From NFIB State Director Anthony Smith
Thousands of bills were introduced in the 2019 Oregon Legislative Session. Hundreds of those passed in both chambers and are now law (or will become so soon.)
Below you will find two lists of bills affecting small businesses in Oregon – one list of notable bills that successfully passed and made their way to the Gov. Kate Brown’s desk, and one list of notable bills that were brought forward and considered, but later died during the legislative process.
One thing to note about the bills that died – on occasion, a bill fails to move forward with very little effort due to a lack of interest on the part of legislative leadership, or a less-than-robust lobbying effort on the part of the bill’s advocates. However, most of the time a bill dies because of sustained and coordinated efforts on the part of the bill’s opponents. In recent years, NFIB hasn’t been able to defeat every bill we oppose, but we’ve helped kill many, many bad bills.
Also below is a very brief summary of each measure.
List of Bills that Passed:
- HB 3427 – Corporate Activities Tax
- HB 2005 – Paid Family & Medical Leave
- HB 2010 – Health Insurance Taxes
- SB 123 – Equal Pay “Fix” Bill
- SB 726 – Workplace Discrimination
- SB 164 – OregonSaves Compliance
- HB 2007 – Diesel Engine Regulation
- HB 2341 & HB 2593 – Pregnancy Accommodation
List of Bills that Died:
- HB 2020 – Cap & Trade
- HB 2014 – Unlimited Jury Awards
- SB 379 – Marijuana Accommodation
- SB 211 – Small Business Tax Cut Roll-back
- HB 3022 – Trial Lawyers’ Workers’ Comp Bill
- SB 750 – Private Attorney General Act
- HB 3374 – Overtime Rule
- HB 2498 – Independent Contractors
- HB 2818 – Age Discrimination
- HB 2269 – Employer Assessment
Summary of Passed Bills in 2019
HB 3427 – Corporate Activities Tax
Known by supporters as the Student Success Act, the bill directs more than $1 billion in new spending annually for K-12 education via the creation of a new Corporate Activities Tax (CAT). The CAT is a consumption-based, business entity-level gross receipts tax that takes effect January 1, 2020 (so long as the measure is not rejected by voters via referendum.)
The tax is $250 + 0.57% of Oregon sales for businesses with $1 million or more in annual gross receipts, or “commercial activity,” a defined term in the legislation, but with many exclusions. It applies to all business entities, regardless of business structure: C corps, S corps, partnerships, LLC’s, and sole proprietorships. Businesses with $750,000 in commercial activity must file, even if they have no tax liability. Those businesses with $750,000 or less in commercial activity are exempt.
The proposal includes a 35% subtraction against commercial activity: The greater of cost of goods sold or labor costs. The bill also includes a 0.25 percentage point reduction in personal income taxes for most Oregonians, excluding those that pay at the 9.9 percent rate. This provision is separate from the sections in HB 3427 that established the CAT, but will impact each business-owning taxpayer’s bottom-line tax liability. The new individual tax rates also begin in tax year 2020.
The bill passed by a vote of 37-21 in the House, and 18-11 in the Senate.
HB 2005 – Paid Family & Medical Leave
Under HB 2005, employees making $1,000 or more during the current or previous year will be able to take paid leave for family and medical reasons, like the birth, adoption, or fostering of a child, or the serious health conditions of employees or their family members. Victims of domestic violence would also qualify for the benefit.
Funded via new employer and employee payroll taxes, the bill allows for 12 weeks of paid leave per year, an additional 4 weeks of unpaid leave if the employee would also qualify for leave under the Oregon Family Leave Act (OFLA), plus two more weeks for a medical condition related to pregnancy or childbirth. The new payroll taxes that fund the program will be split between employees and employers: 60 percent by employees and 40 percent by employers, for a combined amount not to exceed 1% of payroll.
