New law clamping down on drive-by lawsuits highlights accomplishments for small business
The 2017 half of the 53rd Arizona State Legislature adjourned May 10 with some big victories for small business. The 2018 half convenes January 8.
Won New Law Curbing Drive-By Lawsuits
NFIB/Arizona worked with a broad coalition of business groups, advocates for the disabled, and key legislators to develop and pass legislation (Senate Bill 1406) designed to halt gross abuse of the state’s version of the civil rights law that prohibits discrimination against individuals with disabilities in all areas of public life, including jobs, schools, transportation, and all public and private places that are open to the general public.
Throughout the first half of 2016, thousands of Americans With Disability Act-based “drive-by” lawsuits were filed in state courts against Arizona small businesses for alleged violations of ADA parking lot rules. NFIB/Arizona responded on behalf of its members by first working with Attorney General Mark Brnovich to save more than 1,100 small-business owners from having to pay a $3,500 to $7,500 shakedown settlement price to predatory lawyers.
By early 2017, state courts had ruled in favor of the targeted small businesses after the attorney general petitioned the court to intervene in all the open cases on the grounds that the state’s ADA law specifically empowers the attorney general’s office to enforce the law. Though the attorney general’s court victory was total, nothing in state law discouraged or prohibited other ‘entrepreneurial’ lawyers from developing new schemes that abuse the ADA—like non-compliant websites or other hyper-technical violations.
Before the legislative session, NFIB/Arizona proactively reached out to the disability rights community to develop comprehensive legislation that would end the abuse of the state’s ADA law. With the leadership of Rep. Maria Syms of Paradise Valley, NFIB drafted consensus legislation limiting who may file an enforcement lawsuit to an actual aggrieved person rather than literally any person in the world. The proposal also instituted tough new legal sanctions on the lawyers who abuse the ADA as a shakedown scheme, effectively removing the profit motive for drive-by lawsuits.
After two competing versions of reform stalled, compromise legislation ending drive-by ADA lawsuits in Arizona was ultimately forged and signed into law by Gov. Doug Ducey. The final legislation combines the main provisions of the Syms legislation detailed above with those of another bill authored by Sen. John Kavanagh of Scottsdale that establishes a 30-day notice and cure period allowing a business to come into compliance before any ADA-based lawsuit could be filed. A longer 60-day notice and cure period is also available to a business that is required to obtain a building permit or similar form of government approval in order to make the changes necessary to comply or cure the violation.
Obtained ADA Compliance Costs Write-Off
NFIB authored a new law (House Bill 2214) that allows small businesses to immediately write-off the costs of complying with the Americans With Disability Act on their state income taxes in the tax year they are incurred rather than over the normal 39-years allowed for amortization under the IRS tax code.
Secured Municipal Tax Reform for Property Owners
Gov. Doug Ducey signed a pair of important bills that help protect small businesses from municipalities placing the interests of the city government or favored special interests ahead of the property taxpayer. House Bill 2011 reforms county and municipal bond levies (funded by property taxes) so excess tax collections are not allowed to be higher than 10 percent of the annual payments of principal and interest. This law became necessary because some Arizona cities had allowed large fund balances to accumulate thereby allowing them to divert excess dollars to projects not included in the original bond question. Lawmakers also passed NFIB/Arizona-backed legislation (House Bill 2213) limiting the power of cities to shift the property tax burden to small businesses through the abatement of taxes for redevelopment projects.
Helped Pass Clarification of Joint Employer Relationships
A new state law backed by NFIB/Arizona (House Bill 2322) clarifies the definition of joint employment relationships for franchises and their franchisees. The legislation was in response to an Obama-era National Labor Relations Board ruling that could make a franchiser have control over a franchisee’s employment decisions, and a business hiring a subcontractor could essentially be taking on all the subcontractors’ employees as their own.
Championed Federal Balanced Budget Amendment
NFIB/Arizona successfully partnered with the Balanced Budget Amendment Task Force to make Arizona the 28th state to pass (34 states are required) the necessary resolution calling for a convention of the states to propose a federal balanced budget amendment. House Concurrent Resolution 2013 states:
That, pursuant to Article V of the Constitution of the United States, the Legislature of the State of Arizona formally applies to the Congress of the United States to call a convention of the states only for the purpose of proposing an amendment to the Constitution of the United States requiring that, in the absence of a national emergency, the total of all federal appropriations made by the Congress for any fiscal year may not exceed the total of all estimated federal revenue for that fiscal year, together with any related and appropriate fiscal restraints.
“Arizona is sending a message that if the federal government can’t get their fiscal house in order, the states will do it for them, just as our Founding Fathers envisioned,” said HCR 2013’s sponsor, Speaker of the House J.D. Mesnard of Chandler. “Arizona is at the forefront of efforts urging states to flex their muscles by exercising their constitutionally prescribed powers to push back against the federal government. I look forward to talking with our counterparts in other states to begin work organizing an Article V amendments convention that will finally put our national government on a more solvent fiscal path.”
Defeated Big Labor Agenda
NFIB/Arizona successfully opposed the perennial Big Labor agenda items from moving forward in 2017. Their top priority, the Employment Omnibus (House Bill 2347 and Senate Bill 1353), would have required all employers to create an elaborate new employee training program that includes workplace counseling, sexual harassment training, and information on relevant professional employment organizations (i.e., promote union membership); and, employers would only be allowed to terminate if the employee commits at least four violations of the employer’s policies or if they commit sexual harassment or a felony. Moreover, employers would be guilty of a Class 2 misdemeanor if they “retaliate against, harass or intimidate” someone for joining a union.