POLICY ROUNDUP: Regulatory Overreach and Response, Capitol Hill Oversight and More

By at 28 November, 2023, 9:28 pm


The federal regulatory agencies are humming with costly ideas and proposals. From raising bank capital standards that would further tighten capital access for small businesses to special interest regulation benefitting labor union bosses (not workers), federal regulators are busy pushing burdensome rules and red tape that will disproportionately hit small businesses.

SBE Council is pushing back.

The Downstream and Harmful Effects of Mandating Higher Capital Standards

A Federal Reserve proposal, aptly called the Basel III Endgame, would make capital and credit less available and more expensive for small businesses. A business coalition letter signed by SBE Council to Federal Reserve Board Member (and Vice Chair for Supervision) Michael Barr notes that the proposed increase is “without merit” and the outcome will be harmful for businesses, especially small businesses. As detailed in the letter, the Fed did not adequately measure and consider the downstream impact of the proposal:

“This is not just bad policymaking; failing to appropriately measure the costs or justify the need for increasing capital may cause federal banking regulators to push forward a rule that violates basic tenets of cost-benefit analysis and the Administrative Procedure Act.”

The groups are urging the Fed to pull the rule, and if re-proposed, measure the real costs and their impact.

SBE Council Sends Letter to Senate Banking Committee: In a November 13 letter to Chairman Sherrod Brown (D-OH) and Ranking Member Tim Scott (R-SC), SBE Council president & CEO Karen Kerrigan underscored the harm that the Basel III rule would impose on small businesses. Kerrigan writes:

“Policymakers should not advance sweeping reforms without adequate review and without properly understanding how their actions impact the business community, especially small businesses that are disproportionately affected by regulation. Policies that further restrict access to capital at a time when small businesses are already experiencing barriers would be a costly mistake – for local businesses and economies, and the broader U.S. economy as well.”

ICYMIKerrigan in American Banker: Fed Policies Continue to Batter Small Businesses

Momentum Building for Congressional Overturn of NLRB’s Expansive “Joint Employer” Rule

As reported on in our previous enews, SBE Council strongly supports congressional efforts to overturn the National Labor Relation Board’s (NLRB’s) unworkable and overly-broad “joint employer” rule. Momentum is building for congressional action, as SBE Council has joined nearly 100  business groups (and growing) in support of the bipartisan congressional review act (CRA) resolution to nullify the rule.

Small Business Owners: ACT TODAY to Help Us Nullify this Harmful Rule! Visit the “Coalition to Save Local Businesses” Action Center here.

In addition, SBE Council announced support for safeguarding the 2020 joint employer rule, a move that is being pursued in the Fiscal Year 2024 Labor-HHS spending bill (H.R. 5894). As stated by SBE Council’s Karen Kerrigan in a press release:

“The new standard disrupts business models and relationships, and will wreak havoc on countless small businesses nationwide. Many small businesses across sectors are in jeopardy of losing independence, along with the financial investment and sweat equity they’ve put into their businesses if the new rule is fully executed upon. Many individuals will be denied successful paths to business ownership. SBE Council fully supports congressional action to prevent these harmful consequences, and utilizing the appropriations process to maintain the 2020 standard, which will protect local small businesses against the damaging outcomes of the 2023 NLRB rule.”

Changes to “Walkaround Rule” a Potential Workplace Nightmare for Small Business: SBE Council Joins Comments Urging OSHA to Withdraw Proposal

In comments delivered to OSHA opposing changes to the “Worker Walkaround Representative Process,” SBE Council joined 74 business organizations urging the agency to scrap the proposal. As noted by the Coalition for Workplace Safety (CWS) in an explanation of the proposed rule:

“Under the current regulations, safety experts, such as hygienists and safety engineers may accompany OSHA on an inspection of an employer’s worksite. OSHA’s proposal would greatly expand the regulation and allow a ‘multitude of third parties’ to join OSHA on an inspection if an employee requests the agency do so. OSHA envisions worker advocacy organizations, labor organization representatives that do not represent the employees, consultants, or attorneys may join the inspection, even though none of these organizations would actually legally represent the employees or owe the employees any fiduciary duty.”

In the comments, CWS outlines its objections and urges OSHA to withdraw the proposal. Specifically, “[t]he proposed rule is anything but practical – it contains no defined guardrails to prevent unions, attorneys or other third-parties from using the OSHA inspection process for their personal benefit.” Additionally, the proposal “includes no guidance” for determining “who qualifies as the ‘authorized representative’ of the employees, or what to do when competing third parties claim interests in an inspection.”

The SBA Office of Advocacy also weighed in on the proposal. Advocacy observed that OSHA’s Regulatory Flexibility Act (RFA) certification is improper because OSHA fails to include the direct and foreseeable costs that small employers would incur as a result of the rule. Advocacy recommends that OSHA revise and republish its RFA analysis with a valid assessment of costs to small entities before proceeding.

Costly and Worker-UNFRIENDLY Overtime Proposal Gets a Hearing on Capitol Hill: “Bad for Business”

On November 29, the Subcommittee on Workforce Protections, Committee on Education and the Workforce will hold a hearing on the proposed “overtime” proposal. The subcommittee is chaired by Rep. Kevin Kiley (R-CA). Working with our business allies, SBE Council is pushing back against this really bad Department of Labor (DOL) proposal, which will harm not only small businesses but their dedicated workforce.

Comments Filed to DOL: SBE Council joined the Partnership to Protect Workplace Opportunities (PPWO) in comments that expressed opposition to the proposed rule (244 organizations signed onto these comments), which pointed out:

“The PPWO’s members believe that employees and employers alike are best served with a system that promotes maximum flexibility in structuring employee hours, career advancement opportunities for employees, and clarity for employers in classifying their employees under the FLSA. Unfortunately, as we describe below, if implemented as written, the Proposed Rule will result in large numbers of employees being reclassified as non-exempt, with significant consequences for both the reclassified employees and their employers.”

Obviously, those consequences will not be good ones, as detailed in the comments.

SBA’s Office of Advocacy Says DOL Needs to Re-Do its Small Business Analysis: The Office of Advocacy observed that DOL’s Initial Regulatory Flexibility Analysis on the overtime proposal “is deficient because it underestimates the economic impact of this rule on small entities.” The office added that small entities weighed in on the costs and other unintended consequences of the proposal:

“Small entities cannot afford these extra labor costs, as they face a difficult business environment post-pandemic including inflation, supply chain disruptions, shutdowns, and tighter labor markets. This rule may also have significant impacts on nonprofit organizations, which may have to cut services. This rule may also lead to unintended negative consequences for employees, such as limiting worker flexibility, lowering morale, and loss of benefits.”

Coalition Comments to Treasury/IRS: Abandon Tax Credit Scheme Forcing PLAs on Clean Energy Projects

SBE Council joined coalition comments opposing federal government efforts to tie the eligibility of clean energy tax credits to the use of project labor agreements (supported by the labor union lobby) for federal (taxpayer funded) clean energy projects. The groups note:

“Simply put, clean energy developers coerced into mandating anti-competitive PLAs by illegal IRS policy should expect to pay more, which ultimately limits the number and quality of clean energy projects.”

“The undersigned organizations support fair and open competition and oppose PLA schemes on clean energy projects receiving enhanced tax incentives because hardworking taxpayers deserve more efficient and effective policies that will encourage all qualified contractors and their skilled workforces to compete to build long-lasting, quality projects at the best price….We urge the IRS to abandon its illegal and coercive scheme to push clean energy project developers into requiring PLAs.”

Complied by SBE Council Staff


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