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Legislative Issues

The following is the narrative of the 2016 Roll Call which summarizes important issues of concern to MBRG.

The 2016 Legislative Session – Further Diminishing Maryland’s Brand

An Unenviable Brand

Few, if any, individual legislators consider themselves to be actively “anti-business” or working against the interests of business owners and their ability to employ. But, collectively, that is exactly the reputation that the Maryland legislature has earned. That is, in fact, Maryland’s brand as evidenced by a multitude of national rankings by various think tanks, non-profits, and surveys of business owners.

As entrepreneurs, entertainers, and everyone in the public eye can attest, brand is a powerful construct: it encompasses everything about how a product or person – or an entire state – is perceived in the market place. Whereas it takes years to build a positive brand, it can be shattered in mere minutes. Conversely, and unfortunately, it takes years to reverse the negative effects of a bad brand.

Moreover, when an individual or entity is engaged in a rebranding effort – trying to improve its reputation and show itself as a reliable, predictable brand – it needs to be an all-in initiative with consistent application of the principles that will improve that brand.  In short, the effort can’t include starts and stops, and it can’t be unilateral in a trilateral system. The 2015 legislative session was a decent start to improving the brand with five bills that implemented recommendations from the Augustine Commission and relatively fewer bad-for-business bills than prior years; we gave credit where credit was due in last year’s edition of Roll Call.

But 2016 seemed to usher in a return to an unfortunate mindset of workplace intrusion, a paradigm in which the legislature places itself squarely in the middle of the employer-employee relationship.

A Bias Toward Workplace Intrusion

Who is best suited to decide which applicants should be hired – employers or lawmakers? Who is best suited to determine wage rates and eligibility for paid time off? Who is best suited to determine employees’ schedules? Who is most incentivized to keep their workforce healthy, happy, and engaged? The answers should be simple, yet the legislature has made it clear that it believes lawmakers know best, not employers. Business owners and other employers, it would appear, cannot be trusted to do the right thing. Consider a sampling of the higher-profile bills introduced but not passed this year:

  • HB 580 Maryland Healthy Working Families Act
  • SB 623 / HB 197 Maryland Pay Stub Transparency Act of 2016
  • SB 664/HB 1175 Fair Scheduling, Wages, and Benefits Act
  • HB 1372 Payment of Wages – Minimum Wage and Repeal of Tip Credit
  • HB 401 Equal Pay for Equal Work

HB 580, also known as the “paid leave” act, was poised for passage as it made it out of the House of Delegates, but the legislative session ended before the Senate was able to hold a vote. The other bills did not make it out of their respective committees. Collectively, these bills would force employers to include the minimum salary in an open job announcement,  relinquish the tip credit currently applied to the wages of tipped employees, provide employees with their schedules 21 days in advance or be fined – and be fined for changing the schedule with less than 21-days-notice, incur significant record-keeping and notification costs with a myriad of new payroll requirements, and give employees nearly unlimited ability to take paid “sick and safe” leave without verification of need.

Why worry about bills that were ultimately not voted upon? Two important reasons.

First, they will undoubtedly be reintroduced, and they just might pass. These bills have been making their way through the states with reputations for being unfriendly to business, so it is a given that they won’t simply go away. They are part of a national trend in states that view business either as: 1) an adversary that must be controlled and cannot be trusted to do the “right” thing, 2) a seemingly never-ending source of funding that will never go away, regardless of how much it is burdened by ever-increasing regulations and taxes, or 3) an easy target for self-preservation and grandstanding by legislators who can claim that they “stood up to” business, in favor of “working families”, “the children”, or some other carve-out of our society designed to polarize and pit us against each other.

Of course, none of these views is correct. Businesses overwhelmingly are incentivized to take good care of their employees and minimize turnover, but legislation actually makes that increasingly difficult with each passing year. And businesses certainly do have a tax-and-regulate threshold, a breaking point at which they pack up shop and head south for the winter. And spring. And summer. And fall. Finally, unquestionably, it is not an either/or case of business-versus-working families or business-versus-education or business-versus-good healthcare. That, in fact, is ludicrous, and a thriving business climate has been shown time and again to improve all aspects of an economy.

