Senior Manager, Communications and Strategy, U.S. Chamber of Commerce
June 16, 2022
Small businesses have been dealt a tough set of cards during a pandemic-era marked by shutdowns, labor shortages and other challenges. Axios recently reported that as prices soar, and with labor and supply shortages unlikely to let up anytime soon, small businesses are navigating uncertain waters.
In the latest MetLife and U.S. Chamber Small Business Index, 85% of small businesses said they are concerned about rising inflation. More than half (51%) believe it will be at least six months until the small business climate returns to normal.
Yet despite the challenges, there has also been a surge in applications to start new businesses. In the last two years, entrepreneurship has taken off at unprecedented levels, leading to the largest increase in new business applications in recorded history.
That’s why the U.S. Chamber unveiled a set of five principles in the Small Business Bill of Rights calling on elected leaders to ensure small businesses—new and old—can grow and thrive through challenges and uncertainty.
“It’s hard to put into words what it means to be a small business owner,” says Lori Tapani, co-owner and president of Wyoming Machine in Stacy, Minnesota, “but the Small Business Bill of Rights does that.” The Bill of Rights asks our elected leaders to create an environment where founders and small business owners have the freedom to:
- Hire and manage employees
- Establish the terms on which they do business
- Be protected against frivolous lawsuits
- Benefit from their business and direct its future
- Be free of onerous regulations
“Lack of Clarity Hurts My Business”
The first principle asks that the government not unduly burden a small business’s ability to establish their own employment policies nor interfere with their ability to fairly compete for talent, including using independent contractors and part-time workers.
Ronnie Slone, President of The Slone Group in New Orleans, Louisiana, says that as a business consultant he needs to use independent contractors to meet an ever-changing mix of clients and scopes of work.
“Building a business by using other trusted consultants provides the flexibility of services and expertise I need to help my clients,” Slone says. “Unfortunately, the lack of clarity in state and federal law on what constitutes an employee versus what constitutes an independent contractor hurts my business.”
“Wage Requirements Act as a Deterrent”
For Creature Comforts Veterinary Resort and Suites in Inman, South Carolina, the second principle in the Bill of Rights—that small businesses establish the terms on which they do business—is crucial.
Small business owners should be free to manage the daily operations of their business, including establishing terms of service and entering into contracts without unnecessary government intervention, the Bill of Rights states.
According to Craig Lambert, President of Creature Comforts, a clear example of unnecessary government intervention in daily operation is minimum wage requirements.
“When the federal government sets a minimum wage rate, the requirement acts as a deterrent to the employer and employee relationship. Mandating a federal minimum wage limits the discussion I have as a small business owner with job applicants,” says Lambert.
Plus, Lambert says, “higher wage mandates, without acknowledging qualifications and talent necessary for specific jobs, result in arbitrary price hikes to consumers that are necessary to cover increased wage demands.”
“We Have So Many Stories”
According to the U.S. Chamber’s Institute for Legal Reform (ILR), America has the world’s costliest legal system, and 79% of American voters see the number of “frivolous” lawsuits as a problem.
Frivolous, unnecessary, and costly lawsuits can be devastating to small business owners. The Bill of Rights makes clear that a small business has the right to operate without fear of profit-based litigation that uses the threat of lawsuits to extort payments.
Heleena Sideris, Co-Owner of Park City Lodging, a property management and vacation rental business in Park City, Utah, has seen her fair share of unfair lawsuits.
“A property owner left our management pool and his water heater broke months later and he sued us. In another case, someone who wanted to buy a property in a complex we manage sued us because their lender wouldn’t approve a loan to purchase the property...and the list goes on,” Sideris says.
Recently, ILR reported that as small businesses struggle to overcome the challenges brought on by inflation and supply chain and labor shortages, they are now facing the increasing possibility of being hit with an Americans with Disabilities Act (ADA) lawsuit.
Law firms are finding ways to exploit the ADA and target small businesses with excessive ADA lawsuits. These lawsuits prioritize forcing small businesses to settle for millions of dollars —not improving accessibility, as the law intended.
According to Courthouse News, one restaurant in San Francisco, Hon’s Wun-Tun House, was sued in March 2021 because their dining tables were not wheelchair-accessible, even though they only offered takeout and were closed for sit-down service.
“The Regulations Don’t Make Sense”
The fourth Bill of Rights principle says that small business owners should enjoy the return on the businesses they build and be free to determine the future of their business, including the ability to sell the business or leave it as an inheritance.
However, small businesses are often prevented from pursuing the path they want for their business due to regulations.
“We would like to establish an employee-owned business, but regulations on financial draws don't make sense. There are too many challenges to accomplish this,” said Sideris of Park City Lodging.
"A Never-Ending Debate of Rule Changes"
Being free of onerous government regulations would be liberating for small businesses who feel they are navigating a new rule change at every turn.
"In game theory, every time you change the rules of the game, the participants are forced to alter the way they play the game. In this case, we are talking about America’s small businesses that account for more than 60% of net new jobs," said Joe Shamess, General Partner at Flintlock Capital, during testimony before the House Small Business Committee in a hearing on veteran entrepreneurship in June 2022.
"They’re wading through a seemingly never-ending debate of rule changes and shifting incentives that threaten their fundamental abilities to create, build, and grow the enterprises that will power our economy forward."
Through the Small Business Bill of Rights, and the voices of America’s small business owners, the U.S. Chamber is urging elected officials to ensure that founders, entrepreneurs, and small business owners operate in an environment where they are empowered to make decisions for their own businesses.