There has been a flurry of activity this week in the employment law front impacting the small business community.

President Obama Signs Bill Relaxing Rules on Pay Equity Suits

            President Obama signed the Ledbetter Fair Pay Act into law, overturning a recent Supreme Court case that found restrictions on the statute of limitations for individuals to file pay discrimination suits under Title VII of the Civil Rights Act.  This law allows workers to file an employment discrimination case up to 180 days after they receive a paycheck or benefits that they allege is discriminatory.  The Act was named for Lilly Ledbetter, a retired supervisor at Goodyear Tire & Rubber Company who belatedly filed a claim that she was paid less than her male counterparts due to sex discrimination. 

            This law will increase the numbers of individuals that can sue businesses for pay discrimination, and may also apply to the payment of pension benefits.  This law also revises the timeframe for pay discrimination suits under the Age Discrimination in Employment Act, the Rehabilitation Act of 1973, and the Americans with Disabilities Act.

New Form I-9 Goes into Effect February 2

            The U.S. Citizenship and Immigration Services issued a new Form I-9 to verify employees’ eligibility for employment.  Employers must begin using the new form on February 2, 2009.  Previous versions of Form I-9, in English or Spanish, are no longer valid. Employers who are still using the old forms after February 2 will be subject to applicable penalties and fines.  The new Form I-9 is available from The U.S. Citizenship and Immigration Services website.

            The revised form eliminates employees’ use of expired documents to verify employment eligibility.  The government eliminated expired documents formerly accepted because they are frequently used by counterfeiters to create authentic-looking documents for aliens seeking unauthorized employment.  The new form also adds and removes some of the documents employers can accept to verify employment eligibility.

DHS Delays Implementation of E-Verify Employment Eligibility System

            This week the Department of Homeland Security (DHS) agreed to delay until May 21, 2009 implementation of a new rule that would require federal contractors to use the federal government’s E-Verify employment eligibility system.  This extension was granted after several business groups, including the U.S. Chamber of Commerce, Associated Builders and Contractors, and the Society for Human Resource Management filed a lawsuit challenging the legality of the federal contractor rule. 

– Janis Reyes, Assistant Chief Counsel

            This week, the Office of Advocacy released its annual Report on the Regulatory Flexibility Act, which outlines federal agency compliance with the Regulatory Flexibility Act, and reports on Advocacy’s efforts to relieve the regulatory burden on the nation’s small businesses.

            The RFA requires agencies to analyze the economic impact of proposed regulations on small entities and consider less burdensome alternatives that still reach the agencies’ regulatory goals.  Advocacy’s regulatory attorneys and economists work closely with federal agency staff to ensure RFA compliance and bring small business concerns to the decision-making table.

            Advocacy’s efforts in fiscal year 2008 saved American small businesses $10.7 billion in foregone regulatory costs.  Some of the efforts Advocacy made to secure these cost-savings for small business include:

Ø   Submitting 33 public comment letters to federal agencies on regulatory proposals,

Ø   Convening 28 roundtables to solicit opinions and concerns of small business stakeholders,

Ø   Delivering the 2008 r3 Top 10 Rules for Review and Reform to agencies for their action, and

Ø   Working with stakeholders in five states to pass regulatory flexibility legislation.

– Jamie Belcore, Assistant Chief Counsel

            The United States lost 2.6 million jobs in 2008, the greatest decline in annual nonfarm payrolls since 1945; meanwhile, the unemployment rate has crept up to 7.2 percent.  Later this week, the Bureau of Economic Analysis will release what most economists expect to be horrible gross domestic product figures for the fourth quarter of 2008.  In other words, the economic recession is severe, and the numbers appear to be bearing this out.

            Looking forward, though, we would expect for there to be more entrepreneurship taking place as a result of this economic downturn.  Much of that will be out of necessity; the talent pool of those who are being laid off is such that they are capable of selling those talents as their own boss, if they so choose.  Moreover, many of these individuals might have contemplated becoming self-employed for some time, but they were not willing to strike out on their own and forego the benefits of their existing jobs.  Unemployment changes that, providing an opportunity to pursue those dreams.  Looking back at past recessions, it is definitely true that smaller businesses were able to recover sooner than their larger counterparts.

            From my perspective, with the largest single concern from small business owners being poor sales, small business owners (both new and existing) will need a strengthened economy to flourish.  Even those who will use this time to their advantage, in other words, should hope for an economic recovery to prosper.  That is the biggest challenge of all right now.

– Chad Moutray, Chief Economist

            The most recent Small Business Profiles for the States and Territories—published in January 2009 captures the economic activity and condition of small businesses of each state including the U.S. Territories.

            Differences among the states reinforce the “regional” nature of the U.S. and the possible perils of assuming national trends apply to our neighborhoods.

            Some bits of information from this edition include:

            Small businesses employ 44% of the workforce in Florida (the low end of the range), and they employ 69.8% of Montana’s workforce (the high end). Louisiana had the highest increase in non-employer firms during 2005-2006, while Massachusetts, Michigan, New Hampshire, Alaska and Kansas were states with declines during this time period.

            The unemployment rate in Hawaii was the lowest at 2.6 percent–well below the national average of 4.6 percent; meanwhile Michigan had the highest rate 7.2 percent. Hawaii recorded over 100 percent increase in business bankruptcy while Oregon and Wyoming had a decrease.

