When President Trump took office a year ago, he declared that for every regulation created, two would go away; that he would undo Obama administration executive orders; rehaul the tax system; and instruct Congress to get rid of the Affordable Healthcare Act (ACA) and other regulations deemed unfriendly to business.
The President and Republicans finally scored a victory in December with the passage of a new tax plan including repealing the penalty associated with the health insurance mandate in the ACA.
“Even though you have a Republican president, a Republican House and a Republican Senate, nothing is really getting done, which is not that different from the last House and Senate and its predecessor before that,” says James Reidy, an employment attorney with Sheehan Phinney in Manchester. “And it doesn’t matter about party. It seems to be a slow trickle.”
That’s not to say there aren’t some significant bills with the potential to affect NH businesses hanging out there, slowing wending their way through. Business NH Magazine spoke with area employment, real estate, health care and banking experts to get a sense of what NH businesses could expect in the coming year.
Family Leave
Changes are being proposed at the federal and state level that could affect family medical leave provisions. Currently the Family Medical Leave Act (FMLA) states that certain employees must be allowed to take up to 12 weeks of unpaid leave for family reasons, such as a personal illness or taking care of a newborn, without fear of losing their jobs.
Currently a U.S. House Bill, if passed, would change that to be paid leave, funded by taxpayers, says Charla Bizios Stevens, director and chair of Employment Practice Group for McLane Middleton. In NH, however, lawmakers are looking to create Family Medical Leave insurance where employees would pay a small percentage of their salaries, .05 percent, which would be collected into a fund by the NH Department of Employment Security.
“You could basically have employers juggling all these programs for their employees,” says Stevens. “The good part is, most good employers recognize that there is a need for employees to take the time off and that they are probably going to be taking the time off anyway.”
She says securing income supplementation through the family leave insurance would be good for the employee and may keep them from quitting. “In New Hampshire, we’re really trying to retain our workforce, especially our younger workers, so I would think there would be some benefit to the employee and the companies.”
Though not a part of the FMLA, Reidy says there is another proposed bill in the NH legislature that would mandate employers offer a certain number of days of paid sick leave per year. If passed, it may affect a business’s bottom line, but the absence of such a law could affect a business’s ability to compete with states like Massachusetts, which already has a paid sick leave law, and Vermont, which is in the process of adopting one, Reidy says.
Protecting Workers from being Penalized
Two NH laws that employers should be aware of protect employees from being disciplined for making requests, Reidy says. One that went into effect Sept. 1, 2016, states you cannot discipline an employee for asking for flextime. However, the law does not create a right to flextime; it just prevents an employer from penalizing an employee for asking for it.
Another law, which went into effect in 2015, states if an employee requests information about his or her wages or complains about his or her wages, or seeks to disclose his or her salary to co-workers, he or she can’t be disciplined. “A lot of employers have rules that say you can’t disclose your wage to other employees, and now employers can’t do that,” Reidy says.
A bill has been submitted to include gender identity as a protected class under existing state anti-discrimination laws. A similar bill stalled in the State House in early 2017, but has come back. There is no federal law protecting against discrimination on the grounds of gender identity. Although some states and municipalities have adopted such laws, NH has not. While NH’s law protects against discrimination based on sexual orientation, it does not offer protection against discrimination based on gender identity. “It was close,” says Reidy of the first go around with this bill. “If I had to guess, I think it will pass if gender identity is better defined. I think that was the main criticism of the bill.”
While changes to these worker protection laws may not have a huge impact overall for businesses, Reidy says, it is still something they will have to be aware of and grapple with in the coming year.
Overtime Pay
Employers also this year will likely have to spend some time figuring out what to do about paying overtime to employees. There was a great deal of activity in the last two years of the Obama Administration to update and revise federal overtime laws, including a rule change set to go into effect in December 2016 that would have doubled the minimum salary a worker could earn from $23,660 to $47,000 and still be exempt from overtime pay. Several states, the U.S. Chamber of Commerce and other entities challenged the increase in court as well as the authority of the Department of Labor to even make these changes. In November 2016, a federal judge in Texas issued an injunction and in August 2017, the same judge struck down the rule change, saying the level was set so high it might include management who are supposed to be exempt, sending it back to the U.S. Department of Labor to figure out.
“The problem is,” Reidy says, “employers, including employers here in New Hampshire, may have already made those changes because they were supposed to go into effect that December….only to be told, ‘well hold off’ and now they are being told to scrap them altogether.”
Reidy says employers who provided raises so employees met the threshold or changed their status to hourly instead will now have to look carefully to see if they should have given raises or changed their status because of exemption because of duties and decide whether to leave them alone or change pay or status back to what they were before the regulation went into play. “I think this is a hard one. … Most employers will not do that,” he says.
Reidy says he suspects that those employees treated as exempt will remain exempt. The question will be what to do about those whose job duties meet the exemption test, but didn’t meet the salary requirement under the proposed changes. Should they now go back to being treated as exempt employees? “So there is some uncertainty in that regard. But a lot of employers—whatever changes they made or didn’t make last December—they will probably just stay put,” Reidy says.
Minimum Wage
Speaking of pay, Stevens says that employers should be prepared to talk about minimum wage this year. “Because again,” she says, “you’re seeing a lot of states and municipalities enacting minimum wage laws that are different from the federal law. We in New Hampshire still follow the federal law. During the presidential campaign, candidate Trump talked about possibly raising the national minimum wage because $7.25 is pretty low. We’ve not seen that. But I kind of suspect at the state level and the national level we might start hearing something about that.”