The bill exempts employers with fewer than 25 employees from paying the employer portion of the payroll tax (unless they choose to opt-in, which qualifies them for business assistance grants), but still requires them to hold jobs open for all employees on leave (after 90 days on the job) regardless of employer size, so long as the position still exists. Another way to opt-out of the program is for businesses to offer a private plan to its employees that is equal to or better than the state-run program. The bill also includes a statewide preemption on all local regulation of issues relating to paid family and medical leave.
The bill passed by a vote of 45-13 in the House, and 22-6 in the Senate.
HB 2010 – Health Insurance Taxes
HB 2010 increases the tax rate on commercial health insurance premiums and premium equivalents for managed care organizations and Public Employees’ Benefit Board health benefit plans from 1.5% to 2% and adds stop-loss coverage to list of premiums subject to the tax. This is an expansion of the health insurance tax passed by the Legislature in 2017 and upheld by voters during the January 2018 special election on Ballot Measure 101.
The taxes fund Oregon’s Medicaid program, the Oregon Health Plan, and the state’s reinsurance program by raising the assessment on premiums paid by business owners and employees enrolled in group plans to hold down premiums for those Oregonians enrolled in an individual plan.
For larger employers, subject to the employer mandate under the Affordable Care Act, this bill taxes the premiums that they are required to pay. For smaller employers that still choose to offer health care benefits to their employees on a voluntary basis, this bill drives up the cost of that coverage, potentially forcing more small employers to drop their group plans an enter into the individual market, leaving fewer group plan policyholders to fund the premium tax in future years.
The bill passed by a vote of 44-15 in the House, and 23-7 in the Senate.
SB 123 – Equal Pay “Fix” Bill
SB 123 provides that an employer is not in violation of equal pay requirements for paying different levels of compensation to its employees in certain circumstances. The bill provides needed clarity on a variety of situations so that businesses can comply with the law, including new language that improves the process for employers to utilize an Equal Pay Analysis.
The bill includes new simplified definitions and clarifies bona fide factors may be contained as part of a collective bargaining agreement, adds an allowance for pay differentials for light duty work plans, allows employees to stay on the job, in a modified duty capacity, and maintain their salary, while not forcing the employer to violate the Equal Pay Law.
It includes liability protection when salaries are raised as part of Equal Pay Analysis and makes necessary changes to the Equal Pay Analysis so employers aren’t forced to ask about private and sensitive statuses as it relates to the protected classes. It also clarifies that an employer, if found at fault during a civil action, is required to cure the plaintiff going forward, not as part of the Equal Pay Analysis.
The bill passed unanimously in both chambers.
SB 726 – Workplace Discrimination
Dubbed the Oregon Workplace Fairness Act by supporters, SB 726 prohibits nondisclosure agreements that contain language that prevents an employee (or prospective employee) from disclosing unlawful discrimination, on or off the job, under most circumstances, except when requested by the employee or if the employee turns out to be engaged in unlawful discrimination.
The bill extends the statute of limitations for filing an employment discrimination or sexual harassment claim from one year to five years, and may be done so via the court system or the Oregon Bureau of Labor and Industries (BOLI.) The remedy can include recovery of back pay for the prior two-year period as well as compensatory and punitive damages.
The bill also requires private and public employers to adopt written policies to reduce and prevent unlawful employment practices. At a minimum, the policies must include a process for employees to report prohibited conduct, the identity of the person tasked with receiving reports, a description of the applicable statute of limitations, and the prohibition regarding NDAs and its exceptions. The measure directs BOLI to make available model policies and procedures and that employers may use as guidance.
The bill passed by a vote of 23-6 in the Senate, and unanimously in the House.
SB 164 – OregonSaves Compliance
When the Legislature passed the bill that created the OregonSaves program in 2015, the legislation did not include an enforcement mechanism to ensure compliance with the program. SB 164 imposes civil penalties on noncompliant employers under certain circumstances, but only after repeated attempts have been made to contact the employer.
