NEWS RELEASE: Training funds and tax fairness legislation returned to Missouri employers

The Missouri General Assembly has voted to protect Missouri employers, returning vital training funds and protections for employers in tax court.

Lawmakers voted to override Gov. Nixon’s veto of more than 50 line items in the state budget, including $900,000 to the Missouri Works job-training program.  Missouri Works provides customized training resources and assistance to existing businesses and start-ups through a partnership with Missouri Community Colleges and other local educational agencies.

The Missouri Chamber strongly supported returning these funds to our employers,” said Missouri Chamber President and CEO Daniel P. Mehan.  “These are proven programs and vitally important to the employers that depend upon this training.”

The General Assembly also overwhelmingly supported the veto override of Senate Bill 829, legislation ending an unfair bias against many of the state’s employers.  Senate Bill 829 is sponsored by Sen. Will Krause, a Republican from Lee’s Summit. The bill was handled in the House by Rep. Denny Hoskins, a Republican from Warrensburg.

The bill would ensure that all taxpayers are presumed innocent when the Missouri Department of Revenue chooses to bring them to court in a tax dispute. Under current state law, companies with more than 500 employees and a net worth of greater than $7 million are actually presumed guilty in the state’s tax courts. All other taxpayers are presumed innocent in tax disputes.

“This bill addresses that basic issue of fairness. Current law holds that certain employers are guilty until proven innocent.  That’s just not right,” said Daniel P. Mehan, Missouri Chamber president and CEO.  “Why should we treat one class of taxpayer differently from the rest?”

Securing this legislation has been a priority of the Missouri Chamber of Commerce and Industry for more than a decade.  Prior to 1999, all employers were considered guilty until proven innocent in tax court.

“The Missouri Chamber has pushed to incrementally change this provision year after year and this veto override marks the final step in that process.  The job is finally finished!” Mehan said.

In addition to the change in income tax disputes, SB 829 also requires the revenue department to prove its case in all sales tax exemption disputes.  This provision will be a benefit to both small and large employers.

The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business organization in Missouri, representing almost 3,000 employers, providing more than 425,000 jobs for Missourians.

Right to Work talks continue in House committee

The discussion about making Missouri a Right to Work state continued this week in a House committee.

On Tuesday, Jan. 21, the House Committee on Workforce Development and Workplace Safety heard testimony on House Bill 1053, filed by Rep. Donna Lichtenegger, R-Jackson, and House Bill 1143, filed by Rep. Bill White, R-Joplin. Both bills would end the practice of employees being required to join a union as a condition of employment. Rep. Lichtenegger’s bill would put the proposal to a statewide vote.

During the hearing, advocates for Right to Work, including the Missouri Chamber of Commerce and Industry, pointed out how more and more states are adopting Right to Work legislation. If Missouri fails to act soon, the state will find itself at a competitive disadvantage compared to the 24 states that have already adopted Right to Work, including six of Missouri’s eight border states.

“While the Missouri Chamber and pro-business legislators have worked for years to create a compelling case for business growth and expansion in Missouri, Right to Work status remains a big issue that employers truly consider when deciding where to invest,” said Jay Atkins, general counsel and director of governmental affairs for the Missouri Chamber. “It is promising to see our legislators taking a proactive approach and making this change a priority this session.”

The House committee considering these bills has already also heard testimony on House Bill 1099, sponsored by Rep. Eric Burlison, R-Springfield, which contains similar provisions.

For more information about Right to Work issues, please contact Jay Atkins, general counsel and director of governmental affairs for the Missouri Chamber, at jatkins@mochamber.com or by phone at 573-634-3511.

Don’t punish Missouri taxpayers for drafting error, says Missouri Chamber of Commerce and Industry

 The Missouri Chamber is strongly urging Gov. Nixon to sign House Bill 253 despite a drafting error that was made by Nixon’s Department of Revenue (DOR) in language the department provided to bill drafters.  The main provisions of the bill would reduce small business taxes, cut the corporate tax rate in half and lower individual taxes by $384 million, phased in over ten years.  The bill also guarantees the state would receive at least $1 billion in future revenue growth before the reductions would take effect.

