Oregon Legislature Adjourns 2021 Regular Session

Date: June 30, 2021

A big victory for small business came with passage of unemployment insurance tax relief

State Director Anthony Smith reports from Salem on the small-business agenda at the June 26 adjournment of the 2021 session

The Oregon Legislative Assembly has adjourned sine die the first regular session of 2021. Lawmakers finished their work on Day 159, with just one day to spare. As required by the Oregon Constitution, legislative sessions in odd-numbered years may last no more than 160 days.

Without question, the most impactful legislation that passed this year for Oregon’s small businesses was HB 3389, the Unemployment Insurance Tax Relief bill. It will save employers an estimated $2.4 billion over the next eight years. That’s an average of $300 million per year in payroll tax savings that Oregon’s small businesses will be able to invest in their operations, their employees, and their communities, rather than sending it to the state.

I am also pleased to report that after 16 months of government-imposed restrictions on business operations, Oregon opened for business again, June 30, 2021.

It’s not all good news though. Several bad bills made it across the finish line this session and with the Capitol completely closed to the public (including lobbyists) since the beginning of the pandemic, it’s been an especially difficult time to advocate for and against legislation that will impact our members. Hopefully, we won’t ever have to do it like this again in our lifetimes.

Below you will find two lists of bills from the 2021 session with implications for Oregon’s small businesses – one list of notable bills that successfully passed and made their way to Gov. Kate Brown’s desk, and one list of bills that were brought forward for consideration, 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 (this is what happened, unfortunately, to most of the bills we supported in 2021.) In recent years, NFIB hasn’t been able to defeat every bill we oppose, but we’ve still managed to kill many, many bad bills.

Please see below for a short summary of each measure, NFIB’s position on the bill, and the vote count in each chamber (if the legislation made it that far). The bills are listed in numerical order.

List of Bills that Passed:

  • SB 139 – Pass-Through Business Tax Increase
  • SB 164 – Corporate Activity Tax (CAT) Technical Fixes
  • SB 193 – Unlimited Jury Awards
  • SB 483 – Presumption of Retaliation for OSHA Complaints
  • SB 582 – Recycling Overhaul/Extended Producer Responsibility
  • SB 727 – State and Local Tax (SALT) Workaround
  • HB 2021 – Carbon-Free Electricity by 2040
  • HB 3389 – Unemployment Insurance Tax Relief

List of Bills that Died:

  • SB 15 – Estate Tax Reform
  • SB 137 – Paycheck Protection Program (PPP) Tax
  • SB 488 – COVID-19 Workers’ Compensation Presumption
  • SB 650 – Employer Health Care “Assessments”
  • SB 746 – Cashless Business Ban
  • HB 2205 – Private Attorneys General Act
  • HB 2334 – Small Business Regulatory Reform
  • HB 2358 – Agricultural Overtime
  • HB 2489 – Independent Contractor Status
  • HB 2588 – Daily Air Quality Monitoring by Employers
  • HB 2638 – COVID-19 Liability Protections
  • HB 2674 – Diesel, Tire, Rental & Heavy Equipment Tax
  • HB 2814 – Indirect Sources of Emissions
  • HB 2839 – CARES Act Disconnect
  • HB 2974 – Prohibition of Drug-Free Workplace Policies
  • HB 3171– Secondary Lawsuits against Insurance
  • HB 3305 – Diesel Fuel Ban
  • HB 3351 – $17.00 Minimum Wage

Summary of Passed Bills in 2021

Senate Bill 139 – Pass-Through Business Tax Increase

NFIB Position: Opposed
SB 139 significantly restricts eligibility for Oregon’s pass-through entity (PTE) tax rate policy while at the same time unnecessarily raising overall taxes on Oregon businesses by at least $30 million per year at a time when the state is overflowing with revenue – both from Oregon taxpayers and the federal government.

While SB 139 broadens the lowest PTE rate (7%) to income up to $500,000 and provides a slight rate decrease (from 7.6% to 7.5%) for income between $500,000 and $1 million, Oregon’s smallest businesses with less than $250,000 in ordinary business income (profit) will see no benefit from this change in policy – and businesses with more than $5 million in income will be retroactively prohibited from opting into the program, starting January 1, 2021. Additionally, a new requirement will apply to S corps and partnerships with ordinary business income exceeding $250,000. Businesses subject to this requirement will need to meet or exceed a new “employee to owner ratio,” adjusted based on income, and/or reinvest at least 75% of business profits back into the business, making it harder to qualify for the program.

