How Regulations Accumulate as a Small Business Grows

The Senate votes this week on a small business tax-break bill which also contains controversial provisions to boost community-bank loans to small business. That is, Washington wants to “nudge” small banks into making loans that they’d otherwise avoid. Kind of like what the government did with home mortgage lending, with results some party poopers might characterize as catastrophic, but hey, who’s paying attention to things like that anyway.

One tries in vain to argue that the answer to recovery is not to artificially stimulate anything, or to overrule prices and rates in the marketplace; those are signals about underlying realities to heed and allow to play out. But beyond that, we must cut regulations that paralyze business and job creation. The starting point is to inventory all the regulations that impact a small business as it grows, and set about rolling them back.

Below is the rough inventory I’ve compiled, but I’m sure it’s out of date and some things have changed. And this doesn’t even address industry-specific rules (see endnote), themselves desperately in need of reform. And it certainly doesn’t address yet-to-come from the new financial reform and Obamacare legislation. I welcome any additions and subtractions.

FEDERAL WORKPLACE REGULATION IMPOSED ON GROWING BUSINESSES* (Draft–Wayne Crews)

ONE EMPLOYEE

• Fair Labor Standards Act (overtime and minimum wage [27% min. wage increase since 1990])
• Social Security matching and deposits
• Medicare, FICA
• Military Selective Service Act (90 days leave for reservists; rehire discharged veterans)
• Equal Pay Act (no sex discrimination in wages)
• Immigration Reform Act (eligibility must be documented)
• Federal Unemployment Tax Act (unemployment compensation)
• Employee Retirement Income Security Act (standards for pension and benefit plans)
• Occupational Safety and Health Act
• Polygraph Protection Act

4 EMPLOYEES: ALL THE ABOVE, PLUS

• Immigration Reform Act (no discrimination with regard to national origin, citizenship, or intention to obtain citizenship)

15 EMPLOYEES: ALL THE ABOVE, PLUS

• Civil Rights Act Title VII (no discrimination with regard to race, color, origin, religion, or sex; pregnancy-related protections; recordkeeping)
• Americans with Disabilities Act (no discrimination, “reasonable accommodations”)

20 EMPLOYEES: ALL THE ABOVE, PLUS

• Age Discrimination Act (no discrimination on the basis of age against those 40 and older)
• Older Worker Benefit Protection Act (benefits for older workers must be commensurate with younger workers)
• COBRA (continuation of medical benefits for up to 18 months upon termination)

25 EMPLOYEES: ALL THE ABOVE, PLUS

• Health Maintenance Organization Act (HMO Option required)
• Veterans’ Reemployment Act (reemployment for persons returning from active duty, reserve, or Nat’l Guard)

50 EMPLOYEES: ALL THE ABOVE, PLUS

• Family and Medical Leave Act (12 weeks unpaid leave or care for newborn or ill family member)

100 EMPLOYEES: ALL THE ABOVE, PLUS

• WARN Act (60-days written plant closing notice) -Civil Rights Act (annual EEO-1 form)

*Assumes non-union, non-government contractor, with interstate operations and a basic employee benefits package. Includes general workforce-related regulation only; Omitted are categories such as environmental and consumer product safety regulations, and regulations applying to specific types of businesses such as mining, farming, trucking or financial firms