However, the governor distributed a press release today citing concerns that additional language within the bill – language that would allow Missouri to take steps toward securing sales tax from internet sales – would cost Missourians who use prescription drugs $200 million annually.  Commonly known as the streamlined sales tax, the measure has been pushed by Nixon’s Department of Revenue for years and the department gave assurances to lawmakers that this was the appropriate language to implement it.  In his State of the State address, Gov. Nixon called on lawmakers to pass this streamlined sales tax bill.

“Missouri taxpayers should not be punished for an error made by Nixon’s Department of Revenue,” said Tracy King, Missouri Chamber vice president of governmental affairs.  “There is a way to work around the error, as the streamlined sales tax provision would not go into effect until January 2015.  We urge the governor to sign the bill and allow lawmakers to fix the drafting error when they are back in Jefferson City during a special legislative session or in the 2014 Legislative Session.”

The legislation was a priority of the Missouri Chamber on several levels.

“One of the strongest economic development tools we can provide is broad-based tax relief, which is contained in this bill,” said King.  “It allows existing businesses to keep more of their earnings to reinvest in workers and expansion.  At the same time, it gives prospective employers a strong reason to move to our state.  What’s more, it gives workers an opportunity to keep more of their paychecks.”

The streamlined sales tax language was filed in at least five other bills this legislative session and all bills contained the language provided by Nixon’s Department of Revenue.

“What is so frustrating is that DOR had time to vet this language before this bill was passed,” said King.  “Every time a bill is filed or any version of the bill is changed through the legislative process, the department is required to thoroughly review and report its impact and make recommendations for changes.  This didn’t happen and now Missouri’s business community and the taxpayers in this state will lose millions due to this oversight if the governor chooses to veto this bill.”

The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business organization in Missouri, representing almost 3,000 employers, providing more than 425,000 jobs for Missourians.

 

General Assembly addresses Second Injury Fund insolvency and secures workers’ comp reforms after years of impasse

JEFFERSON CITY – Employers will be facing significantly less financial and legal liability as a result of the Missouri General Assembly’s work and final passage of Senate Bill 1 today.  The Missouri House gave final approval to the hard-won compromise and the legislation is now heading to the governor’s desk for signature.

“This is an important victory for Missouri employers,” said Dan Mehan, Missouri Chamber president and CEO.  “Working through the General Assembly, employers have taken these issues out of the hands of activist courts and the Trial Bar, and we are taking responsible measures to fix them.  Missouri employers and employees will be better off tomorrow than they are today as a result of this hard work.”

SB 1 contains provisions to address the Second Injury Fund and provide benefits for employers.

  • Most important, SB 1 limits the types of claims that can be run through the Second Injury Fund.  The fund had been greatly expanded over the last decade to cover claims that should not have been part of the fund, the main reason the fund became insolvent in the first place.  The bill removes all permanent partial disability from SIF, which is 80 percent of all SIF claims
  • The bill provides a long-term plan to pay off the $1 billion in liability that currently exists within the system.  Currently the Second Injury Fund is $32 million in the red, with more than 1,200 people with outstanding claims.  However, more than 30,000 claims are pending adjudication, saddling Missouri employers with great financial liability.
  • SB 1 also reduces the interest rate from 9 percent to 5 percent that employers are currently paying on outstanding claims.  This will save employers millions of dollars annually.

Years of impasse on this issue has resulted in claimants taking their case to court in order to secure benefits they have been awarded under the law.

“Letting the courts decide this issue likely would have resulted in large rate increases to fund a broken system,” said Dan Mehan, Missouri Chamber president and CEO.  “Employers fund the workers’ compensation system.  Employers are on the hook to pay the existing liability within Second Injury Fund.  It is only fair that employers have a say in how this problem is fixed.  We are grateful that this legislative body listened.”

In addition, the compromise brings all occupational diseases back under the workers’ compensation system.

  • Nine toxic exposure conditions will be eligible for enhanced remedy of up to $150,000 and guaranteed death benefits.
  • The toxic exposure condition of mesothelioma will be eligible for $500,000 in enhanced remedy.
  • An employer can opt to have coverage for toxic exposure under work comp policy, to pay for remedy out of a pool to be administered by the Department of Labor, or address any mesothelioma cases in circuit court.

