Preservation of small business tax break, killing of bad employment law proposals highlight accomplishments
The Oregon State Legislature adjourned its 2017 regular session on July 7 with some accomplishments for small business
Defeated Attempt to Repeal Small Business Tax Break
Gov. Kate Brown’s proposed 2017 budget called for the repeal of the small business PTE tax rates. House Bill 2060 would have restricted the future use of the tax rates so severely that the overwhelming majority of NFIB members would have seen a significant tax increase. Another measure, House Bill 2830, would have repealed them entirely.
The defeat of HB 2060 and HB 2830 were major victories for NFIB this year, but going forward into 2018 NFIB will have to be even more vigilant. NFIB members not taking advantage of the PTE tax rates (42 percent are) might consider having a conversation with your CPA. The more small-business owners who take advantage of the tax rates, the harder it will be for politicians in Salem to take them away.
Killed Proposed Gross Receipts Tax –Twice
Efforts to pass a new gross receipts tax failed to garner support from the three-fifths of legislators needed to pass a tax bill, marking the second time in less than a year that this ill-fated concept was rejected in Oregon. NFIB was part of a large coalition of business groups that defeated Measure 97, but was one of only a handful of business groups to brave the crowds of proponents to publicly testify in opposition to House Bill 2830, the failed “Commercial Activities Tax” (CAT) proposal.
Likewise, when it became clear that CAT proposal was dead, NFIB had to rally quickly to oppose House Bill 2060, a bill that would have raised $196 million for the 2017-2019 state budget by effectively raising taxes on small businesses with fewer than 10 employees and other businesses in certain industry sectors.
This was a very real threat in the waning weeks of the session. Here’s a little background: In 2013, NFIB helped secure a new small business pass-through entity (PTE) tax structure with a starting rate of 7 percent, down from the 9 percent or 9.9 percent that most business owners pay on their business income. Starting in tax year 2015, this was a significant tax reduction for qualified small businesses: S corps and partnerships whose owners “materially participate” in their business operations and have at least one full-time, non-investor employee that works at least 1,200 hours per year.
Stopped Bad-for-Small-Business Employment Law Bills
A number of bad bills would have had serious legal consequences for small business had they passed. A wage-claim measure would have:
- replaced “prevailing party” with “prevailing plaintiff” for the purposes of awarding attorney fees
- authorized the creation of a lien on the real or personal property of an employer
- created a presumption of guilt unless the employer proved they did not take specific illegal actions.
Another bill would have created a new unlawful employment practice for “creating” or “maintaining” an abusive work environment, effectively turning our court system into the new Human Resources department for every employer in the state by treating workplace conduct issues the same way the law treats workplace discrimination.
NFIB testified in opposition and helped defeat all of these misguided proposals.
Won City, County Scheduling Law Prohibitions
The results of this year’s legislative session marked a stark contrast with sessions in recent years when it comes to employment law. On the heels of paid sick time, minimum wage, and the OregonSaves program, which is now in its first pilot phases, small-business owners were right to be concerned that 2017 might produce similar outcomes.
However, efforts to pass a burdensome and costly paid family and medical leave bill failed. Another bill that did pass affected only big businesses in certain industries that employ 500 or more workers. Also in that bill was a provision protecting small businesses from cities and counties establishing their own local scheduling laws – a big win for our members.
Modified Equal Pay Legislation
House Bill 2005 passed both chambers unanimously and was signed into law by the governor. This bill, the Oregon Equal Pay Act of 2017, started out as a very controversial piece of legislation in the Oregon House, but a bipartisan team of legislators in the Senate worked on a compromise – one that even the most conservative and progressive lawmakers could vote in favor of.
Discrimination in pay based on gender, race, religion, etc. has been illegal for a long time. Employers, however, had limited options for defending themselves against a pay discrimination lawsuit. Under the new rules laid out in the new law, Oregon employers can now perform an “equal pay analysis” to demonstrate that their pay differentials are based on bona fide business reasons (specifically defined in the bill) and so long as they do this every three years and provide this evidence to a judge in a pre-trial motion, the chances of having to go to trial would be minimal considering the financial incentives for plaintiffs and their attorneys would be significantly restricted.
This is a tool that employers have never had before, and it’s an important aspect of the bill that led to its unanimous support, but the bill also included a prohibition on employers asking for the salary history of job applicants – a provision that NFIB vehemently opposed, and ultimately kept it from being able to support the bill.
The provision allowing a civil action against an employer alleged to have sought the salary history of an applicant becomes operative January 1, 2024. All other provisions become effective January 1, 2019. One more thing to note, an employer can ask applicants for a “desired salary” on an application or during an interview. This was expressly part of the legislative intent as the bill was making its way through the legislative process. Small-business owners are encouraged to update job application forms.