Government regulations are under fire, and for good reason. There were 3,853 regulations in the Federal Register in 2016, of which 629 were specifically impactful on small businesses, said Wayne Crews of the Competitive Enterprise Institute. A great number were issued after the Presidential election in November.
As small business owners, we surely should ask whether all of these regulations are necessary despite the good intentions that drove them. And are all of them helpful to the U.S. economy, and at what cost to small businesses?
Following the inauguration, the White House addressed some of the regulatory problems:
- On January 20, a memo by White House Chief of Staff Reince Priebus set a 60-day freeze on all government new and pending regulations.
- On January 30, an executive order directed agencies to eliminate at least two regulations for each new one proposed.
- On February 24, an executive order established a task force to eliminate “job killing regulations.” The process to eliminate a federal rule requires agencies to subject such proposals to public comment. It typically takes at least a year and a half to wipe a rule off the books.
Here’s a roundup of some rollbacks — completed or proposed — impacting small businesses to date:
Many of these regulations sound complicated because they are.
A DOL memo issued on April 28 rescinded the so called “union walk around rule,” which was a policy adopted in 2013 by the Occupational Safety and Health Administration. This policy had allowed representatives of an outside union to accompany an OSHA inspector touring a nonunion shop.
On April 13, President Trump signed into law (passed by House on February 15 and by the Senate on March 30) a measure to eliminate a DOL rule approving “Secure Choice” retirement plans. States with these plans would have required small businesses lacking a qualified retirement plan to implement payroll withholding for employee contributions to a state-run IRA-like plan. The DOL had said on December 20, 2016, that these plans were exempt from ERISA so they could go forward. These plans—created in California, Connecticut, Illinois, Maryland, and Oregon—now are on hold.
OSHA imposes certain reporting requirements on workplace injuries and deaths. President Trump signed a law on April 3 (passed by the House of March 1 and by the Senate on March 22) to eliminate certain reporting requirements that had been put in place on December 19, 2016.
On March 27, President Trump signed a law (passed by the House on February 2 and the Senate on March 6) that overturns a DOL rule requiring companies seeking federal contracts of $500,000 or more to disclose and correct any serious labor law violations committed in the last 3 years.
Rollbacks are continuing on some matters:
An executive order on February 3 asked DOL to review the “fiduciary rule” intended to protect retirement savers from poor investment advice. This rule impacts small businesses maintaining qualified retirement plans (including IRA-based plans) for their employees; many expect enforcement would increase the cost of keeping these plans or initiating new plans. The rule originally was set to begin phasing in on April 1, 2017, but has been delayed until June 9 unless it is rolled back entirely.
Prepaid accounts (including prepaid payroll cards) rule from the Consumer Financial Protection Bureau is set to go into effect on October 1, 2017. The rule would require employers to provide certain disclosures, including one informing employees that they are not required to receive wages through these cards and that there are other options. The enforcement of the rule has been delayed until April 1, 2018. Whether “Rule Z” will be changed or killed remains to be seen.
On October 13, 2016, the IRS issued final debt/equity regulations. These seek to classify certain interests in corporations as debt or equity. They primarily impact multinational corporations that try to benefit from corporate inversions. However, to the extent that multinationals duck tax responsibilities through certain transactions, the tax burden falls more heavily on small businesses that can’t do the same. These regulations may be changed or eliminated.
Admittedly, many of these rules and regulations are highly technical, and baffling to small business owners. To the extent the rules can be simplified, clarified, or eliminated entirely, life will be easier for small business owners and allow them to operate their companies and thrive.
Things are constantly changing, so pay attention.