NFIB

Tax week
The week of the Fourth of July ironically was tax week in the Legislature. First, a $1 per pack increase in the cigarette tax (thought to mean $175 million in revenues to the state annually) was passed on June 30, signed by the governor on July 1 and took effect immediately. Although the tax increase had been expected for several months, the short notice placed an additional burden on small business owners who had to take inventory and begin collecting the tax with less than 24 hours' notice. 

In addition corporate taxes were increased a net $500 million annually principally with "check the box" and "combined reporting" requirements for larger companies. Lower corporate tax rates were included in the law beginning in 2010. Only time will tell whether the current 9.5 percent corporate tax rate will actually be lowered to 8.75 percent in 2010, 8.25 percent in 2011, and 8.0 percent in 2012 as promised, or whether the state's revenue "needs" at that time will be too great to permit implementation of the rate reductions. Financial institutions' tax rate will be lowered to 9 percent and large S-corporations will also receive tax relief. The taxation of hotel rooms sold over the Internet and the reinstitution of the state sales tax on airplane parts were not included in the new tax law.  

With the tax increases ($650 million), draws from the rainy day account ($500 million), and anticipated federal healthcare funding ($600 million), the way was cleared to pass a $28.2 billion FY 2009 state budget -- a 5.2 percent increase. Note: During 2007-8, the Legislature has added $350 million to the FY 2008 $26.8 billion spending blueprint originally passed last July.     

Treble damages
Chapter 80 of the Acts of 2008 (Senate Bill No. 1059) requires judges to impose treble damages on employee claims under the state's wage and hour laws even if the employer made an honest mistake. The law takes effect on July 13. While employers could have been liable for treble damages in the past if their conduct was outrageous or motivated by evil intent or reckless indifference to the rights of employees, the new law requires that employees be granted treble damages for failure to pay appropriate wages regardless of the employer's intent. Employers should therefore resolve wage complaints promptly and certainly prior to filing of a lawsuit if at all possible. Some claims (like failure to pay wages on time) must be initially filed with the Attorney General, giving employers additional time to settle the dispute. But this requirement does not apply to all cases, for example failure to pay overtime or improper tipping practices. Bottom line: Employers should not delay in attempting to resolve any dispute with an employee over wages.     

Health insurance
The House approved and sent to the Senate legislation to expand the mandate on mental health coverage to include non-biologically based issues. An amendment to restrict the expansion of guaranteed benefits was defeated prior to the near final vote in the House. A state bureaucracy has determined that the cost increase from the mandate would be minimal, but the mandate would still increase the cost of health insurance and be added to the burden of trying to make the state's new health insurance law work while facing out-of-control expenses during the implementation period. Contact your state senator to request that he or she oppose House Bill No. 4423 that would add to the burden of public and private health insurance premiums.      

Legislative agenda
The Legislature has three weeks to go until its July 31 adjournment date. Several major bills remain on the agenda that will affect small business including legislation to limit the use of toxic chemicals in products (including lead in jewelry), expanding mental health mandate, state regulation of nurse staffing at hospitals, employer access to criminal records of prospective employees, banning trans fats in restaurants, and healthcare cost containment (including healthcare cost transparency and electronic billing and medical records). In addition, several large capital spending bills totaling nearly $10 billion for state colleges and universities, state parks recreation areas, transportation, bridge repair and other environmental projects may be acted upon. It is an ambitious agenda with so many major decisions left to the end of the session.  

And in D.C. 
The national increase in the minimum wage from $5.85 per hour to $6.55 per hour effective July 24 and then to $7.25 per hour on July 24, 2009, does not affect Massachusetts employers who already pay $8 per hour minimum wage.