Another Assault on Small Business and Economic Freedom

Another Assault on Small Business and Economic Freedom

by: former Colorado State Senator Tim Neville

Here’s a quick test. Ask your neighbors or friends about the importance of small business to their lives. Whether owners or employees, you are bound to hear some very personal and passionate stories about the challenges they faced and overcame to compete, grow, and prosper.

A January 16, 2012 article in Business authored by Jeff Moore referenced a number of statistics, including the following eye -openers:

  • Small business employs over half of all private sector employees.
  • Small business generated 64% of net new jobs over the past 15 years.
  • Small business produces 13 times more patents per employee than large patenting firms.
  • Small business creates more than half of the nonfarm private gross domestic product.
  • Small business made up 97% of all identified exporters and produces over 30% of the known export value in 2007.

In a nutshell, small business is our most important engine for economic growth and individual prosperity. So why would certain Colorado legislators propose a new law to further “hamstring” small businesses?

HB 13-1136 is an example of such a bill, euphemistically titled by its sponsors: “Concerning The Creation of Remedies In Employment Discrimination Cases Brought Under State Law”. This bill specifically targets small businesses with 15 or fewer employees that are currently protected under federal law from compensatory and punitive damages sought in employment discrimination cases.

As the bill points out, damages “would be in addition to the remedies allowed under current law, namely, front pay, back pay, interest on back pay, reinstatement of hiring, and other equitable relief that may be awarded”. It further states, “Compensatory damages are to compensate a plaintiff for other pecuniary losses, emotional pain and suffering, inconvenience, mental anguish, loss of enjoyment of life, and other nonpecuniary losses”. The bill also eliminates the age threshold on age discrimination suits and allows those over 70 to now sue.

HB 13-1136 also offers no assurance of reimbursement of attorney fees to small business owners in the case of frivolous lawsuits, and allows either party to demand a costly jury trial.

What about taxpayer cost? According to the fiscal note, the average employment discrimination case requires 300 hours of legal services. Based on the current fiscal note, the bill will require an additional 3+ full time state employees to administer the program, with an estimated cost of over $360,000 annually.

What about the cost to the average small business? The potential cost to litigate and the effect of lost productivity on small businesses would be disproportional. Many start-up companies could be put out of business if faced with these costs, let alone paying a potential $50,000 judgment (highest allowed by the bill for companies with 1-15 employees).

Despite protests and widespread opposition by small business organizations, HB 13-1136 passed through its House committee with few changes. It now awaits approval by House Appropriations committee before moving to the Senate.

In my life I’ve had the fortune to work in a variety of businesses as employer and employee, ranging in size from 2 to 25,000. Each played an important role in helping me achieve my personal goals and take care of my family obligations.

Legislators should champion small businesses as the engines which create new jobs, provide economic growth and opportunity, and enhance the economic freedom and individual liberty of millions of Coloradans.

Instead, sponsors of HB 13-1136 seem more interested in growing government jobs and providing more litigation for courts and attorneys, while further burdening the small businesses on which so many Coloradans truly depend.

Photo used under creative commons license. Photographer: banspy. No modifications were made.