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A Letter from the President

February 24, 2020

By SBAM President Brian Calley

In last week’s letter we discussed administrative rule making and a handful of proposed rules that impact small businesses – some negatively. In times of divided government, the executive branch often relies on (and sometimes pushes the limits of) administrative rule making when they fail to gain traction in the legislative process. Some of those rule sets end up being decided by the judiciary. We find ourselves in court defending the interests of small businesses more and more often these days as anti-business efforts become more sophisticated and are pursued in all three branches of government. Here are a few recent issues where SBAM has played leading roles.

A few years ago, the Trump Administration changed some federal rules that allowed small businesses to band together and purchase health insurance and spread risk the same way that big businesses do. This was a huge win for small businesses, especially sole proprietors who were allowed into small business pools. SBAM quickly moved to create a small business insurance pool under those new rules and impact was bigger than even we expected. Those businesses who took advantage of this change reported savings of 20-65% with similar, but in most cases better, coverage.

Almost a dozen state attorneys general (thankfully this did not include the Michigan Attorney General) filed a law suit to stop small businesses from forming their own insurance pools, claiming instead that they should be forced into the Affordable Care Act exchange. The AGs won in the DC circuit court and the ruling applies nationwide. This has already resulted in lower coverage at much higher costs for small businesses. That case is currently tied up in federal appellate court and the more beneficial small business rules are on ice, for now. SBAM is directly and actively engaged in this legal action hoping to restore the ability of small businesses to compete under the same, more advantageous rules that bigger businesses do. While we expect the court of appeals to rule this spring, I would not be surprised to see this action litigated up to the US Supreme Court.

At the state level, for a little more than a year, SBAM and a handful of other business organizations have been working to secure a previous legislative win on an issue that has spent some time before our state supreme court. At the end of 2018, the legislature adopted a compromise to an citizen initiated petition to increase minimum wage and paid leave time requirements. The compromise was still expensive for small businesses, but it had a more moderate impact than what was originally passed. The previous Michigan Attorney General indicated that the legislature could amend such a petition during the same session in which it was originally adopted. We at SBAM agreed. But the new Attorney General made some initial moves toward changing that petition.

The notion of undoing this legislative compromise inserted a fair amount of uncertainty into the market place. Which rules were businesses to follow? The original petition or the legislative compromise? Recognizing this potential uncertainty, the legislature asked that the supreme court rule early on the matter in what is known as an advisory opinion. This bypasses the lengthy and expensive lawsuit route and simply asks the court to weigh in. SBAM and our business coalition were among the respondents who did present our case when the state supreme court asked for arguments.  In the end, the supreme court decided not to issue an advisory opinion.

We have mixed feelings about this outcome. In the short term, the court’s lack of action means that the legislative compromise stands and small businesses can operate as they currently are. However, it also leaves the door open to a legal challenge which would start at the court of claims and likely spend years making its way through the legal system before coming back to the supreme court. So now we wait. If an additional challenge comes, we will be ready.   

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