            The value of this annual publication is the state level information that it provides about small businesses on the number of firms, demographics of business ownership, small business income, banking, business turnover, industry composition, employment gains and losses.

            Detailed historical data may be found in the Small Business Economic Indicators and the Small Business Economy reports.

– Victoria Williams, Economist

            The Federal Aviation Administration has finalized its Special Flight Rules Area rule for the Washington, D.C. metropolitan area.  The new rule imposes flight restrictions on aircraft operating in and around the national capital area.

            Our office designated the rule one of the 2008 Top 10 Rules for Review and Reform as part of the Regulatory Review and Reform (r3) initiative. 

            FAA’s final rule creates a smaller restricted airspace than was originally imposed, removing some 33 small airports and helipads from the regulation.  These changes reduce the economic impact of the rule while maintaining the FAA’s security parameters.  The change to a smaller, more uniform, airspace addressed many of the issues raised in public comments and in the r3 nomination.

            The r3 nominator, owner of Potomac Airfield in Maryland, had this to say about Advocacy’s involvement:

I offer that SBA’s Office of Advocacy’s role in FAA’s “Special Flight Rules Area,” and other matters, both in security and more general regulatory activities, has fundamentally changed the way the US Government does business, all to the better. . .

 

I believe SBA and regflex have taught various agencies to step more carefully, and more lightly. . .

 

I am optimistic that as a result of SBA activities, our government has achieved a far better balance between security and economy; bringing complex and often conflicting objectives into a more mutually stable position.  That’s a good day’s work!

            To that, we say “Thanks for the kudos!”

– John McDowell

            On January 15, 2009, the Nashville Area Chamber of Commerce will host a Business Outlook Summit.  This first-ever event will focus attention on key business and economic trends for the Nashville area in 2009.  CEOs, sales and marketing managers, human resources staff, facility managers and other local leaders are expected to attend the event and join the discussion on the region’s current business environment.  One of the specific areas of focus will be on the needs and interests of small and mid-sized businesses, with an eye towards business planning for the coming year.

            The keynote speakers include Dave Altig, senior vice president and research director of the Federal Reserve Bank, Atlanta, GA; Robert “Tim” McGee, director of Macro Strategy & Research at U.S. Trust, Bank of America Private Wealth Management; and Rob Atkinson, president of the Information Technology & Innovation Foundation, Washington, D.C. 

            Region IV Advocate Pat Gartland will represent the Office of Advocacy at the event. 

– Kate Reichert, Regulatory & Legislative Counsel

            On January 8, I attended the National Economists Club (NEC) presentation by Laurence Meyer, Vice Chairman, Macroeconomic Advisors, on “Whatever It Takes: Outlook for US Economy and Monetary Policy.” 

            The presentation was based on output from models developed at his forecasting company.  Meyer believes that the US is in a deep recession.  According to his model, moderate economic growth will resume in the second half of 2009 and accelerate in 2009.  He believes macroeconomic policymakers should do whatever it takes to stimulate the economy, including a very large fiscal stimulus and continued low interest rates.  He predicts unemployment will peak at 8% by mid-2009 and remain at this level for a least a year, not declining until 2011. 

            When asked why his 2008 forecast was so far off from the current reality, he explained that his model misread the link between falling house prices and the nation’s financial system, and the overall effect of such a financial crisis on the economy. 

            Find more information about this presentation and other NEC events on their web site.

– Jules Lichtenstein, Senior Economist

            The Washington Post reports that Cass Sunstein, a longtime University of Chicago law professor, and most recently, the Felix Frankfurter Professor of Law at Harvard is expected to be nominated to be the new regulatory czar, as Administrator of the OMB Office of Information and Regulatory Affairs. 

            Professor Sunstein is a prolific author and widely acclaimed administrative law scholar.  He is a proponent of a vigorous OIRA and cost-benefit analysis, but respectful of the limits of cost-benefit analysis.  His 2002 book, Risk and Reason, is one of the leading primers on risk and regulation 

            As this office works closely with OIRA and the Federal agencies, we look forward to working with Cass Sunstein.

– Kevin Bromberg, Assistant Chief Counsel

            The ADA Amendments Act took effect on January 1.  It overturns a series of Supreme Court cases, expands the number of workers who are considered disabled under the ADA, and increases the number of employers that must make reasonable accommodations for these employees.

            The ADA defines a “disability,” in part, as “a physical or mental impairment that substantially limits one or more major life activities.”  The changes emphasize that this statute should be broadly interpreted to cover more individuals.

            The amendments don’t allow consideration of the beneficial effects of mitigating measures such as medications or prosthetics when deciding whether an individual has a disability (there is an exception for eyeglasses or contact lenses).

            The new law shifts the focus of litigation from whether an employee is disabled, thus allowing more plaintiffs to be considered disabled, to whether there was discrimination in the workplace. 

          The ADA covers employers with 15 or more employees, including state and local governments.

            New revisions to the regulations implementing the Family and Medical Leave Act of 1993 take effect on January 16.

            The revised rule makes a host of changes to what employers and employees must do to fulfill the requirements of the FMLA.  Again, seek a good employment law attorney to sort it all out.

            The complications, time, and expense involved in these changes highlight the simple fact that small businesses are disproportionally impacted by federal regulations. 

            Repeatedly we see regulations written with big business in mind.  If the Regulatory Flexibility Act were strictly followed, the impact of regulations on small businesses would be considered as well.  In our view, that’s what is most important.

– Janis Reyes, Assistant Chief Counsel