With a new year come new rules and regulations. However, most of the pressing changes that businesses in Southwest Washington will have to contend with in 2015 did not go into effect on Jan. 1.
Yes, on the first day of the year, the minimum wage and workers compensation rates climbed, and new Affordable Care Act provisions went into effect, but those are incremental changes that most businesses know to watch for.
Business leaders and lawyers are still watching to learn the full impact of statewide crowdfunding rules that went into effect back in November. Additionally, labor law changes coming later this year could change which white-collar employees must be paid overtime. And when state administrators issue water- quality rules this year, there could be costly implications for a wide array of businesses.
Here are some of legal changes Southwest Washington businesses are contending with at the start of 2015 – and more changes that are coming in the months ahead:
As of Nov. 1, Washington companies seeking to raise $1 million or less have access to a new tool for accessing capital: equity crowdfunding.
“Crowdfunding” refers to the increasingly popular technique of using the power of the Internet to raise large sums of money. For example, Vancouver company ProtoPlant Inc. posted a proposal to raise a modest sum of $2,250 to fund a project to develop 3-D printed electronics. Backers who pledge as little as $15 are promised a sample of the company’s product once it has been manufactured.
But “equity” – or ownership – has never been a part of the equation. Selling part ownership in a company has historically been a cumbersome and costly process, requiring careful navigation of state Department of Financial Institution and federal Securities and Exchange Commission rules, says Mark Sampath, a Vancouver-based corporate attorney.
Companies would have to prepare risk disclosures, issue private placement memorandums and follow rigid guidelines when sharing information with potential investors, Sampath says. And rules requiring startups to only work with accredited investors – mostly with net worth in the millions – made it impossible for small investors to participate.
Now much of that red tape is gone, and small investors are allowed to get in on the game – though federal rules still apply.
According to an analysis by Seattle startup attorney Joe Wallin, Washington companies that fill out the proper form and pay a $600 fee can raise up to $1 million through crowdfunding, and any citizen of the state can invest, though there are caps on how much each person can invest.
“This makes it a lot easier to raise money,” says Sampath.
President Barack Obama told the U.S. Department of Labor to modernize and streamline the overtime exemptions that apply to white collar workers, with recommendations due in February, says NIcole Tedrow, chief legal counsel of Washington trade group Associated Industries.
Federal rules currently require overtime pay for everyone earning less than $455 per 40-hour work week who meet a set of complex requirements.
Many expect that $455 per week minimum to change significantly.
“I don’t know exactly what ‘significantly’ means,” says Tedrow, adding that it’s possible that the job duties tests used to determine if an employee is exempt from receiving overtime could change.
“The Department of Labor will issue proposed rule changes and then employers will have the ability to comment,” Tedrow says. “Employers should definitely make their opinions heard. This could significantly increase the number of employees eligible for overtime.”
Gov. Jay Inslee’s proposal to tax carbon emissions is getting a lot of attention, but he faces an uphill legislative battle as Republicans take control of the state Senate. Instead, businesses should watch for the so-called “fish consumption” water quality emission standards – which will be coming out this year, regardless of politics, says Kriss Sjoblom, vice president of research at the Washington Research Council.
The question at the heart of the “fish consumption” issue may not seem to have anything to do with most businesses: How much fish do people eat, on average?
Right now, the state Ecology Department estimates that Washingtonians eat eight ounces of fish per month, on average, and that estimate guides water quality goals – pollution levels must be kept low enough so that eight ounces of fish per month is safe.
If the state raises its estimate of how much fish people eat, that will trigger stricter water quality restrictions that will affect a wide swath of businesses, Sjoblom says. River users will be affected, but so will companies involved in paving and construction.
Affordable Care Act
Bit by bit, the Affordable Care Act continues to introduce new rules that businesses must follow.
Starting this year, companies with 100 or more employees are expected to offer health insurance or to pay a fee of $2,000 per worker after the first 30 people on staff. Companies with 50 or more employees are also supposed to offer coverage this year, though they won’t face penalties until 2016.
But even small companies that are not required to offer health insurance are starting to feel the effects of the requirements, says Tedrow of Associated Industries. That’s because workers have learned they can increasingly change jobs to get coverage – which is putting new pressure on small companies to offer health care as a recruiting tool.
That’s a challenge for small businesses, which can’t always afford to offer health insurance plans, Tedrow says.