If the employees demand higher pay, the employer needs to figure out if there will be increased output or pricing power to justify the increased costs before opening up for business. There usually is for stores / restaurants cause more people are off work and able to spend.

I think the free market would settle on something largely similar. Sometimes customers are sticky too, so it might make sense to serve them at a loss a couple days a year, to keep them coming on other days.

I don't think collective bargaining or unions are necessarily anti-free market either, unless they are forced of-course, so even if/where there are no 1.5X pay regulations, something similar would still come about.