Category: E-News – The Sentinel

Last week, the Pennsylvania Chamber of Business and Industry led a coalition of more than 70 chambers of commerce across the Commonwealth in calling on Governor Josh Shapiro and members of the General Assembly to improve Pennsylvania’s economic competitiveness by eliminating the state’s tax penalty on start-up businesses.

In a letter addressed to the governor and legislative leaders, the coalition highlighted the urgency of improving Pennsylvania’s tax treatment of Net Operating Losses (NOLs).

The coalition cited the negative impact of Pennsylvania’s current business tax and regulatory climate, noting that the state ranks among the worst in the nation for job seekers and key economic indicators. The Kauffman Foundation recently identified Pennsylvania as having the lowest rate of new entrepreneurs in the entire country.

“Governor Shapiro and leaders in the House and Senate have each acknowledged the need to improve Pennsylvania’s economic competitiveness,” the letter reads. “Improving the treatment of Net Operating Losses is a major step towards this goal. Pennsylvania’s 40 percent cap on NOLs is one of the most restrictive in the nation, hindering start-ups and cyclical businesses.”

The coalition emphasized the importance of increasing the cap on NOL deductions, which allow businesses to offset their tax liabilities with previous losses, as a means to attract more employers and reduce hurdles to entrepreneurship and business growth.

Net operating loss reform has emerged as a bipartisan priority in both the state House and Senate. The letter points out that 24 states have no cap on NOLs, while Pennsylvania is one of just two states that caps NOL deductions below the federal limit of 80 percent of taxable income.

“We appreciate the many proposals that policymakers and advocates have put forth to spur Pennsylvania’s economy and urge lawmakers to focus on competitiveness,” the letter continues. “We urge you to prioritize correcting Pennsylvania’s treatment of start-up businesses so the Commonwealth can compete on an equal playing field to attract entrepreneurs, new employers, and the jobs, economic development, and prosperity they bring to communities.”

Full text of the letter is available here.

 

You can find additional coverage of the letter in the following outlets:

• Pittsburgh Business Times
• Pennsylvania Business Report
• Lehigh Valley Business
• Law360

The House and Senate were in session last week and considered proposals related to employment, workers’ compensation, industry-specific regulation, zoning requirements, and more. Here is a rundown of last week’s legislative action relevant to employers:

 

Overregulating Food Processing Industry (H.B. 2235)

The House of Representatives voted 120-82 to pass House Bill 2235 last Wednesday.

This legislation proposes numerous mandates and a comprehensive regulatory framework specifically targeting the food processing industry.

Specifically, the bill proposes mandates on the food processing and meatpacking industries addressing a wide range of employment and workplace policies including dictating new employee orientation and training; workplace safety committees; among other areas.

The mandates in this bill are generally duplicative with mandates that exist under other state or federal laws and therefore likely to create compliance complications and expose employers to the penalties and civil actions outlined in the bill (CLICK HERE for our memo).

House Bill 2235 now heads to the Senate for committee consideration.

 

Pennsylvania Board of Finance and Revenue Appeals Reform (S.B. 1051)

The Senate voted 29-21 to pass Senate Bill 1051 last Tuesday.

This legislation would allow the Board of Finance and Revenue (BF&R) to consider late-filed tax appeals from the Department of Revenue (DOR) if the taxpayer shows good cause. It also establishes a settlement process at the BF&R as an alternative to the formal and lengthy court appeals process.

Taxpayers who disagree with a final decision made by DOR currently have 60 days to appeal the decision to the BF&R. Without the ability to accept late-filed appeals, cases are dismissed on a technicality rather than on merits. The ability to settle disputes at the BF&R will provide for a quicker and fairer resolution to tax disputes, particularly for smaller businesses that do not have the resources for a drawn-out appeals process or litigation in the Commonwealth Court.

We supported this legislation (CLICK HERE for our memo). Senate Bill 1051 now heads to the House Finance Committee.

 

Discouraging ‘Ghosting’ Interviews/Jobs (S.B. 1109)

The House Labor and Industry Committee voted 23-2 to advance Senate Bill 1109 last Wednesday.

This legislation clarifies existing Unemployment Compensation eligibility standards to codify that an individual is not eligible for benefits if they discourage their own employment.

