Oct 28, 2016 - 2:15pm

Spooking Small Businesses: Scary Regulations Lurking in Washington

Executive Director, Communications & Strategy


Scary Regulations

Small business owners don’t need haunted houses or horror movies to give them a fright this Halloween. One look at some of the regulations coming down the pipe from the nation’s capital should give entrepreneurs and small employers plenty of reasons to scream.

In the spirit of the season, here’s a look at the most terrifying federal rules that could soon pop out and scare the success (and jobs) right out of our country’s businesses.

Overtime Rule

The Department of Labor this summer proposed a frightening new “one-size-fits-all” overtime exemption rule. The proposal would more than double the salary threshold under which employees qualify for overtime pay, which would decrease the number of workers who are exempt from overtime compensation and thus drive up labor costs for employers.

The U.S. Chamber, leading a broad coalition or pro-business groups, filed a legal challenge to the rule in September. 

More importantly, it will mean millions of employees will lose flexibility in their work hours because they will be put on a clock, all while not earning more income because employers will manage their time closely to make sure they do not work more than 40 hours a week.

“Making more employees eligible for overtime by severely restricting the exemptions will not guarantee more income, but instead will negatively impact small businesses and limit employment opportunities,” Randy Johnson, U.S. Chamber of Commerce Senior Vice President of Labor, Immigration, and Employee Benefits said in a statement.

Rep. Crescent Hardy (R-Nev.), chairman of the House Small Business Committee’s subpanel on oversight, investigations and regulations, agreed that the proposal will have a chilling effect the economy. During a hearing about the rule earlier this month, he noted that “it increases costs for small businesses and reduces flexibility for American workers.”

Retirement Rule

The Department of Labor is serving up a double dose of horrors this year, with the agency also responsible for a new retirement rule - sometimes called the fiduciary rule - that’s likely to spook many small businesses. If implemented as is, the rule would restrict the advice that financial experts are allowed to share with small business owners and their employees. It would also limit the retirement plan options extended to those small companies.

One small business owner recently testified before Congress that the new retirement rule poses “significantly higher costs for small businesses.” In fact, if the rule is finalized, she said, “it is possible that I may even need to drop [my retirement] plan altogether.”

Related: The Fiduciary Rule’s Seven Deadly Sins

“I’m particularly concerned about the effect the proposal likely would have on reducing choice, restricting access, and increasing costs facing small retirement plans and individuals with small account balances,” Bradford P. Campbell, former U.S. Assistant Secretary of Labor for Employee Benefits, said during the same hearing. “These groups are most in need of access to professional investment advice, but are least likely to be served due to the increased compliance costs and increased legal liability risks unnecessarily created by the proposal.”

Environmental Rules

The Environmental Protection Agency recently implemented a three-headed monster of regulations that’s likely to haunt businesses for years.

First, the department put forth its Waters of the United States (WOTUS) rule, which drastically expands the government’s jurisdiction over both land and water across the country. The U.S. Chamber, many other business groups and the Small Business Administration’s Office of Advocacy have decried the rule, noting that it will cripple small businesses in industries like farming, ranching and construction, among others.

Second, the EPA has issued the so-called Clean Power Plan, which seeks to upend our nation’s electricity grid and will mean significantly higher energy costs for consumers and businesses. And in return? A nearly immeasurable dip in global carbon dioxide levels, all while other countries continue to expand their use of CO2-emitting fuels.

Third, the agency has finalized new ozone rules despite the considerable progress our country has made under existing rules meant to trim emissions. The newly implemented standards, as U.S. Chamber Executive Vice President for Government Affairs Bruce Josten said recently, will “present considerable problems for America’s economy, job creation, and the construction of critical infrastructure projects.”

The U.S. Chamber and other business groups are pushing back against these new environmental rules through the available legal channels, and small business owners can hope that some - if not all - of these scary new regulations will be revised or tossed out altogether. But for now, they're enough to send a chill down any employer’s spine.

Note: This post was originally published on October 30, 2015 and has been updated to note the U.S. Chamber filed a legal challenge to the overtime rule.

About the Author

About the Author

J.D. Harrison
Executive Director, Communications & Strategy

J.D. Harrison is the Executive Director for Strategic Communications at the U.S. Chamber of Commerce.