Utah Legislature 2018 End-of-Session Report

Date: May 02, 2018

Big victories for small business include the defeat of bills aimed at nothing more than enriching trial attorneys

The 62nd session of the Utah State Legislature began January 22, 2018, and adjourned less than two months later March 8 at midnight when the gavels dropped in both the House and the Senate. The Utah Constitution requires the legislative session to end at midnight on the 45th day. No covering the clock or ignoring the fact that it’s midnight to continue working on unfinished business.

The 2018 session saw more than 1,500 bills requested for drafting but only 821 made it through the drafting process to be numbered. Of the numbered bills, only 533 of those bills passed both the House and the Senate.

Gov. Gary Herbert’s deadline for signing bills into law, letting them become law without his signature, or vetoing them was March 28. He vetoed three bills and allowed a few to go into law without his signature. The bills vetoed by the governor were process and procedure legislation that became a turf battle between his office and the Legislature, including 10 items from House Bill 3, an appropriations adjustments measure.

Legislators held a veto-override session on April 18, giving them until May 7 to act.

Volatile Session

The 2018 Session was very contentious. The House and the Senate were at odds on how to address tax reform, education, transportation, marijuana, health-care reform and many other issues. They were looking at over a half-billion dollars in revenue growth and couldn’t agree on the amount to refund taxpayers and corporations or how much to spend on education and transportation. Contention also existed between the Legislature and the governor’s office, which resulted in the before mentioned veto-override session.

Small-Business Victories

The majority of NFIB’s lobbying efforts are dedicated to stopping bills harmful for small business by educating lawmakers about the real-life consequences behind their best of intentions. Five measures in 2018 required NFIB’s special emphasis.

Defeated a Proposed Minimum-Wage Increase
House Bill 117, calling for an hourly wage increase, was back again for the fifth year. This bill would have increased the minimum-wage rate to $10.25 per hour after July 1, 2018, and then to $12 an hour after July 1, 2022. It would have also allowed the Labor Commission to establish, by rule, a minimum hourly wage for minors that is different from the above-mentioned minimum wage. NFIB/Utah testified in committee against this legislation, pointing out many concerns for small business. The first concern mentioned by Utah businesses is that the market for employees in Utah is a very difficult market. Employers are finding it difficult to draw enough qualified applicants for jobs they are trying to fill. The market is also showing that if employers want to find qualified employees and keep them for a long duration they need to pay what the market demands. Small businesses in Utah prefer that wages be market driven not artificially set by legislation. NFIB/Utah was key in having this bill held in committee.

Stopped a Special Minimum Wage for Tipped Employees
A minimum-wage increase for tipped employees, HB 118, was in a separate bill this year from the proposed minimum-wage increase. It would have required those who pay tipped employees to compensate them at least $3.25 an hour, up for the current $2.13 minimum. NFIB called several establishments that pay tipped employees and also talked to many of the employees. Many of them make enough in tips to calculate a wage over the proposed minimum-wage increase. One of the employees could make about $100 to $150 per shift in tips at a restaurant and didn’t even have the employee take customers’ orders, just service the table with drinks and clear the empty plates. NFIB presented the main testimony in committee, and, along with lobbying the committee, was instrumental in having the bill held in committee.

Killed a Proposal to Increase Litigation Against Employers
House Bill 79, which was opposed by the entire Utah Business Coalition, would have allowed the recovery of attorneys’ fees by the prevailing party in litigation, under the private attorney general doctrine, by repealing the prohibition currently in statute. Allowing the recovery of attorneys’ fees in these matters would encourage additional litigation.

A similar provision under California law has resulted in lawsuits against employers. Just the specter of having attorneys’ fees awarded against businesses could motivate businesses to settle lawsuits that should not otherwise be settled (including expensive and lengthy environmental claims).

NFIB played a significant role in lobbying legislators to keep what is already in law and to help protect businesses from potential abuse.