Under current law, UC claimants are generally required to engage in an active search for work, including applying for open positions in their field, engaging in other work search activity, and interviewing for jobs. Unfortunately, employers report interviewing job candidates who admit they are only applying in order to comply with the work search requirement and often fail to show up for job interviews or work, known as “ghosting.”

This bill would clarify the law to disqualify claimants who discourage their own employment. It would not create any additional requirements for claimants who are searching or applying for work in good faith (CLICK HERE for our memo). The bill is pending before the full House of Representatives.

 

Zoning Reform for Housing Construction (H.B. 1976 and H.B. 2045)

The House Local Government Committee voted 14-11 to advance House Bill 1976 and voted 14-11 to advance House Bill 2045 last Wednesday.

H.B. 1976 would revise zoning laws to allow multi-family housing and mixed-use development in urban areas zoned for office, retail, and parking with existing water and sewer systems. Similarly, H.B. 2045 would require municipalities with more than 5,000 residents to permit the use of duplex, triplex, and quadplex housing in areas currently zoned for single-family residences only.

Pennsylvania employers continue to express their struggles in finding qualified workers to fill open positions. Plentiful housing can enhance employee satisfaction, reduce commute times, and attract quality, qualified workers.

We supported this legislation, which is now pending before the full House of Representatives.

 

Office of New Pennsylvanians (H.B. 1630)

The House State Government Committee voted 14-11 to advance House Bill 1630 last Monday.

This legislation would establish the Office of New Pennsylvanians to attract, retain, and embrace immigrants in the Commonwealth.

Pennsylvania employers continue to suffer from a dramatic workforce shortage. This legislation helps ensure that immigrants, who comprise a crucial component of Pennsylvania’s workforce, are equipped with the resources necessary to be productive members of our society and fill an array of job openings in critically in-demand fields.

House Bill 1630 is now pending before the full House.

 

Direct Deposit for Workers’ Compensation Payments (S.B. 1232)

The Senate Labor & Industry Committee voted 11-0 to advance Senate Bill 1232 last Wednesday.

This legislation would allow employers to require payment of workers’ compensation benefits by direct deposit, as well as allow claimants to request payment of benefits by direct deposit.

The bill will modernize the Workers Compensation Act by establishing a regulatory framework to allow employers to make worker’s compensation payments by direct deposit, streamlining the process. These reforms were unanimously recommended by the Workers’ Compensation Advisory Council.

We supported this legislation, which is now eligible for a final vote in the Senate.

 

Pharmacy Benefit Manager Regulations (S.B. 1000)

The Senate Health & Human Services Committee voted 11-0 to advance Senate Bill 1000 last Tuesday.

This legislation would establish new limits on Pharmacy Benefit Managers (PBMs) including limits related to reimbursement, spread pricing, pharmacy networks, and rebate reporting. The legislation would also establish a mandatory dispensing fee to be paid to pharmacies.

The inclusion of a mandatory dispensing fee will significantly increase the cost of health insurance for employers and individuals. The PA Chamber encouraged lawmakers to continue to work with industry stakeholders on an alternative approach that will increase access while avoiding provisions that will significantly raise the cost of health insurance for employers and individuals.

We are opposed to this legislation, citing employer concerns about the bill (CLICK HERE for our memo). Senate Bill 1000 is now pending before the full Senate.

 

Employer 529 Contribution Tax Credit (H.B. 1745)

The Senate Finance Committee voted 11-0 to advance House Bill 1745 last Wednesday.

This legislation would create a credit for employer contributions to 529 tuition savings accounts. Any employer that contributes to an account owned by an employee under the Tuition Account Program would be able to claim a tax credit against the employer’s state tax liability.

The amount of the tax credit would be equal to 25 percent of the employer’s aggregate contributions made to accounts owned by employees during the tax year. The total amount of contributions that an employer may make to accounts owned by employees would not exceed $500 per employee during the tax year. The bill is pending before the full Senate.

Attracting and retaining the next generation of skilled, inspired workers is key to the PA Chamber’s mission and a major part of the multi-tiered workforce development strategy we’re working to implement across the Commonwealth.

