Worker Classification Alert, Labor and Immigration Impact, AI and Yelp Bookings

Hey everybody, it's Gene Marks, and welcome to this week's episode of the Paychex THRIVE Week In Review. This is where we take a few items in the news, and we talk about them because they impact your small business and mine.

Before we get started, running a small business is tough. You've got a lot of balls in the air, a lot of things to do, lot of responsibilities, as well. You probably need help with HR. You're probably doing a little too much in the HR side rather than focus on what you really do best, which is why you should consider using outside HR experts like Paychex.

Paychex can help you with all of your payroll and HR needs, as well, and free up your time to focus on more productive and profitable activities. So, if you're interested, go to paychex.com/meetpaychex. That's P-A-Y-C-H-E-X dot-com forward slash M-E-E-T P-A-Y-C-H-E-X and you can get more information about getting help on your HR side.

All right, let's talk about what's in the news this week. I wanted to highlight a recent report that came from the Department of Labor. They went after a restaurant in Oregon to recover back wages and citing overtime and tip violations. Let me read you this story. The U.S. Department of Labor – this is a press release on their site, among many press releases, by the way – they announced enforcement actions following an investigation into an Oregon restaurant that violated federal wage laws.

The Wage and Hour Division found that the employer misclassified 19 workers as exempt from overtime, failed to pay required overtime premiums, and improperly used employee tips to supplement their base wages. As a result, the department recovered approximately $200,000 in back wages for affected workers. The case underscores the ongoing federal scrutiny of wage and hour labor compliance, particularly in industries like hospitality where violations are common.

The Labor Department emphasized that employers must correctly classify workers and follow strict rules governing tip pools and overtime pay under the Fair Labor Standards Act. The action is part of a broader enforcement push to ensure workers receive legally mandated compensation.

Now, a couple of points on this. First of all, I know we keep hearing about a pro-business administration in Washington and know lots and lots of less regulations, which you know it's certainly true in a lot of aspects, but if you go to the Department of Labor's website or you go to the Equal Employment Opportunity Commission's website and look at their press releases, these two agencies are very active and very busy. The EEOC looks for discrimination and harassment cases, but the Department of Labor is looking for compliance under the Fair Labor Standards Act, and they're going after all sorts of businesses, big and small, to make sure that they're not participating in wage theft.

So, if you're a business, just because you might hear about, you know, all the federal government being more pro-business or less regulatory, be careful, because that is really not necessarily the case when it comes to enforcing existing regulations.

And by the way, that's just the federal government. Your state has its own rules and regulations on paying employees tips overtime, minimum wage. You need to make sure that you're in compliance. How do you get in compliance? Well, it would be nice if you had a nice payroll firm or HR firm like a Paychex or a good labor attorney or a good HR consultant. But be very, very careful. You do not want to be on this press release on the Department of Labor's website saying how your business was participating in wage theft. That is not a good thing and is certainly not good PR for your company.

So, again, just because we, you know, it appears to be a more pro-business or less regulatory environment in Washington, that doesn't mean that the agents aren't very, very active in going after existing regulations. They are, and also we have to be very careful about our state compliance rules as well. So, be careful, okay, it is important. It will cost you not only a lot of money and fines, but also a lot towards your company's reputation.

An interesting article also appeared this week in the Wall Street Journal, and the article said what everyone got wrong about jobs and the immigration crackdown. The Wall Street Journal analysis found that stricter U.S. immigration policies have not produced the expected labor shortages or wage gains for native-born workers. More than a year into the crackdown, wage growth has slowed, particularly in industries relying on immigrant labor, and unemployment among U.S.-born workers has edged slightly higher. You would think it would be the opposite.

Data shows immigrant heavy sectors experience weaker wage increases than the overall economy, contradicting claims that restricting immigration would boost pay. Economists point to other factors such as high interest rates, tariffs, AI-driven uncertainty, and an aging population as more influential drivers of labor trends. Some localized shortages exist, but overall the labor market has adjusted without much major disruption. The findings challenge longstanding assumptions that reducing immigration would significantly tighten the labor supply and raise wages.

