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Lead Your Team Strategy

5 Local Legislative Issues Small Businesses Should Be Watching

5 Local Legislative Issues Small Businesses Should Be Watching
Credit: Wolfilser/Shutterstock

When it comes to monitoring regulatory developments, it can be easy to focus too narrowly on the federal government. However, every business owner should be at least as well apprised, if not more so, of developments in their state legislature and municipal governments.

Cities and states operate largely independently of the federal government, albeit within the confines of federal law, and can act to pass new regulations and measures regardless of Congress's focus. Mike Trabold, compliance director at Paychex, told Business News Daily that his company encourages its clients to stay aware of what's going on in the broader regulatory environment.

"A lot of states and cities … [are starting] to gear up to make some changes for [deregulation] they anticipate at the federal level," Trabold added.

Although Capitol Hill is shifting its attention to the budget and tax reform, employers should consider all layers of government, not just the one most cited on news programs. Here are some hot-button issues employers should keep an eye on in their locality in the upcoming year.

Under the Obama administration, the Equal Employment Opportunity Commission (EEOC) issued new federal requirements for pay equity and salary reporting by businesses. The measure would have required companies with 100 or more employees to submit pay data based on their workers' W-2 earnings. However, the new pay data collection rules were suspended for review by the Office of Management and Budget on August 29.

Still, pay equity legislation is moving forward on local and state levels. States including California, Maryland, Massachusetts, New York and Oregon passed laws expanding employer obligations and penalties regarding equal pay, especially surrounding gender pay disparities. These laws often impact smaller businesses than the federal rule change would have, said Trabold.

"At the federal level, reporting was only for 100-plus employees, but a lot of the state and local level ones are really for all businesses," he said. "It's [often] a pretty low threshold, so most or all businesses will have to do this type of reporting."

Another big push in local and state governments has been for paid sick and family leave laws. Today, 45 states and localities have adopted paid sick leave laws, while five states have adopted paid family leave that extends beyond the purview of the federal Family and Medical Leave Act.

A major concern surrounding these laws is their patchwork nature from location to location, Trabold said. Some are just paid sick leave, some are paid family leave. This opens up questions of which employees are eligible, who does it apply to, differences around record keeping, etc., especially for employers with multiple locations.

"For example, in California there are closely situated cities that have these requirements," Trabold said. "So, if you run a pizza place that has a number of locations in these cities with somewhat different requirements, do you adopt the most generous, or just have each location abide by [the] particular requirement of [the] city you're located in?"

Some multilocation employers in localities with paid leave laws simply abide by the most stringent rule, regardless of which one applies where. Others alter operations from location to location based on standing regulations.

Health care reform is a topic long discussed on Capitol Hill, but Republican efforts to "repeal and replace" the Affordable Care Act (ACA) have thus far stalled. Whether spurred by the uncertainty of federal action or just the general complexity of health care policy, lower layers of government are often spearheading projects of their own.

"There's tremendous ambiguity [on health care policy] at federal level," Trabold said. "States in reaction and anticipation are going out and doing their own things that employers might have to react to or be aware of."

These laws and proposals include attempts to gain greater latitude when it comes to ACA mandates, such as in Massachusetts; proposals to shore up markets as in Minnesota and Alaska; or proposals for single-payer health care systems, oft touted by the progressive wing of the Democratic Party. Integral to these efforts is Section 1332 of the ACA, which allows states to apply for waivers from specific ACA requirements; waivers are intended to encourage experimentation and innovation on health care policy.

With the announcement that the Obama administration's myRA retirement saving initiative would be wound down by the Treasury Department, concerns around the dearth of Americans' retirement savings were renewed. State retirement plans are cropping up as an avenue to provide access to retirement savings accounts to employees that otherwise wouldn't have a 401(k) or the ability to open an IRA.

"There is no traction at [the] federal level around workplace savings programs, so a lot of states have their own plans," Trabold said.

So far, nine states have passed some kind of retirement savings legislation. Oregon, Illinois and California have passed Roth IRA programs. Vermont adopted a multiple employer plan called the Green Mountain Secure Retirement Plan, and Philadelphia and New York City are amid proposals for savings programs as well.

Finally, laws surrounding what are known as "payroll cards" – essentially a prepaid debit card that includes an employee's compensation – are appearing as a response to the new payment methods.

"Increasingly popular with employers, especially those without bank accounts, is having payroll debit cards that someone could use in lieu of direct deposit," Trabold said. "A lot of states are tightening up rules around that, and federal legislation is coming together by the Consumer Financial Protection Bureau (CFPB), but those are being challenged now, and it's a ways off."

Pending regulations surrounding payroll cards include who is and isn't eligible and disclosure about additional fees, or whether additional fees are legal. Currently, Pennsylvania and Kentucky have paycard laws on the books, and legislation is pending in Massachusetts, New Jersey, and New York.

Adam C. Uzialko

Adam received his Bachelor's degree in Political Science and Journalism & Media Studies at Rutgers University. He worked for a local newspaper and freelanced for several publications after graduating college. He can be reached by email, or follow him on Twitter.