The bill passed by a vote of 16-13 in the Senate, with one member excused. It passed by a vote of 32-26 in the House, with one member excused.

SB 164 – Corporate Activity Tax (CAT) Technical Fixes

NFIB Position: Supported
SB 164 makes some important technical changes to the CAT, Oregon’s gross receipts tax enacted in 2019. Most notably, the bill allows taxpayers who use an annual accounting period (fiscal year) for federal income tax purposes as their CAT filing year, rather than the standard calendar year, significantly decreasing administrative burdens.

The bill also provides some limited benefits (consistent with the intent of the original legislation) to certain industry categories, like car dealers, grocery consignment businesses, and insurance companies headquartered in the state.

The bill passed by a vote of 29-1 in the Senate. It passed by a vote of 57-0 in the House, with two members excused.

SB 193 – Unlimited Jury Awards

NFIB Position: Opposed
SB 193 repeals Oregon’s $500,000 cap on noneconomic damages (pain and suffering) for most civil injury lawsuits, excluding wrongful death. As a reaction to a 2020 Oregon Supreme Court decision, and in an attempt to align Oregon statutes with that decision, SB 193 goes further than the court’s ruling and has potential implications for any statutorily created cause of action. Although the court’s decision in Busch v. McInnis Waste Systems, Inc. invalidated the noneconomic damages cap as applied to the claim in that case, no court has held that the cap is invalid for other causes of action.

Objective and predictable economic damages were already unlimited and fully recoverable under Oregon law prior to the passage of SB 193, which was a fair and reasonable approach to our liability system because it considered medical costs, lost wages and lifetime earning potential. Punitive damages are also unlimited. Noneconomic damages, however, are subjective and unpredictable – so they were 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.

When/if this bill, and the massive jury awards that are likely to follow, start impacting liability insurance premiums, small businesses will have to pay more for the same general liability coverage – and if they cannot afford to pay more, they run the risk of leaving themselves under-insured, and legally exposed to massive out-of-pocket costs.

The bill passed by a vote of 17-10 in the Senate, with three members excused. It passed by a vote of 33-26 in the House.

SB 483 – Presumption of Retaliation for OSHA Complaints

NFIB Position: Opposed
SB 483 creates a legal presumption of retaliation whenever an employer takes an adverse action against an employee that has filed a workplace health and safety complaint with Oregon OSHA within 60 days.

Prior to the passage of SB 483, employers were already prohibited from retaliating or discriminating against an employee for making an OSHA complaint, but now the burden of proof has been shifted onto employers to demonstrate that they did not discriminate against an employee who files a complaint.

Because courts have established a link between the timing of complaints being filed and disciplinary action, employees only needed to provide a minimal amount of evidence to demonstrate retaliation, but they had to present at least some evidence. SB 483 eliminates that requirement by creating a presumption of wrongdoing on the part of the employer whenever an employee files an OSHA complaint, even if the employee is already on a corrective action plan – and even if the complaint was filed confidentially with OSHA, making it impossible for the employer to know which employee filed the complaint.

Employers may end up prevailing in these cases, but they will still be left with sizable legal bills, an especially daunting prospect for small businesses already struggling to recover from the negative economic impacts of the COVID-19 pandemic.

The bill passed by a vote of 18-12 in the Senate. It passed by a vote of 36-20 in the House, with four members excused.

SB 582 – Recycling Overhaul/Extended Producer Responsibility

NFIB Position: Opposed
SB 582 is one of two major environmental bills that passed in 2021. It requires that packaging, printing and writing paper, and disposable food service items be recycled through new “producer responsibility organizations.” These new organizations will be responsible for paying $83 million per year, estimated by the Oregon Department of Environmental Quality (DEQ), to collect and recycle these products, to upgrade recycling processing facilities, to create new recycling education programs, to pay local governments, and to operate new depots for the collection of recyclables. DEQ estimates that these expensive new programs might increase the amount of material recycled by about 3%, but the cost of recycling in Oregon would increase by over 30%.

The “producers” who will be required to pay for the creation and operation of these new programs include anyone who makes, imports, distributes or sells a “covered product.” Every store, restaurant, warehouse, office, publisher, manufacturer, or delivery service will be directly or indirectly impacted and required to help pay for these new programs. Ultimately, consumers will eventually bear much of the cost through higher prices.

