Without Missouri Senate action, minimum wage is going to $10 per hour right away – $11 per hour in January

Associated Industries of Missouri (AIM) joined several other business groups in filing suit against an ordinance passed by the City of St. Louis that would have increased the minimum wage that must be paid by employers located in St. Louis City. Although we prevailed at the lower court level, the Missouri Supreme Court invalidated a statute preventing local governments from enacting local minimum wages that had been on the books for nearly 20 years and, in effect, validated the St. Louis City ordinance. Yesterday, the Missouri Supreme Court overruled our motion for rehearing.

The City of St. Louis released a statement that minimum wage will increase as soon as the Circuit Court lifts its injunction, which could happen as soon as next week. It will be effective immediately thereafter, according to this press release by the City of St. Louis.

While the Missouri House took quick action to pass a bill a month ago that would have averted this crisis, the Missouri Senate has not passed the bill.  Unless the Missouri Senate passes HB 1194 and 1193 in the next few days and that measure is signed into law by Governor Eric Greitens, employers in the City of St. Louis will pay the price through increased wages, or low-income workers will lose their jobs, because of the City’s ordinance to increase the minimum wage to $10 per hour. It will get worse in January when the minimum wage rises to $11 per hour.

“This decision by St. Louis City leaders, and now the Missouri Supreme Court, will lead to job losses for many minimum wage workers in the City of St. Louis,” said Ray McCarty, president and CEO of Associated Industries of Missouri. “The notion that money grows on trees and employers will just pay workers more without impacting other parts of their business is simply ridiculous.”

If employers must pay higher wages to some, they must raise prices, lower other costs, or reduce the total number of minimum wage workers. Also, a cascade effect will happen as workers that are currently paid above minimum wage expect higher wages as the minimum wage increases. The higher local minimum wage, combined with the earnings tax imposed in the City of St. Louis, will encourage more businesses to locate outside the City, making it more difficult to attract and retain employees in businesses in St. Louis City.

“The City has traded short-term gain for some workers for longer term job loss for some of the very workers they have sought to help,” said McCarty. “The Missouri Senate may still enact a bill to prevent this action and we hope they are able to pass HB 1194 and 1193,” said McCarty.

AIM happy to see tax cut discussions, but advocates broad based tax relief for ALL Missouri employers

AIM president Ray McCarty said today he was glad to see Governor Jay Nixon is participating in conversations to reduce the tax burden on Missouri taxpayers, but notes there is need for greater understanding of the types of taxpayers that would benefit from AIM’s tax cut proposals.

“Last week’s announcement by Governor Nixon is a good first step toward our goal of reducing the tax burden for all Missouri taxpayers, including Missouri employers, and increasing our ability to compete for jobs in a global economy,” said Ray McCarty, president of Associated Industries of Missouri.

Governor Nixon recently issued a statement in which he says, “I have never been opposed to making responsible changes to our tax code.”  The governor requests cuts in tax credit programs and full funding of the foundation formula for K-12 education.  He cites legislation that will be sponsored by Senator Will Kraus that will include these components and a requirement that state revenues grow by more than $200 million before tax cuts take effect.

But the governor also said he was opposed to providing any tax reductions on “…what’s called ‘pass-through’ business income.”  He continues, “…these tax cuts primarily benefit well-heeled corporate partnerships like law firms, and there is no evidence, anywhere, that these schemes do anything to create jobs.”

In fact, many businesses are organized as “pass-through” entities and would benefit from AIM’s business income deduction, such as that contained in HB 1253, sponsored by Rep. T.J. Berry, and SB 496, sponsored by Senator Eric Schmitt.  This includes sole proprietorships in which one owner owns the business; partnerships where husbands and wives or multiple individuals own the business; subchapter S corporations; and other types of business organizations.

According to 2010 tax year data published by the Internal Revenue Service, only 16% of S corporations were “professional, scientific and technical” firms such as law, lobbying and accounting firms.  Such firms also accounted for only 16% of the net business income of all S corporations.  The remaining 84% of S corporation income was reported by manufacturers (16%), wholesale trade businesses (13%), healthcare professionals and hospitals (11%), construction businesses (8%), retail trade (7%), finance and insurance companies (7%) and the rest was reported by various other industries.

IRS data also confirm 94% of all businesses would benefit from the business income deduction supported by AIM for “pass-through” entities.  AIM supports broad-based tax relief that would help ALL businesses in Missouri, including regular corporations that are responsible for nearly one-fourth of all net income reported on tax returns.

“Associated Industries of Missouri will continue to work toward a balanced and measured approach in providing tax relief that will help Missouri job creators be more competitive in the global marketplace, and we look forward to continuing the conversation with the governor and all legislative leaders in the coming weeks,” said McCarty.

Nolte’s and AIM’s Broad Based Tax Relief Bill Set For Senate Hearing

Following a meeting this afternoon between Senate Ways and Means Chairman Chuck Purgason, Representative Jerry Nolte and I, Senator Purgason posted a hearing of his committee for tomorrow on HB 1639, the Broad Based Tax Relief Act of 2012.

In the meeting, Senator Purgason indicated his willingness to move the part of the bill forward that would reduce the tax burden of EVERY Missouri employer by 50% over five years.

“Associated Industries of Missouri applauds both Senator Purgason and Representative Nolte for their leadership in providing real tax relief for employers – employers that will be free to use the additional money to create jobs and invest in their businesses, improving the Missouri economy,” said AIM President Ray McCarty.

