The U.S. Senate today defeated for the second time on two years the so-called Paycheck Fairness Act, which would have unleashed a mountain of litigation against employers working in good faith to provide opportunity to all employees.
Senators voted 52 to 47 - eight votes short of the necessary 60 - to take up Paycheck Fairness in a vote widely seen as a political step by Democrats seeking to paint Republicans as waging a “war on women.” Massachusetts’ two Senators split their votes, with Republican Scott Brown opposing the bill and Democrat John Kerry supporting it.
The legislation would allow unlimited punitive and compensatory damages in cases of suspected pay discrimination. Employers of all sizes would be exposed to increased litigation and a spate of frivolous class-action suits even when they act with a reasonable belief that their pay policies are lawful.
Associated Industries of Massachusetts President and Chief Executive Officer Richard C. Lord commended Brown for voting against a bill that would benefit trial lawyers more than workers.
“We believe that existing laws protect workers from gender discrimination while allowing employers the freedom to adopt competitive business practices to retain and attract employees,” Lord said.
Brown said in a statement:
“As a father and husband of women in the workforce, I believe strongly in fair pay, and employers who discriminate against women should be prosecuted aggressively," Brown said in a statement. "The bill before the Senate today was flawed and overreaching. It’s the right cause but the wrong bill. On the heels of last week’s dismal jobs report, the last thing we should be doing is putting more job-killing burdens on small businesses and employers. Instead, we should be focused on creating jobs for women who, like all Americans, have been negatively affected by the employment crisis.”
AIM opposes the Paycheck Fairness Act because:
- It would remove the Equal Pay Act caps on punitive and compensatory damages and would apply punitive damages to all cases.
- It would also eliminate a key justification for pay disparities by requiring that any difference in pay be substantiated as a “business necessity.” Additionally, these defenses would have to be based on “bona fide” factors and would prevent employers from paying employees in different localities different rates.
- It would make it easier for plaintiffs’ attorneys to file class-action suits against employers by requiring participants to “opt-out” of equal pay class-action suits. Currently, claimants must “opt-in” to suits if they wish to be part of the class.
- It would require that the government collect information on employee wages and other data. This would also enable confidential salary information to be publicly shared with employees’ coworkers, competitors and others. In addition, the bill would allow the Equal Employment Opportunity Commission (EEOC) to require employers to report sensitive wage information that may be publicly disclosed.
Associated Industries of Massachusetts (AIM) today commended Senator Scott Brown for supporting an amendment that would have left the development of national greenhouse gas regulations in the hands of Congress.
Senators defeated by a tie 50 to 50 vote a measure that would have prevented the U.S. Environmental Protection Agency from bypassing Congress and regulating greenhouse gases under the Clean Air Act.
Senate Republicans pushed the EPA regulatory prohibition after the failure of the last Congress to pass “cap and trade” raised fears that the Obama administration would pursue the same goal administratively, without Congress.
AIM supports a national approach to greenhouse gas regulation, but the association remains concerned about the aggressive encroachment of non-elected regulators upon policy issues that should be debated in Congress. Agencies such as the National Labor Relations Board and the United States Department of Labor, for example, have fundamentally restructured the regulatory playing field on rules governing union elections, independent contractors and other important issues.
“Massachusetts employers appreciate Senator Brown’s position that decisions on broad policy issues such as greenhouse gas regulation belong with elected representatives. Allowing regulatory agencies to make those decisions deprives voters of the ability to comment, participate and ultimately render judgment at election time,” said Robert Rio, Senior Vice President of Government Affairs at AIM.
National greenhouse gas regulations will have a limited effect on Massachusetts since the commonwealth already regulates emissions under the Global Warming Solutions Act of 2008. The law imposes onerous Massachusetts-only standards to reach the goal of reducing greenhouse gasses 20 percent by 2020 and 80 percent by 2050 over 1990 levels.
The House of Representatives passed a spending bill in February that would prohibit the EPA from regulating carbon dioxide emissions.
Employers in Massachusetts and elsewhere will not face onerous new 1099 tax reporting requirements now that the U.S. Senate has passed and sent to President Barack Obama a repeal of the controversial health-care reform provision.
Senators voted 87-12 today to repeal the controversial law that would have required businesses beginning in 2013 to file 1099 tax forms for every vendor that sold them more than $600 worth of goods and services. Both Massachusetts senators – Democrat John Kerry and Republican Scott Brown – supported the measure.
President Obama has expressed concern about the funding portions of the repeal but is expected to sign it.
The Senate vote apparently spares 38 million businesses, charities and non-profit organizations from a bureaucratic nightmare that some experts estimate would have increased paperwork by 2,000 percent. Associated Industries of Massachusetts has strongly supported repeal of the provision, which would have saddled employers with significant administrative and accounting expense at a time when many are already struggling with the soft economy.
“AIM and its member employers commend Senator Kerry, Senator Brown and their colleagues for taking a stand against a regulation that would have placed an intolerable burden on millions of small companies across the country. We urge President Obama to sign the repeal,” said Richard C. Lord, President and Chief Executive of the Association.
Today’s Senate vote approved an earlier version of the 1099 repeal approved by the House of Representatives on March 3.
The 1099 filing requirement was projected to raise nearly $25 billion over the next decade by ensuring that vendors pay their taxes. Now, the money will be made up by changing another part of the health care law, requiring more families to repay tax credits designed to help them cover insurance premiums, if their incomes increase beyond certain levels.
It’s one down and one to go for the U.S. Senate as it revisits several harmful business-tax provisions of last year’s federal health care reform.
The Senate acted last week to repeal the provision that expanded 1099 tax expenditure reporting requirements on business. Now comes word that Senator Scott Brown intends to file a bill to repeal a medical device sales tax also contained in the health reform statute. That’s good news for Massachusetts and its 225 medical device manufacturing companies.
