. retailers want the rule changed. If it isn’t, they argue, companies may move their warehouses, and the jobs that come with them, outside the United States.” READ MORE
Here’s how the real estate industry may change in light of last week’s antitrust jury verdict: “Right now, home sellers essentially pay fees for both their own agent and the buyers’ agent, with a typical commission around 5 to 6 percent, split between the two brokers. That structure is largely enforced by the National Association of Realtors, which has about 1.5 million dues-paying members. If a seller doesn’t agree to those terms, the listing isn’t shown on the multiple listing services that underpin most home sales. This week’s decision may have changed that. ‘The industry can no longer believe that any jury will decide in favor of their price-setting system,’ Steve Brobeck, senior fellow at the Consumer Federation of America, told DealBook. Experts identified a range of potential shifts, including:”
“Making commission sharing optional, so that sellers’ agents who don’t want to pay buyers’ agent fees can still list on databases. Negotiating to have the home seller cover the buyer’s broker costs as part of the transaction price.”
“Having buyers’ agents charge flat fees, bill by the hour, or offer a menu of services that home shoppers could choose from. Forgoing buyers’ agents altogether, as buyers in most countries do. According to analysts at the investment bank Keefe, Bruyette & Woods, as much as 30 percent of the industry’s commissions could disappear.”
“Start-ups are trying different business models. Some, including CoStar’s Homes.com, promote house listings instead of selling buyer leads to agents, as Zillow and Realtor.com do. And companies known as iBuyers, like Opendoor and Offerpad, try to remain independent from multiple-listing services by listing homes they own.”
“Lower fees could drive down the number of U.S. agents as much as 80 percent, according to the KBW analysts. Among those at risk are part-time brokers or underperformers. ‘We’ll find out who the real professionals are,’ said Jason Haber, an agent at Compass.” READ MORE
The last few years of a tight labor market have produced considerably more PTO days for employees: “Growth in paid-time off—including family leave, sick leave, and vacation—is widening the gap between the number of hours for which workers get paid and the number of hours they are actually on the job. Employers have expanded paid benefits to retain and attract workers in a hot job market. Employees, meanwhile, are using the new benefits as they juggle work, family, and health.”
“As of this spring, employers offered 80 percent of workers paid sick leave, up from 67 percent a decade ago, according to Labor Department data. Paid vacation expanded to 77 percent of the workforce from 74 percent. And paid family leave, with the most dramatic jump, increased to 27 percent from 12 percent.”
“‘Business owners are already trying to deal with missed sales opportunities because they don’t have enough staff,’ said Holly Wade, executive director of the research center at the National Federation of Independent Business, a trade group for small-business owners. ‘The days off are adding another element of stress.’” READ MORE
Amazon’s much-hyped drone project is dropping small objects on driveways but still has a long way to go: “Exactly a decade ago, Amazon revealed a program that aimed to revolutionize shopping and shipping. Drones launched from a central hub would waft through the skies delivering just about everything anyone could need. They would be fast, innovative, ubiquitous — all the Amazon hallmarks. The buzzy announcement, made by Jeff Bezos on ‘60 Minutes’ as part of a Cyber Monday promotional package, drew global attention. ‘I know this looks like science fiction. It’s not,’ said Mr. Bezos, Amazon’s founder and the chief executive at the time. The drones would be ‘ready to enter commercial operations as soon as the necessary regulations are in place,’ probably in 2015, the company said.”
“Eight additional years later, drone delivery is a reality — kind of — on the outskirts of College Station, Texas, northwest of Houston. That is a major achievement for a program that has waxed and waned over the years and lost many of its early leaders to newer and more urgent projects.”
“Yet the venture as it currently exists is so underwhelming that Amazon can keep the drones in the air only by giving stuff away. Years of toil by top scientists and aviation specialists have yielded a program that flies Listerine Cool Mint Breath Strips or a can of Campbell’s Chunky Minestrone With Italian Sausage — but not both at once — to customers as gifts.”
“Only one item can be delivered at a time. It can’t weigh over five pounds. It can’t be too big. It can’t be something breakable, since the drone drops it from 12 feet. The drones can’t fly when it is too hot or too windy or too rainy.”
“You need to be home to put out the landing target and to make sure that a porch pirate doesn’t make off with your item or that it doesn’t roll into the street (which happened once to Mr. Lord and Ms. Silverman). But your car can’t be in the driveway. Letting the drone land in the backyard would avoid some of these problems, but not if there are trees.” READ MORE
THE 21 HATS PODCAST
Sometimes, Dreams Do Come True: If you’ve been listening to this podcast, you know we spend a lot of time talking about all of the things that can go wrong for a business owner. And yes, in part because we started recording these conversations just a couple of months before the pandemic hit, we’ve had plenty to talk about. Even this year, with the worst of the pandemic behind us, we’ve been talking about everything from excess inventory to lost clients to layoffs to ineffective marketing to surviving the valley of death. So, with that in mind, this week, I’ve chosen to replay an episode both because it offers an inspirational message and because, well, we here at the home office need a little break. It’s the episode we recorded two years ago when Karen Clark Cole sold her business.
“Especially given that Karen had only recently been through a tough period that prompted her to take time away from the business, the conversation is a nice reminder that sometimes things do come together. It’s also full of great advice for anyone who thinks they may want to sell their business one day.
You can subscribe to the 21 Hats Podcast wherever you get podcasts.
Thanks for reading, everyone. — Loren