So, here's what we're finding so far. This immigration crackdown on undocumented workers is having an impact on undocumented workers, but to me, I read this as saying that most businesses, particularly small businesses, are staying resilient in their hiring and their employment because we're not hiring undocumented or illegal workers to work in their business. So, even though ICE and the government is going after undocumented or illegal immigrants, most businesses have remained, you know, above that and the labor market overall has not changed because these workers, you know, we're not finding work to begin with. So, that's very interesting to hear.

The other thing that's interesting is you would think that it would have put more contraction on the labor supply, and it really hasn't. In fact, as evidenced by this Wall Street Journal analysis, you know, pay rates have slowed, wage growth has slowed. It's not as if there's less labor and so we're paying our workers more to come and work for us.

And the final interesting point is that people talk about immigration having such a big impact on the labor market, but really there are other bigger things that are impacting the labor market. AI uncertainty certainly is one of them, an aging population, demographic shifts, overall costs that we're trying to keep low in other areas to keep up with tariffs and inflation.

So, immigration might be a part of impacting labor rates and labor participation and the amount of workers in the country, but I think compared to some of those other factors, has much, much less of an impact.

So, new and interesting information about immigration and its impact on the labor force, contradictory to what we would have thought.

And in this week's AI news, this week's news is about Yelp. We all know Yelp. They launched an AI assistant to streamline local search and bookings. Let me tell you more. This is according to their press release and an article in searchengineland.com. Yelp has introduced a new AI-powered Yelp assistant designed to transform how users find and interact with local businesses. The tool uses conversational AI to guide users from search to action, helping them discover options, understand recommendations and complete bookings, orders or appointments within a single workflow. It’s like a ChatGPT for Yelp.

Powered by Yelp's extensive database of reviews, the assistant summarizes relevant insights and explains why businesses match a user's request, improve trust and decision making. The rollout marks a strategic shift from the traditional search-based discovery to an action-oriented conversational chat bot type of conversation.

For businesses, this raises the stakes on having complete profiles, strong reviews and integrated booking capabilities, as competition increasingly centers on capturing transactions, not just visibility and local search results.

So, Yelp is leaning into AI for its users and customers. You know who else has been leaning into AI recently? Google Maps has had some big transformations in its AI to allow us as users – and I'm a heavy user of Google Maps – to have conversational AI chatting conversations with it to find local businesses and local sites and get directions. All that impacts us as business owners.

The tools themselves are becoming easier, more conversational, more interesting to use for a lot of customers. So, if you are, your business is on Yelp and you are getting some work from Yelp, my advice to you is to lean heavily into the platform; Not only learn to use their AI tools that the platform provides, but also make sure – like this article in Search Engine Land (dot-com) recommends that your profile is completely up to date, that you're getting strong reviews. You've got booking capabilities on there, as well, that you are really maximizing all of Yelp's tools because Yelp is making it a lot easier for their users to find businesses. And the businesses that look the right way and are getting good reviews, they're the ones that are going to get some action.

Same thing in Yelp's competitor, which is Google and Google reviews and Google Maps. If you get most of your business that way, lean into those tools, as well. Consider hiring an outside consultant that might be able to help you maximize and leverage both Yelp and Google Maps or lean into AI and it can give you great advice for maximizing your presence.

My business is more B2B, so I'm really not so much on Yelp or Google Maps to attract clients to my business, but your business, if you're B2C and you're selling mostly to consumers, those two platforms are huge. You should be taking advantage of their AI tools and making sure that your profile and reviews are strong so that when people are using their AI tools, they're going to find your business.

My name is Gene Marks, and you have been watching or listening to this week's episode of the Paychex THRIVE Week in Review. If you'd like tips or help and advice in running your business, go to paychex.com/thrive and sign up for a newsletter.

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Thanks again for watching and listening. We'll see you again next week with more news that impacts your business. See you then.

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I'm your host, Gene Marks, and thanks for joining us.

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