PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

4 Recent Moves by the Trump Administration and Key Agencies that are Big for Small Businesses

By at 25 October, 2018, 11:07 am

Small Business Insider

By Karen Kerrigan-

Congress may be out, but the wheels of reform continue to turn inside-the-beltway.

During the past couple of weeks, there’s been some notable movement on administrative actions by the White House and regulatory agencies that SBE Council has been advocating for, or monitoring very closely.  These significant actions are very positive for entrepreneurs and small businesses.

Here are some highlights:

Improvements to Health Reimbursement Accounts

On October 23, the Departments of Labor, Treasury, and Health and Human Services (HHS) announced a proposed rule to liberalize the use of health reimbursement account (HRA) funds.  The proposal vastly improves this important tool for small businesses.

Under the proposal, small businesses will be allowed to use HRA funds to provide offsets for premiums purchased by their employees in the individual market. Current rules in Obamacare do not allow employers to provide this type of financial support for employees.

In addition, employers who offer traditional group coverage would also be allowed to provide an HRA of up to $1,800 per year (indexed to inflation) to reimburse an employee for certain qualified medical expenses, including standalone dental benefits and premiums for a short-term health insurance plan for those employees who choose not to participate in the traditional coverage option offered by an employer.

Read the proposed rule here and the DOL FACT SHEET here.

This is a solid proposal for small businesses, and SBE Council will submit comments to make it even stronger for small businesses and their employees. (Read SBE Council’s response to the proposed rule here.)

Association Retirement Plans for Small Businesses

On October 22, the Department of Labor announced a proposed rule that will make it easier for small businesses to offer retirement savings plans to their workers through Association Retirement Plans (ARPs). This model will leverage the power of pooling to better negotiate lower cost 401(k) type plans for small businesses and lift administrative burdens associated with managing the plans.

Similar to Association Health Plans (AHPs), where the final rules have been in place for several months to help small businesses more efficiently access affordable health coverage for their employees, ARPs could be offered by a variety of associations formed by city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide. The self-employed would also be permitted to join such plans. In addition, plans could be sponsored through Professional Employer Organizations (PEOs) under the proposed rule.

As noted by the media release announcing the proposed rule:

“By expressly permitting these new plan arrangements, the proposal would enable small businesses to offer benefit packages comparable to those offered by large employers. The Department expects the plans to reduce administrative costs through economies of scale and to strengthen small businesses’ hand when negotiating with financial institutions and other service providers.”

On August 28, members of SBE Council joined President Trump in Charlotte, NC where he announced an Executive Order directing the Department of Labor and Treasury to move forward with this initiative. (Read SBE Council’s media response to the Executive Order here.)

A Competitive Playing Field for Global Shipping Rates

On October 17, the Trump Administration announced forceful action to address the disparity in global postal rates that undermine U.S. businesses. This disparity especially hurts our small businesses, and enables the production and shipment of counterfeit goods into our country. President Trump announced that the U.S. will pull out of the international system that sets shipping rates (terminal dues), as these rates undercut American business and the body governing rates has been unresponsive to change.

The U.S. is part of the Universal Postal Union (UPU), the international body that sets terminal dues. These are fees that postal operators pay each other for the domestic delivery on inbound international mail. Current pricing procedures not only put small businesses at a competitive disadvantage, but also reportedly create a loss for the United States Postal Service (USPS). Previous representatives from the U.S. State Department who have engaged in these negotiations have not been adequately instructed by the Postal Service leadership to achieve parity for our businesses, or even revenue neutral results for the USPS.

Current terminal dues rates set by the UPU and provided by the United States Postal Service (USPS) to foreign shippers have resulted in a severe competitive imbalance that gives these shippers favorable rates for packages sent into the U.S., which happen to be far lower than what U.S. small businesses are charged to ship packages domestically.

As I noted in our media release about this important action:

“President Trump’s action today is great news for American small businesses. This wacky system forces our small businesses to pay higher shipping rates than foreign competitors, subsidizes shipping costs for our competitors, enables intellectual property theft and counterfeiting, all the while exacerbating the challenging financial condition of the U.S. Postal Service. Small businesses are grateful for the leadership of President Trump and the work of his team.”

Read a small business owner’s view of why this is important to his firm in The Atlantic: Why It’s Cheaper to Ship Goods from Beijing Than New Jersey.

(See SBE Council’s media release on the action here, which includes detailed background on the issue and the UPU.)

New Joint Employer Standard Moving Forward

In its Fall 2018 Unified Agenda of Regulatory and Deregulatory Actions released on October 18, the Department of Labor said it will release a proposed rule on joint employer by the end of the year.  For many types of small businesses and for entrepreneurs who wish to franchise their businesses, having certainty and predictability on joint employer is critical for moving forward with expansion plans. A common sense fix to the standard is good news coming out of the DOL.

The National Labor Relations Board (NLRB) is also moving forward with a proposed rulemaking on the joint employer standard. Again, small business owners and employers want and need a clear and long-term rule given the Obama-era NLRB expansion of the standard to include ‘indirect’ and ‘unexercised’ employee control, which means small businesses could face unlimited and unpredictable joint employer liability and repercussions if they are a franchisee, staffing firm or if they work with other contractors, partners or subcontractors on projects in any industry.

Under the NLRB’s proposed new rule on joint employer, “an employer may be found to be a joint-employer of another employer’s employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.”

That definition and framework provides the clarity small businesses need. Small business owners and entrepreneurs need to weigh in here and let NLRB know you agree with their approach.

The DOL proposal will complement the NLRB’s action. At the same time, SBE Council is working with our allies to move the Save Local Businesses Act through the Senate, as it already passed the House this past summer.  (Read SBE Council media response to the NLRB announcement here.)

SBE Council will submit comments to the NLRB on their proposal.

Karen Kerrigan is president & CEO of the Small Business & Entrepreneurship Council

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