The bill passed by a vote of 16-13 in the Senate, with one member excused. It passed by a vote of 31-24 in the House, with four members excused.

SB 727 – State and Local Tax (SALT) Workaround

NFIB Position: Neutral
SB 727 is probably the most interesting and complicated bill of the session. It could significantly benefit many NFIB member businesses by effectively reducing their federal tax liability, but it’s not without some risk. The bill creates a new, voluntary tax to be paid by pass-through businesses, while at the same time offering a dollar-for-dollar state income tax credit to the owner(s) of those businesses (proportional to their ownership stake in the company).

Along with the 20% pass-through deduction on Qualified Business Income (QBI) that was a major part of the Tax Cuts and Jobs Act (TCJA) that NFIB supported, Congress limited a taxpayer’s ability to deduct State and Local Taxes (SALT) to $10,000. While less of an issue for states with lower taxes, for business owners in Oregon, this significantly impacted their federal tax liability and reduced the overall benefit of the 2017 tax reforms for these taxpayers.

Since then, the IRS has issued guidance on how states can legally address this issue to effectively reduce certain taxpayers (owners of pass-through businesses) federal tax liability by creating entity-level state taxes that are not subject to the SALT cap, yet deductible on federal tax returns.

The challenge with SB 727 is that it creates a new tax that didn’t exist prior to its passage – and to address a temporary problem (all personal income tax provisions of the TCJA automatically expire at the end of 2025, which is why we have been focused nationally on making the 20% pass-through deduction for QBI permanent). Once a tax is on the books, it rarely go away. SB 727 passed with an automatic two-year sunset, but we’ll be watching this one closely in future sessions.

The bill passed by a vote of 22-7 in the Senate, with one member excused. It was then amended and passed by a vote of 48-7 in the House, with four members excused. The Senate concurred with the House amendment by a vote of 26-1, with three members excused.

HB 2021 – Carbon-Free Electricity by 2040

NFIB Position: Opposed
HB 2021 is the other major environmental bill that passed this year. The legislation requires Oregon’s largest electricity utilities to reduce greenhouse gas emissions associated with electricity sold to Oregon consumers to 80 percent below baseline emissions levels by 2030, 90 percent below baseline emissions levels by 2035, and 100 percent below baseline emissions levels by 2040. The bill also appropriates $50 million General Fund to the Oregon Department of Energy (ODOE) for deposit in the newly created Community Renewable Investment Fund for the purposes of funding community renewable energy projects.

HB 2021 will make living and working in Oregon more expensive – even for those Oregonians lacking the ability to pay more for electricity. As energy costs rise, small-business owners are not always able to adjust the price of their goods and services quickly enough (if at all) to match potentially steep energy cost increases without hurting their customer base. For example, most owners cannot afford to buy new, more energy-efficient equipment if current equipment still has useful life. They are effectively caught in a dilemma that only time and/or good fortune can change.

Whatever the cost to the average Oregonian, the cost of HB 2021 for small-business families will be even more severe. Our members will pay once for their household energy needs – and then a second time to keep their businesses running.

The bill passed by a vote of 35-20 in the House, with four members excused. It passed by a vote of 16-12 in the Senate, with two members excused.

House Bill 3389 – Unemployment Insurance Tax Relief

NFIB Position: Supported
HB 3389 will provide Oregon employers with much needed unemployment insurance tax relief, holding businesses as harmless as possible for pandemic-related layoffs, while at the same time providing partial deferral and forgiveness for 2021 tax increases to address near-term costs, and keeping Oregon in a lower overall tax schedule over the next decade to address long-term costs. The Employment Department estimates that HB 3389 will save Oregon employers $2.4 billion through 2029.

Critically important, HB 3389 does not jeopardize the future solvency of the Unemployment Insurance Trust Fund. Employers in Oregon have no interest in risking the solvency of the fund, as that would require the state to borrow money from the federal government to pay benefits to workers. Many states have had to do this during periods of economic recession. Their workers receive the same benefits, but at a much higher cost to employers due to interest owed on borrowed federal dollars.

The bill passed by a vote of 56-20 in the House, with four members excused. It was then amended and passed by a vote of 25-4 in the Senate, with one member excused. The House concurred with the Senate amendment by a vote of 56-0, with three members excused.