“This option gives employers the choice on how to handle these risks,” said Mehan.  “Rather than continue to let occupational diseases be a target for trial attorneys, SB 1 provides protections for both employers and employees.  Currently, employees can take common ailments such as carpal tunnel syndrome and repetitive motion injuries to the courts, requiring months and thousands of dollars to resolve.”

The bill brings the system closer to where it had operated for 80 years.

“There is a reason no other state in the nation has occupational diseases outside of the worker’s compensation system,” Mehan said.  “It goes against the very reason workers’ compensation system was created.  We want workers to receive the care they need to be made whole, quickly and efficiently.  We want them to receive all that is coming to them, not have to pay 40 percent back to trial attorneys.  In exchange, employers want the protection from being brought into court for these types of injuries.”

The Missouri Chamber applauds leadership and the bill sponsor, Sen. Scott Rupp and Rep. Todd Richardson for their work on the issue.

The Missouri Chamber of Commerce and Industry (www.mochamber.com) was founded in 1923 and is the largest business association in Missouri, representing almost 3,000 employers providing more than 425,000 jobs for Missourians.

Economic development efforts working in Missouri

As Missouri lawmakers brace for another week of economic development discussion in the special legislative session, they can look to past efforts and know their work is paying off for Missourians. It’s been reported that General Motors was considering expansion of its Wentzville plant that would create up to 2,000 new jobs, nearly tripling the plant’s current workforce of 1,200 employees.

“This is economic development at work,” said Daniel P. Mehan, president and CEO of the Missouri Chamber of Commerce and Industry.  “This expansion would not only bring 2,000 new jobs for Missouri workers, the economic impact of an expansion this size would be felt across the entire region.”

Last summer, lawmakers worked to pass a valuable tax incentive package targeting auto manufacturers called the Missouri Manufacturing Jobs Act.  The Act allows expanding auto manufacturers, to keep a portion of its employee withholding taxes in exchange for investments made by the company.  This incentive could come into consideration for major expansions like General Motor’s Wentzville plant.

This summer, lawmakers have been embattled, once again, in the economic development arena.

“When people work, everyone wins,” Mehan said. “As economic activity increases, state revenues increase and that improves Missouri’s ability to invest in education, transportation and other state programs.”

Provisions within the package would be targeted to support creating an international air cargo hub at Lambert International Airport in St. Louis.  Other provisions target data centers, an emerging industry that projects more than $12 billion investment over the next three years.  Science and technology companies, another high-growth segment of the economy, are also the focus of the jobs plan.

“We need to continually work to make sure Missouri is making the most of every investment,” Mehan said.  “That’s why lawmakers are back in Jefferson City.  Some would rather stall debate over philosophical differences than get to work and make sure Missouri remains competitive.  I hope we can overcome the differences and put these critical tools in place for working Missourians.”

Employer liability for the Second Injury Fund is growing at an alarming rate

More than 100 injured workers are waiting for benefit payments from Missouri’s Second Injury Fund that have been awarded to them under current law, with no promise of when their benefits will be paid.  More than 30,000 workers are waiting to have their cases heard through SIF, with no idea when their cases will be resolved.  That’s because Missouri’s Second Injury Fund – designed to protect employees who are reinjured on the job – is broke and there is not enough money to pay all benefits.

Revenue flowing into the fund has decreased drastically due to high unemployment and the decline in workers’ compensation premiums, which establishes the base for SIF funding.  In 2007, SIF revenue from the 3-percent surcharge totaled $70 million.  In 2011, SIF revenue from the 3 percent surcharge totaled $40.4 million.  Meanwhile, current expenses are approximately $55 million annually.  As a result, over the course of several years, the fund has been sliding toward insolvency.  In 2009, Attorney General Chris Koster suspended all settlement offers, which has resulted in a backlog of 30,000 cases.

“Right now, Missouri is just sitting back while cases continue to mount and injured workers go without the benefits awarded them,” said Daniel P. Mehan, president and CEO of the Missouri Chamber of Commerce and Industry.  “It’s bad policy and in the end, Missouri employers are going to be holding the bill.  But in the meantime, we have injured workers that have been awarded benefits under the law and they are not getting paid.  No responsible employer wants to see their workers treated that way.”