Beat Back a Bill Changing Definition of Employer
House Bill 283 aimed to expand federal workplace protection laws not intended for the smallest employers. Specifically, this bill would have amended the definition of employer and required certain employee discrimination and unfair labor practice claims involving employers with fewer than 15 employees to proceed to an evidentiary hearing without a division investigation. Something NFIB viewed as unfair to employers. NFIB could see this legislation for what it was and knew that small businesses in Utah could not afford to have additional rules and regulations placed upon them. Small businesses treat their employees like family and work hard to make sure they are happy, because if they don’t, they know how difficult it is to replace employees. NFIB stood firm against heavy pressure in helping defeat this unwise proposal.

Prevented a Dream Bill for Lawyers from Passing
A dream bill for trial attorneys and a nightmare for business owners, House Bill 359 would have created new liability for individuals, businesses, homeowners, property owners, churches, and parent companies jointly and severally liable for any intentional tort that occurs within a facility or on their property. NFIB/Utah and its entire business coalition partners worked very hard to make sure this bill was stopped in committee.

In between times working to kill legislation bad for Main Street entrepreneurs, NFIB helped get some pro-small-business legislation passed.

Won Single-Sign-On Simplification
House Bill 150, funds the “single sign on” simplification program. NFIB/Utah successfully limited the fee to a nominal amount not to exceed $5. This fee will be used to design, create, operate, and maintain the “single sign on” web portal. The Department of Technology Services is charged to create a web portal that allows a person doing business in the state to access, at a single point of entry, all relevant state-collected business data about the person, including information related to:

  • business registration
  • workers’ compensation
  • tax liability and payment
  • other information collected by the state that the department determines is relevant to a person doing business in the state.

By enabling a single sign-on process that extends across agencies, the state can create a new model for serving businesses and citizens by providing a more personalized view of all of the services that are relevant to the individual user.

In a few years, Utah will have an excellent “single sign on” source for business. NFIB/Utah is very supportive of a “single sign on” source and we look forward to seeing this become reality. NFIB/Utah supported this bill through both houses and thanks Governor Herbert for signing it into law.

Secured Single-Sales-Factor Method for Tax Calculation
House Bill 293 alters Utah’s Corporate Income Tax calculation to include the “single-sales-factor” method for most industries in the state. This means that for a multi-state business conducting business in Utah, the state will only use the amount of sales in Utah to calculate a company’s state income tax liability on their profits. More and more states are using the “single sales factor” rather than including a business’s property and payroll in the state as part of the calculation of their tax liability. The hope is that this bill will lower the tax burden on Utah businesses, which will help sustain Utah’s economic success for the future. NFIB/Utah encouraged all legislation that will help business be more successful. HB 293 was signed into law by the governor

Obtained Vital Independent Contractor Clarification
House Bill 364 further clarifies when an entity can be considered an independent contract, not an employee. NFIB/Utah welcomed this clarification and encouraged passage throughout the process. It was signed into law by the governor.

Acquired Greater Local Government Transparency
Signed into law by Governor Herbert, Senate Bills 28 and 29 are companion bills seeking transparency in local governments. Currently, there are over 700 different entities that local governments have created. It has been very difficult to determine exactly whom those entities are. SB 28 will require all those entities to register with the lieutenant governor’s office and will allow the state to withhold funds and property tax disbursements if an entity does not comply. SB 29 requires each county in Utah to publish the list of government entities on the county’s website. NFIB/Utah has worked for years to create transparency in government at all levels. It is difficult for all businesses to comply with rules and regulations created by government entities and even harder if they don’t know whom they are and what their purpose is. NFIB/Utah will continue to support transparency legislation in the future.

Succeeded in Getting Workers’ Compensation Advisory Council Changes
Senate Bill 64 passed the Utah State Legislature and was signed by the Governor. The most important aspect of this bill reduced the rate at which certain workers’ compensation carriers and self-insured employers must reimburse a hospital for covered medical services. NFIB/Utah supported the changes made in this legislation and appreciates the advisory council for staying on top of concerns in this arena. The bill also makes some technical changes to the membership of the workers’ compensation advisory council as well as changes to the report that the advisory council gives to the Business and Labor Committee during the interim.