Since Oregon’s largest employers have been enrolling in the program for nearly two years, and the smaller employers have only just begun to facilitate the program in 2019 (with the smallest of small businesses scheduled to enroll in 2020) a fundamental fairness issue arose in the application of civil penalties – having civil penalties kick-in right at the time when smaller businesses (that may not have a Human Resources department) are joining the program would be bad public policy and send the wrong message: one that would be punitive in nature rather than compliance-focused.
The Oregon Treasury was receptive to small-business concerns and added a two-year civil penalty delay to the bill so that small businesses, including new start-ups, will have the same amount of time to come into compliance with the law as the larger businesses already enrolled in the program. Civil penalties will also be limited to $100 per employee, and not to exceed an aggregate maximum of $5,000 per year.
The bill passed by a vote of 23-7 in the Senate, and 41-16 in the House.
HB 2007 – Diesel Engine Regulation
HB 2007 creates a new regulatory program to replace or retrofit old diesel engines within the Portland tri-county region. The bill establishes cut-off dates which prevent titling or registration of vehicles. HB 2007 aims to incentivize fleet upgrades through the distribution of $50 million in Volkswagen Settlement funds while preserving existing state preemption of local idling laws.
By 2029, heavy-duty (greater than 26,000 pounds) and medium-duty (14,000 – 26,000 pounds) must have 2007 and 2010 or newer model year engines, respectively. By 2023, these trucks cannot register in the Portland-area if powered by a model year 1996 diesel engine or older. For reference, even the heaviest diesel pick-up trucks weigh-in at less than 10,000 pounds.
By 2022, nonroad diesel vehicles used for construction projects in the Portland-area must be powered by model year 2010 diesel engines or newer to qualify for public contracts of $20 million or more. However, there are many exceptions to the vehicles regulated by HB 2007 including log trucks, farm vehicles, training vehicles, emergency vehicles, recreational vehicles, vehicles that travel less than 5,000 miles per year, antique vehicles, and fleets with five or fewer heavy-duty trucks.
The bill passed by a vote of 44-15 in the House, and 17-11 in the Senate.
HB 2341/HB2593 – Pregnancy Accommodation
HB 2341 requires that employers with six or more employees accommodate reasonable requests that mothers make that are related to pregnancy, childbirth or related medical conditions. In addition to posting this information in a public place, the Bureau of Labor and Industries must establish training materials that will be available to advise employers and employees of their rights.
The bill passed unanimously in the House, and by a vote of 25-3 in the Senate.
HB 2593 requires all employers to provide reasonable rest periods for employees to express milk as often and as long as needed for the child’s first 18 months. Employers with 10 or fewer employees may be eligible for an exemption if they can show that providing these breaks would impose an undue hardship on their business.
The bill passed unanimously in the House, and by a vote of 20-8 in the Senate.
Summary of Failed Bills in 2019
HB 2020 – Cap & Trade
HB 2020 would have modified state anthropogenic greenhouse gas (GHG) emissions reduction levels goals to at least 45% below 1990 emissions levels by 2035 and to at least 80% below 1990 emissions levels by 2050 by establishing a Climate Policy Office (CPO) within the Department of Administrative Services and requiring the CPO to adopt a cap-and-trade program.
The declared purpose of the program would have been to achieve emission level reductions, promote GHG emissions sequestration and mitigation, promote adaptation and resilience by natural and working lands, fish and wildlife resources, communities and the economy, the state’s infrastructure in the face of climate change and ocean acidification, and to provide assistance to households, businesses, and workers impacted by climate change or climate change policies that allow the state to achieve greenhouse gas (GHG) goals.
The cap-and-trade program would have placed a cap on the total regulated anthropogenic GHG emissions in the state through setting allowance budgets starting in 2021 through 2050 and provide a market-based mechanism for covered entities to demonstrate compliance.
The immediate effect of such a program would have been increased prices for carbon-intensive energy sources, like gasoline, diesel, natural gas, and propane. In the long-term, even electricity would cost more – all for an imperceptible impact on global climate change due to Oregon’s already minuscule carbon footprint.