Summary of Failed Bills in 2021

SB 15 – Estate Tax Reform

NFIB Position: Supported
SB 15 would have established an additional exemption to Oregon’s estate tax, effectively raising Oregon’s estate tax exemption threshold to $2.5 million and providing a benefit to taxpayers with estates valued up to $8.5 million before seeing no tax savings from this policy proposal.

In a recent survey of NFIB members in Oregon, 88% of respondents supported the complete elimination of Oregon’s estate tax. This bill took a different approach, but it would have been a step in the right direction and hopefully, it’s the beginning of a thoughtful dialogue on the subject of estate taxes that is long overdue.

Oregon’s estate tax currently applies to all estates valued at $1 million or more. The tax rates range from 10% to 16% on the value of the estate that exceeds $1 million. In contrast, the federal estate tax exemption level is currently $11.7 million (for 2021). Three-fourths of states do not impose an estate tax or inheritance tax at all. Only the state of Massachusetts has exemption threshold as low as Oregon’s at $1 million.

The bill was referred to the Senate Committee on Finance and Revenue, where it received a public hearing. Unfortunately, the bill failed to advance.

SB 137 – Paycheck Protection Program (PPP) Tax

NFIB Position: Opposed
SB 137 would have required Oregon businesses to add back, as taxable income, forgiven PPP loan amounts in excess of $100,000. That means any amount beyond $100,000 that was forgiven would essentially be taxed by the state of Oregon. That might sound like a lot of money (it is!) but most small businesses with as few as 10-15 full-time employees would have seen their forgiven PPP loans taxed under SB 137.

PPP funds were intended to keep as many employees on payroll as possible when states were experiencing massive spikes in unemployment benefit claims due to the pandemic. Congress was clear that these funds should not be considered income, and after the IRS issued a ruling that these funds would not be allowed as regular deductible business expenses, Congress responded by expressly fixing this unintended consequence with the passage of the Consolidated Appropriations Act of 2020.

Taxing PPP loans would have been an unfair and punitive action against Oregon businesses at a time when Oregon was already projected to bring in more revenue than ever before. The Legislative Revenue Office estimated this unnecessary tax increase would have cost Oregon businesses $450-$600 million.

The bill was referred to the Senate Committee on Finance and Revenue, where it received three public hearings, but never moved forward. This bill was especially troublesome as amendments were introduced to disconnect from the CARES Act and tax PPP loans at different times during the session. Fortunately, these efforts were unsuccessful.

SB 488 – COVID-19 Workers’ Compensation Presumption

NFIB Position: Opposed
SB 488 would have added COVID-19 to the definition of occupational disease for purposes of workers’ compensation and created a presumption of compensability for pandemic-related medical issues.

The adoption of a COVID-19 presumption would have meant there would be no requirement that the virus be contracted in the workplace and would effectively be non-rebuttable by the employer. Even if an employee was never exposed in the workplace, the presumption would have required the employer defending the claim to identify the exposure up to 30 years after the incident by finding the actual off-duty source and confirming a positive test for that non-employee. This would make it nearly impossible to prove the exposure was not work-related. As a result, many COVID-19 cases that are not actually a result of workplace exposure would have been brought into the workers’ compensation system.

SB 488 was referred to the Senate Committee on Labor and Business, where it did not receive a public hearing and failed to advance. However, there were amendments discussed on a pair of Senate bills relating to workers’ compensation that nearly advanced with a COVID-19 presumption. Both bills eventually died in committee, along with SB 488.

SB 650 – Employer Health Care “Assessments”

NFIB Position: Opposed
SB 650 would have created a new Public Assistance Protection Fund by requiring the Oregon Department of Revenue to impose an “assessment” (tax) on certain employers if the median salaries or wages paid to employees residing in Oregon would qualify those employees or their family members to receive public assistance programs, like food stamps (SNAP) and Medicaid (Oregon Health Plan).

Assessments collected would be transferred to and deposited in equal amounts to the Education Stability Fund, to the Oregon Health Authority Fund to provide grants to counties for county health programs, to the Oregon Department of Education to pay grants to school districts for capital improvements to, and supplies for, primary and secondary schools, and to the Public Employees’ Benefit Account to offset the pension liabilities of school districts.

