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
“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
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
“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.