NFIB preparing for renewed fight against bad-for-small-business bills expected to make return appearances. Push for tax reform still a top priority.
The 2018 half of the 105th Nebraska Unicameral Legislature convenes for business January 3 with the following immediate challenges for NFIB. All bills from the 2017 session are still alive for action.
Fighting for Passage of Tax Relief Bill
In the 2017 half of the session, Legislative Bill 461, a comprehensive tax-relief package, fell victim to a filibuster. It would have revised the system for valuing agricultural real estate, benefiting rural landowners, and would have reduced the top income and corporate tax brackets. NFIB will continue to support efforts to bring about meaningful property and income tax relief.
Nebraska is running the risk of getting left behind other states in reforming, refining, and streamlining its tax environment. The nonpartisan Tax Foundation ranked Nebraska a middling 25th best overall, with its property tax rank (39th) and a corporate-tax rank (29th) proving the biggest drags on competitiveness.
Lowering Workers’ Compensation Costs
Nebraska law is quite clear on the matter: All employers (including contractors) with one or more employees (including part-time employees and minors) must have workers’ compensation insurance. There are only a few exceptions.
Maryland established the first modern workers’ compensation law in 1902. Other states shortly followed. The general principle of workers’ compensation laws is that in exchange for receiving free medical and rehabilitation care – and in some cases, lost wages – for an injury sustained on the job, employees give up their right to sue their employer, which they had to do prior to receive care and compensation, and which clogged court systems with such cases.
The cost of paying workers’ compensation insurance premiums rose to the 13th biggest worry of small-business owners out of the 75 concerns NFIB measures quadrennially in its Small Business Problems & Priorities report—a five-point jump from its previous ranking.
States across the nation have made reforming their workers’ compensation systems a priority for reducing costs on the small-business owners they need to generate the jobs needed for a strong economy. Last session, NFIB lobbied extensively to stop another cost from being yoked on the backs of small businesses. Legislative Bill 181 would require an employer to provide reimbursement to an employee for a reasonable fee associated with a subsequent report and examination by a physician selected by the employee in any case in which a physician selected by the employer renders medical findings on the medical condition of the employee, which are disputed by the employee.
NFIB will continue its fight against more workers’ compensation mandates, which are one of the biggest costs to running a business and staying in business.
Stopping Job-Killing Minimum Wage Increases
Last session, a proposal (Legislative Bill 211) to increase the state minimum wage for tipped employees from $2.13 per hour to $3.60 per hour in August of 2017 and then to $4.50 per hour in January of 2018 hit a roadblock when NFIB expressed opposition to the bill, citing the fact that the minimum wage established under the proposed bill would exceed that which exists under federal law.
The minimum wage is earned by just 2.7 percent of the nation’s workers, according to the U.S. Bureau of Labor Statistics, and most of them “tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, about 10 percent earned the minimum wage or less, compared with about 2 percent of workers age 25 and older.”
In short, the minimum wage is an entry level wage earned mostly by teenagers and young adults still living at home. Increases in the minimum wage have only one major effect—eliminating entry-level jobs. In spite of these facts, proponents of ever-increasing rates wrongly argue that they’re needed to lift people out of poverty, even though little to no evidence back it up.
Preserving Family and Medical Leave Agreements Between Employers and Employees
The good news is that the vast majority of businesses already offer paid or unpaid time off, and for any reason the employee chooses: sickness, care for a family member, parental duties, personal or family member victim of domestic violence, etc. (see infographic here). Also, the federal Family and Medical Leave Act “provides certain employees with up to 12 weeks of unpaid, job-protected leave per year. It also requires that their group health benefits be maintained during the leave.”
Additional state mandates could do more harm than good.
In the 2017 session, Legislative Bill 305 called for establishing a statewide paid family medical leave insurance program similar to Nebraska’s unemployment insurance system and have it administered by the state Department of Labor. The bill also would require employers to pay all other benefits that are due to the employee that would be paid in the absence of leave, as well as all other benefits offered to the employee (vacation, sick leave, etc.) and would require employers to allow employees to return to their jobs after exercising their right to family medical leave.
Although NFIB succeeded in stopping LB 305 for the moment, the measure is still available for consideration in 2018. As NFIB continues to point out, unlike the heads of corporations, small-business owners know personally each of their employees and their families, and most offer paid time off on a case-by-case basis, providing the employee what he or she needs in a way the business can afford.
Mandatory paid leave would only impose unnecessary limitations on these businesses. Such initiatives assume one size fits all. In the small-business world, what works in one company could be detrimental for the next. The rigid nature of mandated paid leave often has a negative impact on employee morale. Four other points NFIB reminds policymakers of are:
- Big businesses and huge corporations have full-time legal and human resource departments to deal with local, state, and federal rules and regulations. Small businesses do not.
- Small businesses already pay 30 percent more per employee than big businesses do to comply with the same regulations.
- Employee replacement costs can be a big issue for small-business owners when an employee goes on paid leave.
- A worker taking extended time off leaves a hole that has to be filled by other staff working overtime or by finding, hiring, and training a new temporary employee as a replacement—both of which are direct costs to the business.