The bill was referred to the Senate Committee on Labor and Business with a subsequent referral to the Senate Committee on Finance and Revenue. The bill never received a public hearing in either committee.

SB 746 – Cashless Business Ban

NFIB Position: Opposed
SB 746 would have prohibited private-sector businesses from being able to accept the forms of payment that work best for their business model by banning cashless point-of-sale systems in Oregon.

The bill included a list of nearly 20 exclusions for certain businesses so that they could continue to operate on a cashless basis if this bill were to pass, but these exemptions correctly acknowledged that there are legitimate business reasons why it may not be appropriate or pragmatic for a business to accept cash payments – reasons relating to efficiency, security, and overall customer experience.

The vast majority of NFIB members currently accept cash and have no plans to change that. Many are enthusiastic about receiving cash as payment and spending that cash at other businesses. Others are experimenting with new business models and might be thinking about moving to cashless systems – and some may already have. The one thing that NFIB members overwhelmingly agree on is that the state should not be dictating which forms of payments private businesses should or should not be required to accept.

The bill was referred to the Senate Committee on Labor and Business, where it received a public hearing, but it failed to advance out of committee.

HB 2205 – Private Attorneys General Act

NFIB Position: Opposed
HB 2205 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 its state attorney general 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.

Special thanks to NFIB members who took action on HB 2205. It would have been a disaster for Oregon businesses, especially small businesses that rarely have Human Resources departments or an attorney on staff. PAGA may be dead for now, but we’ll have to remain ever vigilant on this one as I expect to fight this battle again in future legislative sessions.

The bill was referred to the House Committee on Judiciary and assigned to the subcommittee on Civil Law. It had a public hearing and a work session but did not advance.

HB 2334 – Small Business Regulatory Reform

NFIB Position: Supported
HB 2334 would have strengthened Oregon’s agency rulemaking laws by providing additional clarity regarding the criteria agencies use when conducting a statement of cost compliance effect on small businesses.

Under current law, agencies must conduct an analysis to determine how small businesses will be impacted by proposed permanent rules. Temporary rules are exempt from this requirement. HB 2334 would have fixed that – which is very important considering that temporary rules often serve as the starting point for the permanent rulemaking process.

Another issue we identified with the way current law is set up relates to the requirement for agencies to reduce the economic impact of the proposed rule on small businesses if the statement of cost compliance effect shows that the rule has a significant adverse effect on small businesses. Agencies rarely ever comply with this requirement, so HB 2334 proposed to move this section of current law into another section of the law that agencies generally do comply with.

This simple change would ensure that Oregon’s agencies fully and consistently consider, and appropriately mitigate, the costs imposed by proposed agency rules as a formal part of the administrative rulemaking process going forward.

The bill was referred to the House Committee on Economic Recovery and Prosperity. It had a public hearing but did not advance.

HB 2358 – Agricultural Overtime

NFIB Position: Opposed
HB 2358 would have required that all farms, regardless of size or seasonality, pay overtime to employees after the first 40 hours worked. For as long as there have been wage and hour regulations, the law has treated farms differently, as farmers and their employees need to work unique hours to harvest crops, take care of livestock, and keep supplies of agricultural products secure. Farmers operate in a global trade market on the thinnest margins and are unable to increase the price of commodities to account for huge swings in the cost of labor; they are price takers. These variables set agriculture apart from other sectors and account for some of the differences in state and federal law.

If HB 2358 were to have passed, farms would have been forced to control labor costs by reducing employee work hours, which ultimately means less take-home pay for farm employees and less productivity for the farm. They would have likely switched to less labor-intensive crops or mechanized where possible, and many family farms would simply not be able to stay in business. Fewer farms mean fewer jobs, reduced crop diversity, and devastating impacts on rural culture and rural economies. 

The bill was referred to the House Committee on Business and Labor, where it had two public hearings. It was then referred without recommendation to the House Committee on Rules, where it was amended and passed out to the Joint Committee on Ways and Means. The bill failed to advance in Ways and Means.

HB 2489 – Independent Contractor Status

NFIB Position: Opposed
HB 2489 would have directed agencies that administer certain state laws to use specific criteria to determine whether an individual is an employee or an independent contractor and to cooperate in adopting rules to facilitate consistency in the application of the definition of independent contractor.

Similar bills in recent years have proposed changes to Oregon law that would have significantly altered the state’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.