And reaction in the business community is mixed, Stevens says. “Most employers would tell you that, ‘hey, we pay more than minimum wage anyway in New Hampshire,’ even for fairly low skilled jobs,” she says. “But part of the problem is we’re competing against Massachusetts, Vermont and Maine. Maine is only a little bit higher, but Massachusetts is currently quite a bit higher” at $11. There is a movement in Massachusetts to put a $15 minimum wage and paid family and medical leave proposal on the 2018 ballot.
Stevens says employers are more concerned about how an increased minimum wage would affect wages generally. “Because then you end up with wage compression,” she says. “You have somebody who is brand new and you hire them at $10, but what about your guy who’s been working there for five years? Do you have to raise him up to $11? I think that becomes more of an issue for employers: what’s the ripple effect?”
Health Care
Businesses are also keeping an eye on changes to health care. “Federally, health care is obviously in flux right now and there is a lot of uncertainty, although the Affordable Care Act is in place until next year,” says Kara Dowal, a partner with Shaheen and Gordon in Manchester who specializes in health care matters. “It’s seemingly a never-ending list of changes and adjustments that are being made either with executive orders, like the President did this fall, or more recently under the tax reform bill, which repeals the individual mandate.”
If the mandate repeal goes through, Dowal says it’s hard to say what the result will be specifically for business, other than it may mean fewer people having access to affordable insurance, which tends to affect the economy as a whole. “Really it’s just keeping an eye on that, and it changes so frequently,” she says. “I guess that change is the only guarantee.”
There is also a bill in the NH House requesting that a commission be established to study the feasibility of a single-payer health care system in the state. Dowal says this is basically like Medicare, but it would cover everyone. “If that passed, you wouldn’t have a need for employer coverage and that would be a huge change for the way we get health care in New Hampshire,” Dowal says. “I think there’s a lot of harsh reactions to that concept as far as the feasibility and how to pay for it and where the money would come from and whether businesses would still pay for it. It was studied in Vermont, and they decided it wasn’t feasible.”
Real Estate
Also on the horizon are possible changes to real estate regulations, says Philip Hastings, an attorney whose practice focuses on real estate with Cleveland, Waters and Bass in Concord. Hastings says business owners ought to pay special attention to provisions that may be affected by the Republican tax reform bill. One deduction in particular is section 1031 of the tax code. Hastings explains that allows sellers of low basis property to defer capital gains or federal income tax on the sale of those properties if they purchase similar real estate. This is typically used in commercial real estate.
“That’s been, over the last five to 10 years, a driver of a lot of real estate transactions,” says Hastings. “The folks who are selling properties, instead of taking a significant tax hit, will roll their proceeds into additional property and defer payment of the tax.”
“I have not seen either of the federal tax plans [from House or Senate] do away with that, which would be a good thing, but the lowering of the federal corporate rate may have some impact on the 1031 exchange portion of the real estate transaction,” he says. “To the extent that the tax reform act may lower the federal tax burden upon the sale of highly appreciated real estate, it may make the 1031 exchange process relatively less attractive.”
Congress has been working on reforming EB-5, also known as the Immigrant Investor Visa Program, which could affect real estate. The visa fast-tracks immigrants for a green card if they invest at least $1 million to finance a business in the United States that will employ at least 10 American workers, or $500,000 if the business is in a rural area or area with high unemployment.
Hastings says NH has a few such projects in the works, including Ragged Mountain. “They’ve owned the ski resort since 2008, and they’ve invested very heavily to improvements to the ski area, and they’ve taken steps toward getting approval for some on-mountain housing,” Hastings says. “The economy has certainly affected them, but they have been able to move forward and the EB-5 has been—when the capital markets were tight in 2010/2011 after the financial meltdown—a good source of capital for them.”
The EB-5 Regional Center Program was due to sunset earlier this year but received an extension to Dec. 22, 2017. (Reauthorizing the program past Dec. 22 had not been decided as of press time.) Hastings says if the EB-5 program ended, it would eliminate “a potentially useful source of investment capital for projects that may not otherwise be able to tap into more traditional credit facilities.”
Marijuana Policies
Maine and Massachusetts have legalized recreational marijuana, while NH has approved only medical marijuana and decriminalized possession of three quarters of an ounce of the drug.
“And that’s a real challenge for employers who are trying to enforce their drug free workplace and other drug and alcohol policies,” Reidy says. “Given our proximity to these other states, you can certainly have someone living in one of those states and working in New Hampshire.”
Reidy says he often reminds clients that pot is still illegal under federal law, and they can follow the federal law. He tells them to treat marijuana as they would alcohol. While alcohol is legal, businesses can still have policies that say you can’t come to work under the influence.
Sexual Harassment
On another front, Andrea G. Chatfield, an employment attorney with Cook, Little, Rosenblatt & Manson, in Manchester, is cautioning her clients to take a close look at their sexual harassment policies. While there is no legislation or rule change on the horizon, she says it’s still worth doing.
Computers need to review their policies and provide training to all employees and managers, says Chatfield. “If you haven’t done training with your workplace, get it done. And that needs to start with the top. There has to be buy-in from the top, by the most senior management and the most senior executives. They themselves need to get trained first and foremost and then they need to provide that training to their staff. It will be more impactful and effective if they can say, ‘I went through this training, and I take this seriously.’ I’ve already seen an uptick with my clients saying can I get training on the books….The smart employers are being proactive.”
Data Security
Chatfield suggests that companies take stock of their privacy and data security and upgrade if necessary. Massachusetts already has a law that requires businesses to have written policies that mandate protecting personal identification information of employees and customers, she says.
And Some Good News
Chatfield predicts this year may actually result in some pleasant changes for NH businesses. “I think we’re going to see fewer new regulations or at least a streamlining of regulations that hopefully will bring more ease of compliance,” Chatfield says. “When it comes to regulations, you want to invite compliance rather than making them so complex and so numerous [that] you just kind of want to throw your hands up and say ‘I just can’t comply with everything.’”
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