For more information on how devastating paid leave could be, the Research Foundation of NFIB took a detailed look at a federal proposal, using sophisticated BSIM modeling (Business Size Insight Module). State paid-leave mandates on top of federal ones only exacerbate the already difficult jobs small-business owners have in keeping their doors open and Nebraskans employed.
Protecting a Small-Business Owner’s Right to Know
Advocates for prohibiting employers from asking a job-seeker up front if he or she has ever been convicted of a crime, popularly called ‘ban the box,’ have been gaining ground in some states with both Republicans and Democrats.
But significant research from even left-of-center institutes shows they are having a harmful, not helpful, effect on job-seekers, especially those with no criminal record. From the Brookings Institution: “Overall the unintended consequences of ‘ban the box’ are large, and run counter to one of its goals: reducing racial disparities in employment. For this reason, I hope jurisdictions repeal their ‘ban the box’ laws … Advocates could push for policies that would provide more information to employers about ex-offenders’ job-readiness, rather than taking information away.”
From Princeton University: “Withholding information about criminal records could risk encouraging statistical discrimination: employers may make assumptions about criminality based on the applicant’s race.” From researchers at Georgetown University, University of California Berkeley, and UCLA: “We find that employers who check criminal backgrounds are more likely to hire African American workers, especially men. This effect is stronger among those employers who report an aversion to hiring those with criminal records than among those who do not … These results suggest that, in the absence of criminal background checks, some employers discriminate statistically against black men and/or those with weak employment records.” [Italics added]
In the 2017 half of this current session, Legislative Bill 420 would have prohibited employers with 15 or more employees from asking an applicant to disclose, orally or in writing, information concerning the applicant’s criminal record or history, including any inquiries on any employment application, until the employer or employment agency has determined the applicant meets the minimum employment qualifications. NFIB succeeded in helping to stop the bill from passing, but it remains alive in the 2018 half of the session.
Killing Wage Disclosure Legislation
Closely related to ban-the-box proposals are wage-disclosure legislation in limiting a small-business owner’s right to know in making hiring decisions.
NFIB succeeded in bottling up Legislative Bill 354 last session but the measure is still alive for the 2018 half of the Legislature. LB 354 calls for prohibiting a private employer with four or more employees from:
- screening job applicants based on their current or prior wages, including any requirement that a job applicant’s current or prior wage satisfy minimum or maximum criteria
- requesting or requiring as a condition of being interviewed, or as a condition of continuing to be considered for an offer employment, that a job applicant disclose his or her current or prior wages
- seeking information regarding a job applicant’s current or prior wages from the current or former employer of the job applicant, except that an employer may confirm a job applicant’s wages if the job applicant provides written authorization to do so and the confirmation is done after the employer has made an offer of employment to the job applicant.
The bill would establish a Class IV misdemeanor penalty for violations of the Wage Disclosure Act.
Opposing a Sales Tax on Services
Last session, NFIB helped stall in the Revenue Committee two separate measures that would have imposed a sales tax on a significant number of services that are currently exempt from taxation. Each measure, however, is still alive for this session. Legislative Bills 312 and 563 called for extending the state’s sales tax on goods to include services on such things as:
- accounting services, excluding accounting services performed in the furtherance of a for-profit enterprise
- architectural services for single-family housing
- bail bonding series
- cleaning of tangible personal property
- coin-operated machines used for dry-cleaning or other laundry services
- custom meat slaughtering
- cutting and wrapping
- dating and escort services
- debt counseling services
- hunting or fishing guide services
- instruction in music, dance, golf, and other recreational activities
- investment advice
- interior design services
- labor of a contractor for any major additional, remodeling, restoration, repair or renovation of owner-occupied residential housing
- lawncare, gardening and landscaping services
- legal services, excluding legal services performed in the furtherance of a for-profit business enterprise
- maintenance, painting, repair, and interior decoration services for single-family housing limousine, taxi and other transportation services
- parking services and docking fees
- personal care services, including hair care, massages, nail services, spa services, and tattoo services
- personal instruction services
- real estate services relating to the sale of single-family housing
- sale of Nebraska lottery tickets
- shoe shine services
- social escort services
- storage and moving services
- swimming pool cleaning and maintenance services
- tax return preparation services
- taxi, limousine and other transportation services
- tele-floral delivery services
- travel agents and tour operators
- wedding planning services
- weight loss services
NFIB will continue to keep both bills from passing.
Monitoring Equal Pay Proposals
NFIB strongly supports equal employment opportunity and appropriate enforcement of the federal Equal Pay Act, which protects all employees, and Title VII of the Civil Rights Act of 1964.
Federal law already prohibits gender discrimination, including workplace compensation and benefits, but so-called “equal pay” legislation proposed in states are typically little more than increased penalties for behavior that is already against the law. While increasing penalties may enrich a few attorneys who file questionable lawsuits against numerous small-business owners who don’t have the resources to fight frivolous cases in court, they will do little or nothing to improve wages for women.
NFIB/Nebraska will carefully monitor all legislation regarding this matter and oppose proposals that do nothing more than unfairly punish small businesses.