Health, Wage Bills Among Congress’ Unfinished Business

Suppose a business owner spent all year completing a project and then handed it over to a client, only to have the client nix it and order the whole thing reassembled . . . in three weeks.

That’s a little like the job Congress faces this month as it copes with President Clinton’s veto in late September of a $790-billion tax package.

Many pieces of legislation were bound up in the tax bill. Congress is scrambling to repackage them and wrap up other measures before the legislative session ends this month.

Here are key bills that could affect small business:

* Health care: There are pluses and minuses for small-business owners in a measure that combines portions of HR 2990, sponsored by Rep. Jim Talent (R-Mo.), with portions of HR 2723, sponsored by Rep. Charlie Norwood (R-Ga.) and which passed the House last week. On the plus side, the self-employed would be able to get a tax deduction for 100% of their health insurance premiums by 2001, up from 60%.

Also, the $600,000 limit on medical savings accounts would be lifted for small businesses, as would a host of conditions that had to be met before small-business owners could create medical savings accounts for themselves or their employees. The conditions were so restrictive that few small-business owners could afford to take advantage of medical savings accounts.

“What we had in place was the 1996 Kennedy-Katzenbaum medical savings account, which was a very restrictive test and not much of a success,” said David D’Onofrio, a spokesman for National Small Business United, a small-business activist group. “What this bill does is blow the doors off on limitations [so as] to keep costs reasonable for small business.”

In addition, the measure would make it easier for small-business nonprofit associations and trade groups to create national health plans. It would exempt, for example, national chambers of commerce from federal laws that make it hard for them to create such plans. Plus, it would lift a number of regulations on health plans created on a countywide or statewide basis for small businesses.

But, small businesses could face added legal liability under hazily worded provisions of the proposal, D’Onofrio said. Employers who have a “direct involvement” in what is covered can be sued along with the health insurance provider if something goes medically awry for an employee, the bill says. Whether that means employers would be liable simply for choosing one type of plan over another could be a question that might embroil small firms in court proceedings, D’Onofrio said.

The Senate, meanwhile, has passed a health-care bill that does not include the increased liability for small-business owners. Before the end of the legislative session this year, both houses of Congress will need to hammer out a compromise on the issue.

* Minimum-wage increase: With the economy soaring, momentum is building for a minimum-wage increase. A $1-an-hour increase over two years to $6.15 seems most likely, though no bills have been introduced yet.

Meanwhile, small-business advocates are lobbying to make a wage increase more palatable. Sen. Christopher “Kit” Bond (R-Mo.), chairman of the U.S. Senate Committee on Small Business, is working on a series of proposals. They could include increasing the per-child tax credit, phasing in the repeal of the estate tax, immediate 100% health insurance deductibility for the self-employed and increasing the business meal deduction from the current 50% to 80%. Others in Congress are considering removing the unemployment insurance tax surcharge and allowing hourly workers to take time off in lieu of overtime pay. But all of it is in the discussion stage.

* Pension reform: Included in the tax bill were a number of measures to relax restrictions on pension plans for small employers, pushed by Reps. Rob Portman (R-Ohio) and Ben Cardin (D-Md.). The benefits include making it easier for small-business owners to offer pension plans for employees by streamlining the reporting and deduction rules, increasing the maximum contribution for Savings Incentive Match Plans for Employees--a popular pension option for small companies--to $10,000, and eliminating IRS user fees for small businesses. Small-business advocates are hoping the measures can be revived.

* Ergonomics: Bond has proposed legislation that would delay the federal Occupational Safety and Health Administration’s establishment of rules for workplace ergonomic safety. But in the face of Democratic opposition, he temporarily withdrew an effort to withhold funds from the agency. Bond has pledged to bring the issue up again before Congress adjourns.

Bond believes OSHA should not initiate the rules process until the National Academy of Science assesses the validity of existing ergonomics research. The academy study is due in a year.

Meanwhile, a study released last month by the Office of Advocacy, an independent department of the federal Small Business Administration, revealed that small companies would be severely hurt by ergonomics requirements. OSHA estimated that full program costs for a 19-worker business in a high-risk injury category would come to $4,075. But the SBA study concluded that costs for a 15-worker firm in the same category would actually be as high as $63,579.

Although the OSHA regulations would take as long as two years before they are proposed, reviewed and adopted, Bond wants to stop the process now because proposed rules are “used as a foot in the door that is never pulled out,” said Craig Orfield, Bond’s communications director. Because the House already has passed a measure similar to Bond’s that would delay OSHA action, organized labor seeks to prevent a similar bill from passing in the Senate, Orfield said.

* SBA funding: Despite dire predictions from SBA officials that it will have to lay off thousands of employees unless Congress increases its budget, there is no sign that anyone favors providing the $994.5 million requested. Indeed, the amounts approved by both houses of Congress are $250 million short. Many lawmakers object to the SBA’s $45-million request for controversial new programs called New Market Initiatives that are touted by President Clinton and Vice President Al Gore.

It looks like a lose-lose situation may be shaping up for the agency. If it doesn’t receive the desired funding and, true to its word, extensive layoffs result, the agency--and its ability to provide help to small-business owners--could be severely harmed. But if the SBA manages to provide service even in the face of layoffs, then the agency’s credibility is severely harmed.

Times staff writer Vicki Torres can be reached at (213) 237-6553 or at vicki.torres@latimes.com.