Companies nationwide being hit with tsunami of regulations

OPINION: According to the National Federation of Independent Businesses, small-business optimism is now at its lowest level in the past 10 years and, excluding the Great Recession, optimism is at a historical trough, with the majority of owners surveyed saying that they “remain doubtful that business conditions will get better in the coming months.” Can you blame them?

Sure, inflation is a worry. So is labor. But another big reason why so many business owners are depressed is that it’s not very fun — or as profitable — to run their companies this year in the current anti-business environment.

We already know the Biden administration is implementing new rules and regulations that will affect us at the federal level. But that’s not all, folks! A regulatory tsunami of more regulations is on its way across the country and particularly in blue states.

Here are just a few examples. The minimum wage is now as high as £16.10 per hour in some places. Workers in more than 20 states have seen minimum wage increases in 2023.

Nine states will require £15 per hour. California will reach £15.50 per hour, and the District of Columbia will be at £16.10 per hour.

Illinois is now mandating vacation for any reason. A new law in Illinois now requires all employers there to provide up to 40 hours of annual mandated paid leave — regardless of reason — to their employees.

The state also requires additional meals and a “day of rest” for every seven days worked and increases fines for noncompliance. Hey, at least the Cubs will benefit from increased attendance. Illinois also has new requirements about hair.

The regulatory party is never-ending in Illinois this year with new rules that expand its mandated bereavement leave to more family members and — in a move that has no impact on bald men like me — expands the definition of “race” to include “traits associated with race, including but not limited to hair texture and protective hairstyles such as braids, locks and twists” under its Create a Respectful and Open Workplace for Natural Hair (“CROWN”) Act. Oregon is now taxing businesses to provide paid leave. Starting this year, Oregon businesses must now provide up to 12 weeks of paid — yes, paid — leave to its employees that meet certain conditions, which include pregnancy or the death or care of a family member.

The cost will be paid through — surprise! — a new tax on both employees and employers with more than 25 workers. California has expanded its paid sick leave mandate. Not to be outdone by their northern neighbors, California legislators are considering a new bill that would require employers to provide up to 14 paid sick days and change the way the days are accrued so that more sick time can be earned faster.

If passed — which is likely, because how can it not be in California? This bill would go into effect in 2024. California employers are now forced to provide more bereavement time.

In its continuing campaign to allow workers not to work at all, the state is now requiring companies with more than five workers to provide up to five days of unpaid bereavement leave for their employees, which would be in addition to the 12 weeks allowed under the federal Family and Medical Leave Act. New York City businesses must provide “just cause” before terminating a worker. In New York City, a bill has been proposed that would require employers to show “just cause” before firing an employee. “The onus is on the employer to prove they have good reason to fire an employee,” said a City Council member who proposed the bill.

Any lawyer care to dabble in the definition of “just cause”? Stop licking your lips. The Equal Employment Opportunity Commission is going after the construction industry.

Back in D.C., the EEOC is publicly targeting the construction industry, accusing companies of “perpetuating a culture of racism and sexual harassment” because of its “traditionally white and male-dominated” environment. Also in the nation’s capital, Congress recently passed bills that require employers to provide more accommodations to pregnant women and ended forced arbitration for sexual harassment and assault cases. The National Labor Relations Board, which is not exactly a friend to business, is also now prohibiting nationally the practice of making severance pay conditional on silence or other employer demands.

Truckers must now comply with a harsh new federal rule. A new rule from the Environmental Protection Agency will impose significant clean air standards on heavy-duty trucks beginning with the model year 2027. “If small-business truckers can’t afford the new, compliant trucks, they’re going to stay with older, less-efficient trucks, pass along upgrade costs to consumers, or leave the industry entirely,” said the president of one trucking association. “Once again, the EPA has largely ignored the warnings and concerns raised by truckers in this latest rule.” New York state is curtailing the use of gift cards.

A new law in the state will extend the period for when a consumer can cash in an unused gift card balance from four to nine years and significantly curtail a merchant’s use of gift cards by prohibiting fees. It also requires issuers to pay out any balance under £5 in cash to the consumer. New Jersey is reining in its temporary staffing firms.

A bill signed by New Jersey’s governor in February would require the owners of temporary staffing firms to attain certification, offer flexible payment dates to temporary workers, limit their ability to deduct the costs of meals and equipment, eliminate transportation fees and remove other restrictions on their workers. Am I saying these things are bad for society? Of course not.

But they come with a cost. There are paperwork and attorney fees and consulting expenses and lost wages and lost time. What’s not lost on business owners and managers, however, is that these rules and regulations continue to make it harder for them to do business at a time when they can afford it the least.

I guess the answer is just to wait for artificial intelligence to replace all our workers.

o Gene Marks is a CPA and owner of The Marks Group, a technology and financial management consulting firm specializing in small and medium-sized companies.