Small businesses hope Obama-backed rules scrapped
Small businesses are hoping to see some high-profile Obama administration regulations scrapped after Donald Trump takes office, with rules affecting overtime, sick leave and the environment among those that may be taken off the books.
Complying with federal, state and local regulations affects companies of all sizes, but can be especially tough for small businesses because they have less revenue to absorb labor, paperwork and other costs related to regulations.
Businesses with fewer than 50 workers paid an average of $11,724 per employee to comply with federal regulations, compared with less than $10,000 for companies of all sizes, a 2014 report released by the National Association of Manufacturers found. Manufacturers with fewer than 50 workers paid an average of $34,671 per worker, while manufacturers of all sizes averaged $19,564.
Federal regulations were cited as the most burdensome kind by 58 percent of owners in a survey released Wednesday by the National Small Business Association advocacy group. Twenty-three percent cited state regulations, and 12 percent said local rules. Seven percent did not identify a source.
Vince Pappas estimates he spends about 10 hours a week studying the regulations that his Baltimore-based company, Stone Steel Corp., must comply with, and deciding how to minimize the impact. Pappas went from owning a fleet of trucks to leasing to now shipping his steel through trucking companies.
“It is way too cumbersome, too much reporting,” he says.
A number of small business groups anticipate fewer rules and more lenient enforcement of existing ones under Trump and the Republican-led Congress. Here’s a look at what they expect for some of the regulations that took effect during the Obama years:
Small business groups opposed the Obama administration’s plan to make 4.2 million salaried workers eligible for overtime, which a federal appeals court blocked implementation of just before it was to take effect Dec. 1. The government is appealing the injunction, which came in a lawsuit brought by 21 states.
The rule would have immediately doubled the threshold at which workers would be exempt from overtime, to $47,476 from $23,660. But some small businesses had already given or promised salaried managers raises to bring their pay above the threshold, or shifted workers to hourly pay and limited their hours to contain overtime costs.
Trump was quoted by the news website Circa during the election campaign as saying he hoped small businesses would be exempt. If the courts don’t strike down the rule, the Labor Department under Trump could restructure the law, perhaps phasing in the increase overtime, says Karen Kerrigan, president of the Small Business & Entrepreneurship Council.
“The business community was on board for a reasonable approach” to a change in overtime regulations, she says.
Farming groups and small business advocates hope a wetlands rule won’t survive. It broadly defines the bodies of water including wetlands that must be protected under the Clean Water Act. Critics contend it gives the government too much leeway in restricting what private landowners can do.
“It typically affects someone where they want to do something different with their land, like adding a parking lot or adding an extension of a building,” says Todd McCracken, president of the National Small Business Association.
Business owners could learn only when they try to get a building permit that they’re prohibited from moving forward with a project because the property is part of a wetland. The rule also makes the process to get building permits longer and more expensive, according to the industry group American Water Works Association.
It has been tied up in the federal court system in a case that may be heard this year. But even if the rule survives, there’s likely to be little support for it in the government. Trump’s nominee for head of the Environmental Protection Agency, Scott Pruitt, filed suit against it in his position as Oklahoma attorney general.
There’s bipartisan support to change the rule — senators who introduced legislation to rework it in the last Congress included Democrats Heidi Heitkamp of North Dakota and Joe Manchin of West Virginia.
Small business groups expect the Environmental Protection Agency’s rules on emissions from coal-fired power plants to be eliminated. The Supreme Court stopped the rules from taking effect while they are the subject of federal lawsuits brought by states and businesses. Trump, who has vowed to bring jobs back to the coal industry, could issue an order nullifying the rules. Congress can also act.
Opponents of the rules say they will hurt the many small businesses in the coal industry, including those that supply equipment or services to big mining companies. If the rule stands, it would mean the eventual phase-out of many of the nation’s 1,300 coal-fired power plants.
The case is currently before a federal appeals court. Congress will likely wait to see how it is resolved before acting, says Karen Harned, executive director of the small business legal center of the National Federation of Independent Business.
Under executive orders from President Barack Obama, companies that have government contracts or subcontracts must provide employees with up to eight days of paid sick leave a year and pay them at least $10.10 an hour for work done on the contract. Trump will have the power to rescind those orders.
Small businesses also want changes in rulings by the Equal Employment Opportunity Commission and the National Labor Relations Board, says McCracken. While those agencies operate independently of the executive branch, he noted that as vacancies occur in each, Trump could shift policy with more conservative appointments.
One NLRB ruling small businesses oppose is on what’s called a joint employer. It says franchisors like McDonald’s and companies that subcontract work to other businesses are considered joint employers with the other parties. Small business owners including franchisees contend the ruling, which is before a federal appeals court, takes away their control of their companies.
Because the NLRB is independent, if the rule is allowed to stand, Congress would be where the joint employer standard could be changed, says Kerrigan.