Click here for a video that explains the bill.  The legislative session ends Friday at 6:00 p.m.

Senate Progress on Business Priorities and Other Bills Slows Down

February 1 – The Missouri Senate is rumored to debate the Employment Law Reform Bill, SB 592 (Sen. Lager), when they resume session today at 10:00 a.m.  The bill was “laid over” last Wednesday following lengthy floor debate and filibustering by Senate Democrats.  The bill is a high priority for Associated Industries of Missouri and is part of the Business Climate Agenda for 2012 supported by every major business organization in Missouri.  The bill would return Missouri’s Human Rights Act to use the same standards as federal human rights laws and provide protection for legitimate whistle-blowers while blocking claims from alleged whistle-blowers that are not disclosing an illegal act.  All Senate committee hearings that were originally scheduled for later today have been canceled, possibly in anticipation of lengthy floor debate today.

Senate debate also stalled yesterday on the Paycheck Protection Act, SCS SB 553 and 435 sponsored by Senators Brown and Crowell.  The bill would submit to voters a proposal that would require a public employee’s permission before union dues could be used for political purposes and prevent the withholding of union dues or “fair share fees” from public employees’ paychecks.  Because the bill affects only public employees, AIM has not taken a position on this bill.

Although the Worker’s Compensation and Second Injury Fund Reform bill, SB 572 sponsored by Senate Majority Floor Leader Tom Dempsey, was approved by a Senate committee more than two weeks ago, the bill has yet to be added to the calendar of bills that may be debated in the Senate.  Discussions are continuing to develop the bill in a way that satisfies objections by Senator Jason Crowell, who stated in the committee hearing on the bill that he would prefer to end the Second Injury Fund, rather than continuing the Fund with reforms, and that he wanted to add language that was approved during Senate debate last year.  In particular, that language would prohibit subrogation of worker’s compensation payments when an employee obtains a judgment from a third party that is responsible for a toxic exposure that causes the employee’s injury.  This bill is a high priority for Associated Industries of Missouri and is also part of the Business Climate Agenda for 2012.

We will continue to keep you posted of any progress, or lack thereof, on our priority bills.  Please be sure to enter your email in the area to the right of our blog page at a4gb.wordpress.com to receive updates via email automatically.

Senators Amend Employment Law Reform Bill

January 27 – The Missouri Senate adopted one amendment to the Employment Law Reform bill and rejected several others in debate Wednesday evening.  You will recall from previous blog articles that this bill would change the standard to prove discrimination from the current “contributing factor” to a “motivating factor” standard, meaning the employer took the action because of the protected criterion of the employee.  For example, plaintiff’s attorneys currently can claim the employer obviously knew the employee was female and that fact must have played at least 1/1000 of a percent in the decision of the employer to take action against the employee.  The employer is left trying to defend themselves that the fact the employee was a woman did not enter into the decision to dismiss the employee, but it is very hard to prove in court with this low standard of proof.  Our bill would use the federal standard for such cases, requiring the plaintiff to prove the employer was motivated by discrimination when dismissing or taking other action against the employee.

The first amendment, proposed by Sen. Victor Callahan (D-11), would have excluded age discrimination cases from the change to “motivating factor”.  In effect, this change would have meant that plaintiffs alleging age discrimination would continue to enjoy the lower standard of proving age was a “contributing factor” in the employer’s decision to dismiss the employee – a much lower standard than is required under the federal law. The amendment was defeated on a 8-25 vote that fell along party lines, with Republicans opposing the amendment and Democrats supporting the amendment.

A substitute amendment for the second amendment (which we will examine in a moment) would have removed the “motivating factor” language altogether, essentially defeating the purpose of the bill.  That substitute amendment, proposed by Sen. Jolie Justus (D-10), was defeated on a voice vote.

The Senate adopted Senate Amendment 2, sponsored by Sen. Bob Dixon (R-30).  The amendment would exclude cases alleging “disparate impact” from the change to the “motivating factor” standard.  A “disparate impact” violation occurs when an employer takes an action or adopts a policy that appears to be neutral but which causes a substantial adverse impact on a group that is protected under the discrimination laws.  The employer that is accused of “disparate impact” must show that the action or policy served a legitimate business goal of the employer and was not intended to be discriminatory.  It is our understanding that in these cases, the case law already places the burden of proof on the plaintiff to produce evidence that proves the employer’s practice or action was not in furtherance of their legitimate business goals, so this amendment does not appear to negatively impact employers.  The amendment was adopted on a unanimous voice vote.

Before wrapping up debate on the bill, Sen. Lager offered Senate Amendment 3 which clarifies that the damage caps in the bill would not apply to housing discrimination cases – a point that opponents had claimed would have caused the bill to be noncompliant with federal law.  Sen. Lager’s amendment was pending when the Senate ended debate this week on the bill.

More action on the bill is expected next week.  You may recall Governor Jay Nixon vetoed similar legislation last year.  It is our hope we can pass the bill and that the Governor will either sign the bill, or we will succeed in obtaining the necessary votes to override his veto this year.  We will keep you posted of developments.

To receive email updates when this blog is updated, please enter your email in the upper right hand corner of the blog.  Associated Industries of Missouri exists to promote the interests of employers in Missouri. If your business would like to join our efforts, please call our office at 573-634-2246.