How do we entice up-and-coming generations of talent to choose Pennsylvania as the ideal place to work, live, and STAY? One important priority is propelling students into inspiring internships that show them promising career paths; helping them develop the “hard” and “soft” skills that teach them on-site job training and what it means to be a model employee; and assisting them in meeting their academic goals while showing them that there are ample, exciting career opportunities right here in Pennsylvania!

“Through our world-class higher education institutions and diverse industries, Pennsylvania has an opportunity to reverse our brain drain problem and become a magnet for skilled workers and population growth. Offering and promoting internships are a great way to help educate and inspire the next generation of Pennsylvania workers while helping employers fill immediate needs,” PA Chamber President and CEO Luke Bernstein said. “The PA Chamber is leading by example. Two current PA Chamber employees began as PA Chamber interns. Our internship program, like so many others, provides students with experience in a variety of fields, including research, writing, technology, policy, communications, and event management – providing invaluable on-job training that will prepare them for the workforce.”

The benefits of internships – both for employers and for employees – are well documented. Research by Strada, an Education Foundation that collaborates with students, policymakers, and other stakeholders to strengthen the link between education and opportunity, shows that college-level employment rates are higher for those who complete an internship across several fields of study. Strada’s research also shows that students with paid internship experience have increased earning power and confidence for the future.

The PA Chamber encourages businesses of all sizes and industries to offer internships as a way to secure Pennsylvania’s long-term economic competitiveness.

In the spring 2024 semester, we welcomed Mackenzie Unger, a student in her final semester at Lebanon Valley College, as an Administrative Intern. During her time at the Chamber, Mackenzie engaged directly on a number of assignments for PA Chamber President Luke Bernstein and the PA Chamber Board of Directors.

“Mackenzie was an eager, intelligent, and committed intern during the months she spent here, and we were thrilled to have her as a member of our team,” Bernstein said. “Not only did she do a great job executing her assignments, but she was friendly, professional, and had a natural skill you really look for in an employee – a willingness to engage with the people around her. Any employer would be fortunate to have her on board.”

To read the full profile on Mackenzie, check out our blog post!

 

Join us NEXT Wednesday, June 12, from 10:30 a.m. to 11:30 a.m. for a FREE webinar regarding the impact of the U.S. Department of Labor’s new overtime eligibility standard, increasing the salary threshold exemption on the employer community.

DOL’s recent ruling increases the salary threshold at which employees may be exempt from overtime pay from $35,568 to $43,888 effective July 1; and then to $58,656 by the beginning of 2025, with automatic increases every three years based on wage data. The webinar will feature McNees Wallace & Nurick attorneys Adam Long and Austin Wolfe, who will discuss the significant implications of the DOL’s administrative action on Pennsylvania employers’ compliance with overtime pay, along with options and next steps you can take to protect your business! Earn continuing education credits for attending this hour of critical insights!

Register here.

The PA Chamber recently joined a national coalition of business associations in calling on Congress to pass bipartisan legislation to protect small business owners from excessive federal regulations.

 

In a letter led by the U.S. Chamber of Commerce and signed by more than 250 groups nationwide (including the PA Chamber and 18 local chambers of commerce in Pennsylvania), the signatories urged members of the House of Representatives to speedily consider and advance H.R. 7198, the Prove It Act of 2024.

 

This legislation would close loopholes in existing legislation (the Regulatory Flexibility Act of 1980) that federal agencies often exploit to impose unreasonable regulatory costs on Main Street employers. According to the U.S. Chamber, the annual cost of complying with federal regulations has risen by $465 billion since 2012 and now totals more than $3 trillion per year. This means a staggering 12 percent of the United States’ entire GDP is spent on regulatory compliance.

 

Furthermore, data from the U.S. Chamber Foundation reveals that small businesses are at a particular disadvantage when it comes to dealing with these regulations. For small businesses with 50 or fewer employees, the costs are nearly 20 percent higher than the average for all businesses.

 

The Prove It Act would close these loopholes by amending the Regulatory Flexibility Act to require federal agencies to be transparent about the costs on small businesses; force agencies to consider small business input when crafting new guidance; and provide for timely court review of whether these agencies are meeting their legal obligations to adequately consider small business in the development of federal rulemaking.

 

This bipartisan legislation would take necessary action to ensure that federal regulators listen to the small business community before imposing costly red tape on America’s innovators, community leaders, and job creators.