The 2.3 percent excise tax on medical device manufacturing firms is scheduled to go into effect after December 31, 2012. The tax would require companies to absorb the additional cost or to pass it along to customers, a situation that would drive up the already high cost of health care.
Massachusetts medical device manufacturing companies generate $6 billion in annual sales and employ 21,000 people. These employers contribute about 10 percent of Bay State exports.
Bipartisan support by members of the Massachusetts Congressional delegation to repeal the tax on medical devices would be welcomed by a critical segment of the state’s employer community.
The United States Senate voted 81 to 17 Wednesday to repeal a provision of the health reform law that would have required businesses to file 1099 tax forms for every vendor that sold them more than $600 worth of goods and services.
Massachusetts Senators John Kerry and Scott Brown both supported an amendment sponsored by Democratic Senator Debbie Stabenow of Michigan that would do away with the expanded 1099 reporting requirement and pay for the repeal with unspent appropriated funds, or already appropriated money from various federal agencies, as directed by the Office of Management and Budget.
The repeal amendment, tacked onto a reauthorization for the Federal Aviation Administration, won the support of all Senate Republicans and 34 Democrats.
The measure is expected to encourage the House of Representatives to move forward with similar legislation – dubbed HR4 - that has attracted 263 co-sponsors. The list of sponsors includes two members of the Massachusetts delegation, Representatives Barney Frank and Nikki Tsongas.
The 1099 mandate, due to take effect in 2013, would require more than 30 million U.S. companies that currently only have to tell the IRS the value of services they purchase from vendors to also report the value of goods and merchandise they purchase. Lawmakers added the 1099 reporting footnote to the federal health reform bill in an effort to fund a portion of the massive overhaul.
Associated Industries of Massachusetts believes the provision would saddle employers with significant administrative and accounting expense at a time when many are already struggling with the soft economy.
“Massachusetts employers commend Senators Kerry and Brown for supporting a common-sense amendment that will head off an estimated 2000 percent increase in 1099 paperwork for employers. We appreciate the sponsorship of Representatives Tsongas and Frank and urge the House to repeal the mandate as soon as possible,” said John Regan, Executive Vice President of Government Affairs at AIM.
Both U.S. Senators from Massachusetts and two members of the Bay State’s House delegation this week supported a compromise $801 billion tax package that will help employers by extending the federal research and development tax credit and a provision that would allow businesses to write off their investments in equipment.
Senators John Kerry and Scott Brown were joined by Representatives William Delahunt and Niki Tsongas in voting for the measure, which will extend for two years the Bush-era tax reductions and add 13 months of unemployment benefits. The remaining members of the Massachusetts Congressional delegation – Representatives Michael Capuano, Barney Frank, Stephen Lynch, Edward Markey, James McGovern, Richard Neal, John Olver and John Tierney – were opposed.
President Barack Obama, who developed the compromise package with Congressional Republicans, is expected to sign the bill as early as today.
Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts, noted that extension of the Bush tax cuts will provide additional capital to the many Massachusetts business owners who operate as subchapter-S corporations and pay the personal income tax rate.
“The president and Congress deserve tremendous credit for passing legislation that will stimulate job growth and advance the economic recovery here in Massachusetts,” Lord said.
The federal research and development tax credit is a complex incentive that can amount to 20 percent for companies that existed during the 1980s and ratchet down to 7 percent for companies founded later. The credit has been a sort of orphan among economic stimulus measures – it has never been made permanent, has lapsed four times and been renewed more than a dozen times.
Both the R&D credit and the expensing provisions benefit key sectors of the Massachusetts economy. Durable goods make up almost $24 billion of the $34 billion in gross domestic product generated by Massachusetts manufacturers, while a recent study by AIM and the University of Massachusetts underscored the importance of research and innovation in allowing Bay State defense contractors to triple the value of their business in the past 15 years.
The U.S. Senate failed this week to repeal a provision of the health reform law that will require businesses to file 1099 tax forms for every vendor that sells them more than $600 worth of goods and services.
Senators Monday considered two competing amendments to repeal the 1099 rule, but neither version received the 67 votes needed for passage. An amendment sponsored by Montana Democrat Max Baucus failed on a 44-53 vote, while a separate measure sponsored by Nebraska Republican Michael Johanns that would also have cut federal spending by $39 billion lost on a 61-35 count.
Two similar amendments to rescind the 1099 mandate failed in September. Some observers now believe that the Senate may not address the 1099 issue until 2011.
Massachusetts Senator Scott Brown, who expressed strong support for repeal during remarks to the AIM Executive Forum on November 19, supported both the Baucus and Johanns amendments. Senator John Kerry voted in favor of the Baucus amendment and against the Johanns proposal.
AIM believes the 1099 provision would saddle employers with significant administrative and accounting expense at a time when many are already struggling with the soft economy. Implementation of federal health care reform will be a long and difficult road without the support of our nation’s small businesses. Imposition of the 1099 requirement on small businesses in 2013 could derail support for the majority of the reform bill effective in 2014.
The mandate, due to take effect in 2013, will require more than 30 million U.S. companies that currently only have to tell the IRS the value of services they purchase from vendors to also report the value of goods and merchandise they purchase. Lawmakers added the 1099 reporting footnote to the federal health reform bill in an effort to fund a portion of the massive overhaul.
The Senate’s Joint Committee on Taxation estimates that repeal would reduce federal tax collections by $19.3 billion.
President Barack Obama recently signaled his willingness to reconsider the mandate.
“You know, for example, I know one of the things that’s come up is that the 1099 provision in the health care bill appears to be too burdensome for small businesses. It just involves too much paperwork, too much filing,” the president said in his press conference the morning after mid-term elections.