05/02/2008
The House and Senate return to Harrisburg on Monday, May 5. Here are some of the key issues to be discussed.
Bill to eliminate independent contractors scheduled for Tuesday committee vote
Despite three weeks of negotiations and one public hearing, it appears HB 2400 likely will be reported as amended from the House Labor Relations Committee on Tuesday with a complicated new definition that perpetuates the current ambiguity of what exactly is an independent contractor. The amended bill still would require small businesses to treat all individuals as employees and makes it virtually impossible to prove otherwise. Moreover, the bill seeks to downright intimidate and harass legitimate subcontractors. Additionally, a decision made earlier this week to narrow the scope of the bill to just construction and motor carriers appears in doubt. The state Labor Department is arguing strenuously to make the bill apply to all occupations because a construction-only definition leaves open-ended what the definition is for other occupations -- and that will cause problems to have different standards for different occupations -- according to the department.
If it is reported from committee, it would go to the House floor.
Specifically, NFIB-member opposition to the proposed amendment to HB 2400 will be:
- It makes it virtually impossible to become an independent contractor. An individual will have to predict they "will continue to be free from control or direction." Nobody can guarantee the future.
- The bill violates due process -- The Labor Secretary has sole discretional authority to impose criminal and civil penalties and no process is outlined in the bill for complaints, appeals and hearings.
- The bill prohibits independent contractors from hiring sub-contractors. This issue has nothing to do with misclassification. It's intended to harass and intimidate legitimate small independent contractors. What happens to a sole proprietor who hurts himself and cannot complete the project in the time specified in the contract, or one who just gets busy? Under this bill they would not be able to sub out some of the work to meet all of the customer's deadlines. That's unfair.
- The bill also would impose unnecessary new mandates on sole proprietors. A sole proprietor with no workers does not have to file for a federal Employer Identification Number because they have no workers. They simply file under their own social security number. Under HB 2400, they would be forced to apply for a federal EIN and then be forced to comply with the myriad forms, filings, etc. that are required under federal law.
- The bill provides no safe harbor for employers who make good faith efforts to comply with the law. Even if you have a contract, a business card, etc., you still would have to go to court to prove the individual really was independent. Despite having all of these supporting documents, you still could be found to be an employer because "free from control or direction" can change in a moment.
Don't delay! Contact your elected officials today to warn them of the costly effect this legislation would have on your business by contacting them today. NFIB has made it fast and easy for you to communicate your message to your elected officials. Please feel free to personalize your message and be sure to include information about your business and how this issue may uniquely impact you. If you need assistance, please contact us at NFIB/Pennsylvania at 717-232-8582.
Rising state surplus helps make case for small business tax cuts
With two months remaining until the end of the fiscal year, state tax overpayments total $437 million above estimate. The surplus provides further evidence of the need for job-creating small business tax cuts. State Revenue Secretary Tom Wolf reported tax collections for April totaled $3.7 billion--$256 more than anticipated.
This spring, NFIB is seeking three targeted small business tax cuts:
- Adopting federal equipment depreciation rules and "Section 179" expensing guidelines. Allowing small business owners to immediately expense critical investments puts more money back into the hands of job creators so they can hire new workers and grow their businesses. Expensing reduces the cost of capital investments for small business and is key to expanding the economy.
- Raising the small-business exemption to the Capital Stock and Franchise tax to $250,000. Raising the "fixed-formula deduction" would exempt the smallest businesses from the burden of this tax.
- Reducing the Personal Income Tax (PIT) rate to 2.8 percent. Returning the PIT rate to 2.8 percent would allow employers to create 27,000 jobs in FY 2008-09 and return an additional $644 million of disposable income to Pennsylvania working families. While net tax revenues would decline by $934 million, the state would realize more than $207 million in general fund revenue. Reducing the PIT means continued growth in state taxes.
Food safety legislation to be voted on Tuesday
The Senate Agriculture and Rural Affairs Committee on Tuesday, May 6 will be voting on HB1422, which amends the current Public Eating and Drinking place Law and the Food Act. The House passed the legislation last July at which time NFIB raised major concerns with the required mandate to have a certified food handler present during all hours of operations.
The Senate Agriculture committee has made some improvements to the legislation but has not removed the mandate for a certified food handler present during all hours of operations. The business owner would be responsible for enrolling employees in a food certification program. The new administrative cost and restrictions to food establishment will make it more difficult to own and operate a food establishment.
If this legislation will have an adverse affect on your business, please contact Gwenn Dando.
Consolidation of Earned Income Tax legislation passes Senate
The Senate passed SB 1063, 41-8, which takes the Commonwealth one step closer to consolidated earned income tax collection. The legislation is now headed to the state House. The legislation would streamline reporting and collection of the tax to reduce the time, paperwork and confusion many small business owners experience in complying with the process.
The EIT collection would be consolidated from 560 tax collectors to county-level collection. SB 1063 would help small employers by clarifying reporting responsibilities and compliance requirements, and reduce the time and paperwork associated with collection and reporting.
Sincerely,
Kevin Shivers, State Director
Gwenn Dando, Assistant State Director