Obtained Workers’ Compensation Case Waivers
Senate Bill 75 creates a path in which a waiver or reduction in penalty may be given to an employer for conducting business without securing workers’ compensation benefits for the employer’s employees. In the future, one-stop shop legislation will solve this problem. Currently, the process of starting a new business is so confusing that many new businesses run the risk of missing one step or another in creating a new business. This bill allows for a one-time-only wavier or reduction in the fee for overlooking workers’ compensation for employees. NFIB supports this because when you are a new business, you might not have all the information at your fingertips to make sure the business is complying with all state laws. SB 75 was signed into law.

Won Greater Clarification on Municipal Business Licensing
Senate Bill 158 is a clarification needed on legislation passed last year that prohibited a city to require a business license for a home-based business if that business had minimal impact on their neighborhood. Senate Bill 158 provides that a municipality is allowed to charge a business license fee to a business when an otherwise exempt business owner requests a license. The concern here was created when some small businesses claimed that even though they fit into the exempt category that doesn’t require a business license, they needed a business license to comply with state and federal laws regulating their specific type of business (example, gunsmith businesses are regulated federally and need to have a city business license in order to acquire a federal firearms permit.) NFIB supports this legislation and is encouraging lawmakers to stay on top of any additional burdens that cities place on truly small businesses that are unnecessary.

Looking Ahead to the 2019 Challenges

A new, two-year session of the Utah State Legislature opens for business on January 28, 2019, with NFIB set to work on the following issues.

Eliminating the Personal Property Tax
NFIB Utah was encouraged to find several other organizations wanting to help eliminate the business personal property tax. The legislative vehicle was House Bill 375, but the entire group ran into the same roadblock it did in the past. The counties claimed eliminating the tax would take money out of their budgets, and they would not be able to sustain current levels of service. One county clerk claimed there was $3.1 million recovered by auditors in 2017 of unpaid business personal property tax. When NFIB asked for a break down on the size of businesses the $3.1 million was recovered from, it couldn’t be provided. The counties agreed to study this issue over the interim and come back with solutions for the 2019 session. NFIB will make this issue a priority for the interim agenda and continue to push for a change in the 2019 Legislative session. We don’t know what those changes will look like right now. We are focused in the long run for this tax to be eliminated but that could take several years.

Curbing Abuse of the Americans With Disabilities Act
Enacted in 1990 to improve access and equality for disabled Americans, the law’s integrity is being compromised by an onslaught of cookie-cutter “drive-by” lawsuits. These lawsuits are filed against small businesses for minor and correctable violations to extort costly legal settlements, rather than seeking to make needed improvements. In Utah, plaintiffs have filed hundreds of cases beginning with a “demand” letter requesting payment on average of $3,900. Last session, House Bill 115 sought to curb the abuse of the Americans with Disabilities Act. NFIB/Utah was frustrated when the sponsor had some conflicts with leadership and the legislation was held up. NFIB/Utah It will re-double its efforts in 2019 with a different sponsor to get this legislation passed.

Reducing Health-Care Premiums
Health-care premiums continue to increase for small businesses in Utah. The HIP (Health Insurance Premium) reduction for 2019 could cause some concerns in Utah if insurers don’t address that correctly. Utah is asking for a federal waiver for partial Medicaid expansion that NIFB will be watching very closely.

Preventing Government Competition with Private Enterprise
Government competition with private businesses is a constant battle. NFIB has been invested in making sure that government entities don’t internalize private business services. Government entities seem to think that they can do the job faster and cheaper if they do the work. This is not a direction we want them to take because in most instances, it is neither faster nor cheaper.

[Tile photo courtesy of Utah State Capitol Visitor Services.]

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