St. Paul (May 21, 2014) – The state’s major small business group, the National Federation of Independent Business (NFIB), today issued a gloomy assessment of the 2014 Legislative Session.
“This session is a big disappointment overall,” said NFIB Minnesota State Director Mike Hickey. “There were a couple of huge setbacks on employment law issues involving a large minimum wage hike and the new rights for workers to file lawsuits against employers under the Human Rights Act (the state’s employment discrimination law). Although we made some progress on the problematic estate tax issue and through enacting some tax repeals.”
Most damaging to small business and the state’s economy will be the higher minimum wage and more lawsuits resulting from the expansion of the Human Rights Act, said Hickey.
“Clearly the biggest disappointment was the dramatic increase in the minimum wage and new rights that were granted to workers to sue their employers under the Human Rights Act that were ironically placed in the Women’s bill,” he said. “We were very disappointed with both of these outcomes and especially disappointed with the Senate Majority Caucus, which had passed a reasonable increase in the minimum wage and never passed the lawsuit legislation. It was really deflating when they totally conceded to the House on these two major issues. Had the Senate stood strong on these issues it would have been a dramatically different session.”
Hickey noted that the expansion of the Human Rights Act to include familial status for employment law purposes will make any worker with children under 18 a member of a protected class and could dramatically expand the number of lawsuits that are filed against employers.
“We just added a big percentage of the population to a protected class status under the act and we fear this is not workable and will likely lead to a significant number of new lawsuits against small employers,” he predicted.
Hickey explained that Human Rights claims are very threatening and expensive for small businesses because it’s almost impossible to anticipate the costs.
“Plaintiffs (employees) can win additional damages from the employer. Attorney’s fees and court costs are guaranteed to prevailing plaintiffs and they are frequently included in settlements. That means that there is a powerful incentive for attorneys to file lawsuits that they might not ordinarily pursue,” he said. “The cost of simply responding to a complaint can range from $5,000 to $25,000. A case heard before an administrative law judge can cost from $50,000 to $100,000 and a full trial in district court can cost double to triple that. That’s enough to put a small business out of business.”
Hickey also noted that the new Minnesota minimum wage of $9.50 per hour is one of the highest in the country, made worse by an escalator tied to inflation.
“This is a dramatic change from the Senate bill and another big letdown, although a lower minimum wage was enacted for the smallest businesses,” he said.
Hickey said there were some positive accomplishments on taxes with the repeal of the new Minnesota gift tax and the new sales tax extensions on the repair of business and farm equipment and warehousing services
“We appreciate the willingness of the majority party leadership to take a second look at these new taxes and swiftly repeal them” said Hickey.
NFIB also applauded the efforts of Senators Rod Skoe (Clearbrook), Ann Rest (New Hope), and Tom Bakk (Cook) for pushing for a large expansion in the current general estate tax exemption. The Legislature passed a $1 million increase that becomes fully effective in 2018. For couples who double that with a trust it will equal a $4 million total exemption.
“We made some real progress on the estate tax issue, although we’re a long way away from the $5.34 million exemption per person that the federal law offers” said Hickey.
For more information about NFIB, please visit www.nfib.com.