Liability on Missouri employers, who are ultimately responsible for the fund by law, is growing at an alarming rate.  Two thousand claims were added to the list of pending cases since July, bringing that number to 30,000.  It will cost tens of millions of dollars to adjudicate these cases. The unpaid liability to permanent total disability awardees has grown from $4.9 million in July to $7.1 million as of Sept. 1.  What’s more, interest on that amount continues to accrue at 10 percent.

Because of inaction by the Missouri Legislature to fix the problems with Missouri’s SIF over the years, Missouri is now in a position where reform alone will not resolve the outstanding liability without additional revenue.  The Missouri Chamber has pleaded with lawmakers to address Missouri’s failing Second Injury Fund for several years.  Unable to reach legislative resolution, the issue now lies in the hands of the courts.  At least two lawsuits have been filed against the SIF, and more are expected.

Over the last decade, claims to the Second Injury Fund have expanded greatly – paying general claims against employers who do not carry workers’ compensation coverage and a broad range of pre-existing conditions.

“The Missouri Chamber strongly disagrees with this policy, but the way the law is written, it will continue to be interpreted in this way.  That is why the Missouri Chamber has been so adamant that lawmakers address this issue,” Mehan said.

Section 287.220.1 of the Missouri Revised Statutes states that “If any employee who has a preexisting permanent partial disability whether from compensable injury or otherwise … receives a subsequent compensable injury resulting in additional permanent partial disability … shall be paid out of a special fund known as the second injury fund.”

Legislation to address the fund was blocked in the final days of the 2011 Legislation Session.  Unfortunately, Missouri employers will have to wait until 2012 to take another run at making change.

For more information on SIF, please contact Richard Moore, assistant general counsel/director of regulatory affairs for the Missouri Chamber, at 573.634.3511 or rmoore@mochamber.com.

Lawsuit over interpretation of occupational disease further fuels need for legislative fix

Employers were recently dealt a blow by the Western District Court of Appeals in a decision involving the legal issue of whether or not occupational diseases are covered exclusively by Missouri Workers’ Compensation Act.  The Western District Court of Appeals, in a 7-2 decision, ruled that workers’ compensation does not serve as the exclusive remedy for employees who may contract long-term, repeated exposure diseases, not set forth explicitly in statute. 

The Court, in a strange twist, did not address whether an employee was precluded from filing a claim under the Worker’s Compensation Act for repeated exposures of occupational diseases while also filing a simultaneous civil lawsuit for the same issue.  This results in uncertainty for employees and employers alike as to what remedy or forum a claim for compensation should be sought.  Under this decision, it appears an employee could pursue remedy through the workers’ compensation system and the courts.

“The Missouri Chamber of Commerce and Industry warned of this potential problem during the last legislative session, but the issue was left unresolved,” said Richard AuBuchon, Missouri Chamber general counsel.  “This decision brings the issue to a much higher level of concern, and should send an even louder alarm to the Missouri Legislature that the problem needs to be addressed.”

The Missouri Chamber recently warned that 2005 worker’s compensation reforms failed to include the term occupational disease in the exclusive remedy section of the workers’ compensation statute.  Instead, the language of the statute now focuses on the term “accident,” implying that only a single isolated event leading to an employee injury can be eligible for workers’ compensation benefits.  For decades employees who filed a worker’s compensation claim were precluded from filing a civil lawsuit against the employer for the same injury leading to the worker’s compensation claim.  It appears this long-standing rule of law is now gone for long-term, repeat-exposure occupational diseases.

During the 2011 Legislative Session, the Missouri Chamber advocated legislation to include long-term, repeated-exposure claims of occupational diseases in the statute.  The legislation was blocked by the Missouri Legislature, through work of trial attorneys wanting more litigation against Missouri employers to garner more legal fees on this issue.  More litigation on this issue does nothing to protect employees.

“Increasing litigation delays compensation to employees for injuries or occupational diseases and weakens businesses,” said AuBuchon.  “The only people who win by keeping this error in the law are trial attorneys.  As lawsuits over this issue continue to mount, it is hurting employers who are already struggling to protect and create jobs.”

The case can be found at: http://www.courts.mo.gov/file.jsp?id=49158.

For more information on this case, please contact Rich AuBuchon, general counsel/legislative affairs for the Missouri Chamber of Commerce and Industry, at 573.634.3511 or raubuchon@mochamber.com.