HB 2489 would have changed the current test to determine who is considered an employee versus an independent contractor in Oregon 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 was referred to the House Committee on Business and Labor. It did not receive a public hearing and failed to advance.

HB 2588 – Daily Air Quality Monitoring by Employers

NFIB Position: Opposed
HB 2588 would have required Oregon employers to monitor daily outdoor air quality and determine whether employees who perform outdoor work activities would be at risk of exposure to unhealthy air quality due to certain concentration levels of particulate matter in the air.

The bill further would have required employers to take certain actions to mitigate the risk of unhealthy exposure, including suspending outdoor work. It didn’t move, but Oregon OSHA is considering a similar rule under its existing statutory authority. NFIB will be monitoring both legislative and administrative efforts on this topic in the future.

The bill was referred to the House Committee on Business and Labor. It did not receive a public hearing and failed to advance.

HB 2638 – COVID-19 Liability Protections

NFIB Position: Supported
HB 2638 would have limited liability for certain claims for damages arising out of acts or omissions taken during the COVID-19 emergency period by businesses in reasonable compliance with government guidance related to COVID-19.

When NFIB surveyed members in Oregon about liability protection for businesses operating safely and in compliance with state and federal guidance, 96.77% expressed their support for the legislation, making this the #1 issue on our most-recent state member ballot, conducted just prior to the beginning of the 2021 legislative session.

Throughout the pandemic, Oregon businesses implemented appropriate required safety measures, but too many of our members fear that even if they followed all the directives of state health and safety officials, they will still face a lawsuit from an individual claiming to have contracted the virus at their place of business.

Businesses need to know that if they were a good partner with the state in combatting the virus that the state, in turn, will be a good partner by protecting them from unfair lawsuits that will drain their already depleted financial resources. This ask was limited in scope and duration, specific to COVID-19, and only offered protection to those businesses that are able to demonstrate that they were in reasonable compliance with COVID-19 rules and regulations.

The bill was referred to the House Committee on Judiciary and assigned to the subcommittee on Civil Law. It had a public hearing and a work session but did not advance. A motion to withdraw the bill from Judiciary failed on the House floor by a vote of 27-31, with two members excused.

HB 2674 – Diesel, Tire, Rental & Heavy Equipment Tax

NFIB Position: Opposed
HB 2674 would have created several new taxes to fund goals established by the Legislature in 2019 to reduce diesel emissions, The bill would have established a 3% excise tax on the retail sale of tires, a 1.5% privilege tax for businesses who sell or lease off-road equipment, a 1.5% use tax on off-road diesel equipment purchased outside of Oregon, a 3.5% rental tax for rentals of off-road diesel equipment, a 2% rental tax for rentals of all other qualified heavy equipment, a privilege tax on heavy-duty trucks and light-duty vehicles, and a fuel tax on all red-dyed diesel used in off-road equipment.

These proposed taxes would have created enormous burdens for the exact businesses they were aiming to assist. These new taxes would decrease the capital that companies have, making it more difficult for them to purchase new, lower-emission equipment. Each of these taxes on their own would create major problems for businesses in Oregon, but together, they would have created a catastrophic cost increase on businesses who use diesel equipment and vehicles throughout the state.

The bill was referred to the House Committee on Energy and Environment. It did not receive a public hearing and failed to advance.

HB 2814 – Indirect Sources of Emissions

NFIB Position: Opposed
HB 2814 would have created a new indirect sources review program at DEQ. A similar program was proposed, and unanimously rejected, at the Environmental Quality Commission in 2020. The proposed program would have applied to indirect sources throughout the state, including retail facilities, government offices and buildings, schools, colleges, hospitals, ports, and development projects. This broad application means that all of Oregon’s economy would have been impacted by this sweeping program.

This proposal was a solution in search of a problem: Oregon has long regulated indirect sources and DEQ has evaluated more than 400 indirect sources under its current indirect sources program. No indirect source has ever been found to cause a violation of air quality standards, which begs the question of why the state needs a duplicative program. Additionally, many other DEQ programs already target mobile sources of air pollutants.

The impact of this program would have been felt by Oregon’s whole economy, but especially by small businesses. Such a program would likely include analysis, review, and permitting requirements. The cost of air quality analysis and permit preparation alone would be prohibitive for some small contractors and businesses, and substantial delays would have also been caused by review requirements.