Because transportation accounts for one-third of emissions in Oregon, the bill would likely have increased the price of a gallon of gasoline by more than 20 cents in the first year of the program alone, and by several dollars per gallon at full implementation in 2050, based on estimates by legislative economists.
The bill passed by a vote of 36-24 in the House. The bill failed to receive a final vote on passage in the Senate, after the bill was referred back to the Senate Committee on Rules by a vote of 17-10 following a Senate Republican walk-out, hundreds of emails from NFIB members to legislators opposing the bill, and a grassroots rally of truckers, farmers, and loggers the likes of which no one has ever seen in Oregon!
HB 2014 – Unlimited Jury Awards
The bill would have lifted the current $500,000 cap on noneconomic damages (pain and suffering) for most civil injury lawsuits. Objective and predictable economic damages are already unlimited and fully recoverable under current law, which is a fair and reasonable approach to our liability system because it takes into account medical costs, lost wages and lifetime earning potential. Punitive damages are also unlimited.
Noneconomic damages, however, are subjective and unpredictable – and so they are limited in Oregon (and many other states) in order to bring stability to our liability system and ensure that the cost of liability insurance remains affordable. HB 2014 would have changed that significantly by opening the door to unlimited jury awards in Oregon for pain and suffering.
The bill passed by a vote of 36-22 in the House, but failed to pass by a vote of 14-15 in the Senate.
SB 379 – Marijuana Accommodation
Senate Bill 379 would have prohibited employers from having a zero-tolerance drugfree workplace policy for marijuana. The bill treated cannabis, and any other substance that is legal in Oregon, the same way that tobacco use is protected under state employment laws – making it illegal to fire someone for their use of a drug that is still illegal under federal law.
The bill did not receive a vote on the floor of either chamber.
SB 211 – Small Business Tax Cut Roll-back
For the purposes of income eligible for elective, reduced personal income tax rates available to certain income of pass-through entities and sole proprietorships, SB 211 would have lowered applicability of the 9.9% tax rate bracket to $415,000 in qualifying business income ($207,500 for single filers), down from $5 million (the top threshold for the current reduced rates.)
Furthermore, SB 211 would have limited qualifying income by excluding all income that is attributable to a specified service trade or business as defined in section 199A of the Internal Revenue Code, mostly professional services.
The net effect of this measure would have amounted to a substantial tax increase on small businesses less than a year after the Governor called a special session of the Legislature to expand the policy to include sole proprietors.
The bill did not receive a vote on the floor of either chamber.
HB 3022 – Trial Lawyers’ Workers’ Comp Bill
As introduced, HB 3022 would have made sweeping changes to Oregon’s workers’ compensation system – a system that has worked well for both employers and employees since the Mahonia Hall reforms of 1990, which included the creation of the Management-Labor Advisory Committee (MLAC). This committee vets and recommends legislative changes to the state’s workers’ compensation system, among other duties, and is represented evenly by representatives of employers and employees.
The advocates for HB 3022, the Oregon Trial Lawyers Association, agreed to work with the business community on limiting the scope of the bill to a few topics where there was some agreement, and after much negotiation, a compromise was reached, and MLAC formally recommended passage of the bill to the Legislature. However, a decision from the Oregon Supreme Court came down in the waning weeks of the legislative session that gave the trial lawyers the result they wanted on one of the two issues addressed by the bill.
As a result, the two sides chose not to move forward with a bill in 2019. MLAC then voted to withdraw their recommendation on HB 3022, There will be further discussions between now and the 2020 short session, with potential for another bill at that time.
The bill passed by a vote of 55-2 in the House, but did not receive a floor vote in the Senate.
SB 750 – Private Attorney General Act
SB 750 would have enabled employees and unions to act as private attorneys general to supplement enforcement actions by public agencies. California first passed this type of law because the AG was understaffed and overburdened. The law weakened the AG and the enforcement agencies and emboldened unions and trial lawyers. In California, the “PAGA” law has resulted in a flood of litigation against employers – and often over minor or technical violations of the law where the employee suffered no real harm.
