Can Small Business Cope with New DOL Rules?

By Elizabeth Sullivan, WIPP Government Relations

In a string of Executive Orders recently taken by the President and executed by the Department of Labor, the House Small Business Committee examined the effects of these regulations on small businesses. In a hearing titled, “The Cumulative Burden of President Obama’s Executive Orders on Small Contractors,” three out of the four witnesses agreed these new regulations hurt more than help small businesses. Witness Dr. David Madland, from the Center for American Progress Action Fund, disagreed. The Executive Orders under scrutiny include Fair Pay and Safe Workplaces, Minimum Wage for Contractors, and Establishing Paid Sick Leave for Federal Contractors, just to name a few.

You might ask why (almost) everyone is crabby, considering the titles for the orders seem pretty straightforward. Everyone should be paid fairly, right? Yes, argued Donna Huneycutt – testifying on behalf of the National Defense Industrial Association – but the actions don’t fit the description. As WIPP’s formal comment pointed out, the proposed system would unload extra paperwork requirements on contracting officers and place burdens on small business contractors. “Several small business contractors have expressed to the AGC that they are strongly considering or plan to walk away from the federal construction market,” voiced Jimmy Christianson, testifying on behalf of the Associated General Contractors of America (AGC). This concern echoed throughout the hearing, with potential job loss cited abundantly as an effect of the regulations.

And it’s not just jobs that small businesses are worried about. To ensure compliance, contractors will also be emptying their pockets. Mr. Christianson highlighted that many small businesses do not have in-house counsel or teams of attorneys on staff. As a result, these businesses have to hire compliance experts or counsel at an average cost of about $400 an hour, which deters many small businesses from seeking federal contracts.  Small business construction contracting companies typically pay for about 20 hours of guidance – you do the math.

Singing a very different tune, Dr. Madland noted studies that highlighted the positive effects of general wage and standard increase. “The state of Maryland found that more companies wanted to do business with the state after they raised standards.” The other three witnesses, representing various groups with small business members, disagreed. Congressman Hanna acknowledged the report’s outcome, but questioned it by citing the three other “real life” panelists that point out they are burdensome, overcomplicated and discouraging people from entering the marketplace.

Overall, Congressman Hanna and other panelists brought up a good point. The commotion is not just coming from the regulations themselves, but that the small businesses they impact are barely considered in the process. Our voices need to be amplified.

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