The bill was referred to the House Committee on Energy and Environment, where it had two public hearings. It was amended and referred with a “do pass” recommendation to the Joint Committee on Ways and Means. The bill failed to advance in Ways and Means.

HB 2839 – CARES Act Disconnect

NFIB Position: Opposed
HB 2839 would have disconnected Oregon’s tax code from three parts of the federal CARES Act: the business loss limitation provision, the net operating loss provision, and the business interest limitation provision. Passed in a bipartisan congressional vote, the combined effect of these key features the CARES Act allows for the immediate monetization of business losses, rather than having to carry losses forward to future tax years, and allows for an increased deduction for interest paid,

Normally, Oregon automatically connects to the federal tax code. Disconnecting from the CARES Act would have changed that standard practice, making Oregon businesses ineligible for state-level tax relief that would otherwise flow their way. HB 2839 would have diverted much-needed cash from the pockets of struggling Oregon businesses to state coffers, making it harder for small businesses to keep their doors open and put unemployed Oregonians back to work.

If passed, the state would have been shortsightedly prioritizing its own budget needs over the cashflow needs of Oregon businesses – and the jobs that those businesses provide to working Oregonians. These businesses were asked to play a critical role in stopping the spread of COVID-19. Many were required to shutter their doors. More saw a drastic drop in sales. Nearly every business was required to enforce public health and safety mandates. All these factors had significant financial impacts on Oregon’s small businesses. The last thing any of them needed was a higher tax bill.
The bill was referred to the House Committee on Revenue, where it had one public hearing. This issue was also debated as an amendment to several other House and Senate bills, but they all failed to advance out of committee.

HB 2974 – Prohibition of Drug-Free Workplace Policies

NFIB Position: Opposed
HB 2974 would have prohibited employers from having a zero-tolerance, drug-free 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 was referred to the House Committee on Business and Labor. It did not receive a public hearing and failed to advance.

HB 3171 – Secondary Lawsuits against Insurance

NFIB Position: Opposed
HB 3171 would have authorized secondary lawsuits regarding the resolution of insurance claims and would have allowed third parties to sue insurers, undermining the existing strong consumer protections Oregon already has.

These proposals would have greatly expanded litigation in resolving insurance claims, disrupting Oregon’s insurance market and threatening higher premiums for consumers, including small businesses. Oregonians can already bring a lawsuit or file a complaint with the state’s insurance commissioner if they feel they have been treated unfairly and the Oregon Division of Financial Regulation can already order insurers to pay claims, as well as require restitution and levy fines against insurers that act in bad faith.

HB 3171 was referred to the House Committee on Business and Labor, where it received a public hearing and a work session, but the bill ultimately failed to move. A separate House bill originally included this language early in the session and it took some effort to get it removed from that bill, which passed and has already been signed into law by the governor.

HB 3305 – Diesel Fuel Ban

NFIB Position: Opposed
HB 3305 would have prohibited retail dealers, nonretail dealers, and wholesale dealers from selling diesel fuel for use in motor vehicles starting in 2024 in the Portland area, and statewide by 2028. It would have mandated public improvement contracts to require that motor vehicles be powered by fuels other than petroleum diesel and would have prohibited the state, as well as counties and cities, from using diesel fuel in their publicly-owned fleets.

The bill was referred to the Joint Committee on Transportation. It did not receive a public hearing and failed to advance.

HB 3351 – $17 Minimum Wage

NFIB Position: Opposed
HB 3351 would have reestablished a statewide minimum wage in Oregon, doing away with the current three-region approach that was adopted in 2016, by setting the new minimum wage at $17 per hour starting on July 1, 2022. Similar to current law, the rate would increase annually based on increases to the Consumer Price Index (CPI).

The bill was referred to the House Committee on Business and Labor. It did not receive a public hearing and failed to advance.

On a Final Note…

Please reach out to NFIB if you have any questions about any of the bills you’ve read about in this update – even if you’re just looking for more detail. And if there’s a bill you tracked that isn’t on this list, we’ll be happy to look into it for you. As a reminder, during session NFIB works on bills that affect the vast majority of our members, not every bill that could affect a single member. For those, we can help connect you with your industry-specific group, your state legislators, or both.

Thank you for your support during the 2021 Legislative session! We couldn’t do this important work without you.

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