Almost every business has to face some kind of regulations from government agencies in order to do business in the U.S. or elsewhere. Many of those regulations are designed to protect consumers or spur competition. But there can also be some negative effects for businesses even in the most well-intentioned regulations. Here are 25 regulations that could potentially impact your small business in some way.
Regulations That Hurt Small Businesses
The Affordable Care Act
Often referred to as “Obamacare,” the Affordable Care Act has been a hotly contested law that impacts businesses and individuals alike. Businesses with more than 50 employees could face penalties for not supplying health coverage options to employees. And many have also had to deal with increasing premiums. But certain rules could change under the new administration, as President Donald Trump and Congress have already taken steps toward at least a partial repeal.
Federal Tax Code
The federal tax code involves many different requirements and regulations for businesses of different sizes. And being that it’s so complicated and all-encompassing, it can represent a major burden for small businesses that have to dedicate time and resources to determine exactly what is required of them.
This one may be a bullet small businesses have dodged. But a relatively new rule related to paying overtime for workers could have added an extra burden. Though the rule has been blocked by federal court action, businesses of all sizes could have seen a major change in the exemption limit that determines which employees are eligible for overtime pay.
Government Contractor Pay
For businesses that have government contracts or subcontracts, there’s a rule that states workers must be paid at least $10.10 hourly for work done under those contracts.
Mandatory Sick Leave
There’s also a rule that states those government contractors must provide employees with up to eight days of paid sick leave a year.
Independent Contractor Rules
Since more and more businesses are utilizing the help of independent contractors over traditional employees, the rules regarding those contractors are changing. In some cases, if the contractor relies on a business for most of their work and income, the business has to meet some of the same requirements as it would with a traditional employee.
Safety and Health Act
Businesses must provide safe and sanitary work environments to employees, according to the Safety and Health Act of 1970. While creating a safe environment is almost certainly a plus for any business, this also means that many have to undergo frequent inspections and other time-consuming processes.
Reporting Requirements on Gender, Ethnicity and Pay
To combat discrimination and wage disparities, the Equal Opportunity Employment Commission wants to require businesses with 100 or more employees to report how many employees they have in different gender and ethnic groups, and how much those employees are paid. This could lead to more time spent on paperwork and potentially lead to even more obstacles for businesses that have legitimate reasons for potential pay disparities.
Clean Water Act
While most businesses would agree that protecting sources of clean water is a good thing, there’s a part of the Clean Water Act that some feel could restrict business activity. The rule states that wetlands can also be protected bodies of water. So businesses or property owners located on or near wetlands could face a number of obstacles when trying to get any construction or renovation work done on their property.
Coal Emission Rules
The coal industry is strongly regulated by clean air rules. So small businesses, including those that supply equipment to large coal plants, could see the need for their products or services phased out. However, there’s currently an appeal case in the works that could see some rules change.
Carbon Emissions Rules
There are also carbon emission rules that apply to energy providers. While small businesses aren’t often responsible for generating energy themselves, these regulations can potentially lead to increased prices for energy customers, which can include small businesses.
EPA’s Risk Management Program
Though this program is more likely to impact large businesses than small businesses, the EPA’s risk management program can lead to businesses expending certain resources toward creating emergency and risk management plans.
You can’t include false or misleading claims in your advertising or marketing materials. Businesses that do so could face fines or other penalties. And again, most small businesses wouldn’t object. But you also need to be able to back up any claims made in your advertising with proof that can withstand a challenge. This could lead to some extra work for you even though the act is meant only to protect consumers from false information.
Fair Packaging and Labeling Act
Businesses that sell food or other packaged goods are required to state all ingredients on the label, along with information about the product itself, the location of packaging and distribution. All information must also meet the standards of the Truth-In-Advertising Act, or businesses could face penalties.
If you sell any food based products outside of your state (aside from certain products that are monitored instead by the USDA) you’ll have to register as a facility and face inspections and other regulations with the FDA.
State and Local Inspections
If you have a smaller or home-based business where you make food items to sell — even if you only do so within your state — you’re still subject to inspections and other regulations from your local or state governments.
Agriculture businesses are also subject to a number of different inspections and regulations depending on the food products or other items manufactured or sold by businesses.
Joint Employment Rules
Franchise businesses and subcontractors that work with other businesses could be considered “joint employers” with those other parties. For those small businesses, that can mean facing regulations meant for businesses with more employees and higher revenue.
The federal minimum wage for non-exempt employees is currently $7.25. So businesses must pay at least that much hourly to regular employees. However, many states have set higher minimum wages for employees recently.
Businesses with employees are required by law to provide certain types of insurance, including Workers’ Compensation, unemployment insurance and in some cases disability insurance.
Immigration and Nationality Act
Businesses hiring for jobs based in the U.S. can only hire U.S. citizens or those who have obtained work visas. So businesses must complete the necessary paperwork and submit forms to prove compliance.
Employee Retirement Income Security Act
If you have full-time employees, you may also be required to provide retirement benefit options to them.
Identity Theft Regulation
If your business collects financial or personal information from customers, you could be held liable if that information is stolen or used in any identity theft schemes.
Fiduciary Rules for Advisors
Designed to protect investors from conflicts of interest by investment advisors, the Department of Labor’s fiduciary rule places some extra compliance costs on professionals that provide financial advice and guidance. While this could potentially help to protect small businesses that use these services, it could also potentially lead to increased costs.
State Licensing Requirements
Not all business regulations come from the federal level. Each state also has its own set of licensing requirements that businesses there must comply with. And researching and keeping up with those requirements can take valuable time and resources from small businesses.
Capitol Photo via Shutterstock
And don’t forget that all the oversight/enforcement of these regulations incurs costs that are paid for with tax dollars, so they’re hurting people twice!
After reading through all the regulations you listed, I couldn’t see a one that didn’t seem like common sense. The employees and customers need to be protected! In each case I could very well imagine abuse and neglect taking place if the regulation wasn’t in place, and I’m sure most of you have witnessed or experienced violations of some of these codes. I realize most small businesses don’t operate in a shady manner. These rules are to protect us from the bad actors. And they also make a more fair playing field for the businesses trying to do it right.
Most of these regulations are reasonable and necessary. I’m certainly in favor of reducing the complexity of tax reporting, though. That is too complex for both business and personal. Bottom line is, most of the regulations were put in place to prevent some type of abuse. If the abuse is never there, the rules aren’t needed. However, many state and local regulations exist that are nothing but a business protection rule, such as licensing for things as simple as braiding hair or grooming pets. These are intended to reduce competition and should be eliminated.