Lawsuit Lending, Business Rent Tax Top the Small Business Agenda for 2020

Date: January 16, 2020

Other issues will include fixing Florida's workers' comp system and easing the regulatory burden on home-based businesses.

NFIB, Florida’s leading small business advocacy organization, says its legislative priorities this session include curbing the practice of lawsuit lending and repealing the state’s unfair sales tax on commercial leases.

Bill Herrle, NFIB’s state executive director, says its members also will urge legislators to fix Florida’s broken workers’ comp system and ease the regulatory burden on home-based businesses.

“Small businesses drive Florida’s economy,” he said. “Our challenge this session will be maintaining an environment where our members can continue to grow and create jobs.”

Lawsuit lending

Tim Nungesser, NFIB’s state legislative director, calls the practice of providing up-front, non-recourse cash to plaintiffs “a perversion of the justice system.”

Often, he said, high interest rates mean plaintiffs can’t afford to settle out of court. To cover the cost of the loan, they’ll try to take to the jury in hopes of winning more money.

That’s especially rough on small businesses, Nungesser said. While plaintiff’s attorneys usually don’t get paid unless the plaintiff settles or wins, defendants pay their lawyers by the hour, he said.

The longer a case drags on, the more it costs the small business – even if the judge eventually throws the case out of court. “One lawsuit can be enough to drive a small business into bankruptcy,” Nungesser said.

Business rent tax

Florida is the only state that requires business owners to pay a sales tax on commercial rentals. The tax, which is currently at 5.5 percent, is particularly hard on small businesses, Herrle said.

“This is the most unfair tax of all for small business owners,” Herrle said. “Owning a building and leasing it back to their business is a popular form of building a retirement for small business owners.”

Workers’ comp

Insurance Commissioner David Altmaier reduced Florida’s workers’ compensation insurance rate by 7.5 percent for 2020, but Herrle said it’s still too high.

The problem, Herrle said, is that the state Supreme Court has struck down Florida’s legal fee schedule in workers’ comp cases. As a result, he said, lawyer’s fees have skyrocketed in such cases.

While the state’s workers’ comp rate has declined, lawyer’s fees as a percentage of settlement amounts have nearly doubled, Herrle said.

Home-based businesses

“NFIB is the voice of Florida’s small businesses, and many of these businesses began in people’s homes, in their garages or around the kitchen table,” Herrle said.

“There’s an effort in the legislature to protect the right to operate a home-based business and preempt local governments from excessive regulation of home-based businesses beyond ordinary policing and zoning and home-owners’ association rules.

“We’ll be working closely with House and Senate leadership on legislation that threads the needle,” Herrle said. “We want to allow entrepreneurs to create and operate businesses at home without giving them an unfair advantage over existing businesses.”

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