The bill did not receive a vote on the floor of either chamber.
HB 3374 – Overtime Rule
In general, an employer must pay 1.5 times the regular rate of pay for all hours exceeding 40 in a workweek. Both state and federal law exempt executive, managerial, and professional employees who meet a series of duties tests and a salary basis test. The federal salary test is $455 per week ($23,660 per year) and is currently being reviewed by the US Department of Labor; the Oregon test is that the employee earns a salary and is paid pursuant to ORS 653.025 (minimum wage), exclusive of board, lodging, and other facilities.
HB 3374 would have raised the salary threshold for employees exempt from overtime requirements equal to two times minimum wage calculated on a monthly basis for a full-time worker.
The bill did not receive a vote on the floor of either chamber.
HB 2498 – Independent Contractors
HB 2498 would have significantly altered Oregon’s current multi-part test to determine who is considered an employee versus an independent contractor by adopting parts of the Dynamex decision issued in April 2018 by the California Supreme Court – a decision that created a restrictive “ABC” test that continues to jeopardize work opportunities for millions of independent contractors in California.
House Bill 2498 would have changed the current test to determine who is considered an employee versus an independent contractor in Oregon. It would have done so by adding a new question to the test: Is the worker’s service outside the usual course of business? If the answer is ‘NO’ then the individual would no longer be considered an independent contractor and will be reclassified as an “employee.”
The bill did not receive a vote on the floor of either chamber.
HB 2818 – Age Discrimination
HB 2818 would have prohibited employers from seeking the age of an applicant prior to making a conditional offer of employment, or including certain words or phrases in recruitment that would suggest or imply an age preference. The bill would have provided for a new private right of action for such claims of age discrimination.
The bill would have also directed the court to award the prevailing plaintiff in an age discrimination suit liquidated damages equal to twice the economic compensatory damages awarded or $25,000, whichever is greater.
The bill would have likely caused legal problems for employers for many reasons, including finding employees with the desired level of work experience – and paying those employees a reasonable salary in compliance with the state’s equal pay law.
The bill did not receive a vote on the floor of either chamber.
HB 2269 – Employer Assessment
The provisions of this bill would have required employers of 50 or more employees to contribute to their employees’ health care costs. An employer could meet the health care expenditure requirement by directly paying for employees’ health insurance premiums or health care services provided to them, or by contributing to the Health Care Access Fund that supports their employees’ access to insurance coverage through the marketplace or helps fund the state’s Medicaid program, Oregon Health Plan.
The bill did not receive a vote on the floor of either chamber.
Raid on SAIF’s Reserve Funds
Earlier this year, Gov. Kate Brown proposed raiding SAIF, Oregon’s leading workers’ compensation insurance carrier, of nearly $500 million to cover unfunded liabilities within our state’s Public Employee Retirement System (PERS).
Small businesses, school districts, and local governments depend on SAIF’s affordable rates and safety programs to ensure a safe and healthy workplace. Raiding SAIF’s reserves could damage what’s been a very successful model for Oregon employers and injured workers. The Oregonian newspaper cautioned against the raid stating it, “risks destabilizing an entity that has competently, reliably and efficiently administered workers’ compensation for public and private employers for years.” Raiding SAIF’s reserves would increase the likelihood of rate increases and provide fewer resources for accident prevention and workplace training programs.
While PERS faces a $26 billion deficit, there is no tie or correlation between its unfunded liability and the premiums that Oregon employers pay to SAIF. Should it ever be determined that SAIF does have excess reserves, those funds should be returned to policyholders and not grabbed by politicians for unrelated matters.
Thanks to hundreds of emails from NFIB members and our coalition partners to legislators, the concept never appeared in bill form and thus did not receive a vote on the floor of either chamber.