Second, the mere introduction of bad bills annually – even if they don’t yet get a vote – validates the negative brand image that Maryland is bad for business. As we stated above, key components of a positive brand have to do with predictability and reliability. Employers are necessarily on edge. They cannot relax, secure in the knowledge that they know what the rules will be next year so they can simply focus on growing their businesses. They have to watch Annapolis constantly and wonder when this other shoe will drop. What will happen if just one legislator is added or removed from a committee and that changes the dynamic next year, thereby opening the door for passage of one of these terrible bills?

Employers also need predictability in the legal system. Year after year, legislation is introduced that may seem only minimally relevant to business owners, but the impact, if passed, would cause an increase in liability costs and subsequently, a business’ insurance costs.  For example, SB 574/HB 869 – Civil Actions – Noneconomic Damages – Catastrophic Injury, sought to triple the maximum amount of noneconomic damages (damages for pain and suffering) which may be recovered in personal injury and wrongful death actions when a catastrophic injury, as broadly defined by the plaintiffs’ bar, is alleged to have occurred.  If passed, this legislation would have led to unpredictability in the liability insurance market and increased the premiums that businesses must pay for this type of insurance.  Bills that negatively impact civil liability laws are bad for business, yet they are introduced year after year in the General Assembly.

 

Tightening the Vise – A Little More Each Year

Of the bills passed this session, there is a combination of laws that increase the cost of doing business, restrict employers’ ability to recover assets from employees who steal from them, and limit business owners’ ability to prevent former employees from walking away with trade secrets and competing against their former company. A sampling includes:

  • HB 1003 Equal Pay for Equal Work
  • HB 190 Civil Penalties for Shoplifting and Employee Theft – Repeal
  • HB 1440 Non-compete and Conflict of Interest Clauses

These bills are included in the scoring in Roll Call, and the explanations of why they are bad for business – and therefore the economy – or simply why they are redundant and unnecessary are included with the bill write-ups.

It is interesting that the names of the worst bills seem to be inversely proportional to their consequences; the nicer the bill sounds, the more deleterious its effects. Who could be against the so-called “Healthy Working Families Act”, for example? Doesn’t everyone want Maryland’s families to be healthy? And working? Of course we do. But if you understand that the economic effects of a bill will have the exact opposite effect of its stated, intended purpose, then you must oppose it.

Another way the vise is further tightened each year is in the set-up of long-term commissions and task forces that have limited definition and no expiration dates. This year, as part of the equal-pay-for-equal-work series of bills, HB 1004, established an Equal Pay Commission. The problem? Of the 13 members designated, just three represent business. Such an unbalanced commission is all-but-guaranteed to make recommendations that do not support a positive business climate.

 

What Can You Do to Help?

The answer is simple. Use Roll Call and communicate with your legislators. Each lawmaker receives an objective, transparent score of 0 to 100% based on their ACTUAL votes on business-related bills or amendments. If your legislators scored a failing grade, hold them accountable. Refuse to support their fundraisers. Demand that they account for their votes.

All too often, lawmakers say “gosh, we never really heard from business on this bill, so we assumed it was not a big issue for you.” Of course, most business owners don’t have an entire day available to spend in Annapolis and we can’t send entire busloads of paid activists to demonstrate on Lawyer’s Mall the way unions and other activist groups can.

And when lawmakers do hear loud and clear from businesses, the typical refrain is “oh, you’re just overstating that. We don’t believe that this bill will be bad for business or as bad as you say it will.” Hold them accountable. Challenge them on the fact that the vast majority of Maryland legislators have never owned a business, never had to make a payroll, never had to comply with the ever-increasing myriad of laws and regulations. In fact, a large percentage of legislators and the activists behind many of these bills have either 1) no private-sector experience as an employer, or 2) never taken the time to truly understand how business actually works.

Spend some time reading Roll Call and understanding it. Call your legislators. Ask them why pro-business bills that would boost the economy and help to change Maryland’s brand never seem to make it to the House or Senate floor for an up or down vote. SB 846, for example, which would have gradually reduced the corporate income tax from 8.25% to 7% and was recommended by the bipartisan Augustine Commission, never even got a committee vote. Ask them why.

And then support the Maryland Business Leadership Political Action Committee to help elect pro-business legislators from both sides of the political aisle.