After unanimously passing their respective Washington State houses last month, two pieces of legislation related to informing small business of their rights under state agency inspection are making headway during public hearings. Business advocates and sponsors of SB 5230 testified this week that the measure is a long time coming and would prevent employers from unknowingly violating state agency law.
Prime sponsor is State Sen. Lynda Wilson (R-17). At a Tuesday, March 14 meeting of the House Government, Elections, and Information Technology Committee she said, “There are a whole lot of rules and regulations right now that businesses can have. We do have the rights, it’s just that we don’t know what they are.”
“I know personally when the government comes to my door and they just show up, you’re kind of taken off guard, you don’t really know what you should be doing…(and) you don’t know that you can have a lawyer or that you can have an accountant,” she added.
According to a 2016 U.S. Small Business Administration report, there are 555,285 small businesses in Washington state, comprising 98 percent of state companies.
Disadvantaged By Regulatory Costs
Gary Smith is the Executive Director of the Independent Business Association. In his testimony on the following day to the same committee, he referenced a 2010 study prepared for the Small Business Administration, which found businesses do not pay federal regulation costs on a level playing field.
“That impact on a small business is working out to be $10,585 dollars per employee and 36 percent higher for a small business than a larger firm,” which “makes it really difficult to compete when you have that kind of overhead in front of you,” said Smith. “Small businesses are impacted greatly by regulations; (SB 5230) is a good way to get at that issue.”
On February 15, the State Senate approved SB 5230 in a 46-0 vote with three members excluded. The bill sports bipartisan sponsorship of 22 State Sens. including Wilson, Guy Palumbo (D-1), Michael Baumgartner (R-6), and Bob Hasegawa (D-11).
The House approved on February 27 the measure’s companion bill, HB 1352, in a 96-0 vote, with two excused. The measure has a total of 37 sponsors including prime sponsor State Rep. Andrew Barkis (R-2), and cosponsors including State Reps. Jim Walsh (R-19), Assistant Majority Whip Mike Chapman (D-24), and Minority Caucus Chair Matt Shea (R-4).
Under the Administrative Procedure Act (APA), state agencies inspecting a business must supply the owner with a copy of any laws they break. Unless that infraction is a danger to public safety, the company then has seven days to correct the violation before incurring a fine or civil penalty.
SB 5230 would require the State Departments of Agriculture, Ecology, Labor and Industries, Revenue, Security Employment, and the State Fire Marshall to send before September 2017 a compiled list of rights small businesses during various inspections or audits to the Attorney General (AG) for reviewing.
By October 30, the AG must report recommendations on identifying small business protections during agency enforcement action and improving the posting of their rights to those state agencies. A month later, the AG would be required to report the same information to relevant legislative committees.
Small Business Bill Of Rights
At the Tuesday, March 14 committee meeting Wilson said, “I think that this bill will be very good in that way in being able to bring the information to (business owners), either before or at the time of the inspection…so many times small employers are not well-versed in the RCWs, they might not know what an RCW is.”
For Palumbo, the legislation was long overdue. “We’ve got an airplane passenger bills of rights, we’ve got a patient bill of rights; we don’t have a small business bill of rights, so this is just one little baby step moving forward and trying to be pro-small business as a legislature,” he said.
“When you are a small business, you don’t have the luxury of lawyers, you don’t have staff like a big corporation does, and it’s pretty scary when your livelihood is at risk,” he added. “It’s just important to let people know what their rights are. Hopefully the next step maybe next year will be to put together that one-page so maybe when you get your business license, you get your bill of rights as well so you know what happens.”
Providing Interpretation and Clarity
This past summer, the Association of Washington Business (AWB) completed a statewide small business outreach tour in 15 cities including Vancouver, Washington, Everett, Bellevue, and Yakima to gauge policy related concerns from the state’s employers.
During those meetings,“stories were shared time and time again of costly complex audits, inspections or record reviews by the very agencies listed in this legislation,” Sheri Nelson told the House committee on Wednesday, March 15. “The majority of these agency enforcements and regulation actions were rarely known by the businesses, and resolution or assistance was only delivered in the form of a fine or a penalty by the agency.”
Nelson is Government Affairs Director for Small Business Policy for AWB. She added, “SB 5230 is a huge step in providing knowledge for our small businesses and in addressing our state’s regulatory environment which frankly is currently structured in a way that creates a challenging relationship between our employers and the state agencies…this legislation may not appear monumental to some, yet it will provide interpretation and clarity to those who need it most.”
Safeguarding Small Business
Patrick Connor, Washington State Director for the National Federation of Independent Business (NFIB) said he believes the bill would better safeguard small businesses.
“(The bill) simply asks a handful of agencies that are responsible for 60 percent of the inspections and audits done for small businesses…(and) describe what the protections and rights of small business owners are when one of those state agents comes out to do one of those audits or inspections.”
“Let’s pull that information together, have the Attorney General give it a look, determine whether there are any holes that need to be filled or best practices to be adopted by the other state agencies, and move forward from there,” added Connor.