Missouri Business Leaders Urge Tort, Workers’ Comp, Employment Law Reforms

January 24, 2011

Business leaders in Missouri are asking state lawmakers for reforms that they say will help protect and create jobs. Among the priorities, which proponents are calling “Fix the Six,” are bottom-line issues for Missouri employers: employment law reform, workers’ compensation reform, tort reform, unemployment insurance reform, franchise tax cap and elimination of the minimum wage escalator, according to the Missouri Chamber of Commerce.

Daniel P. Mehan, president of the Missouri Chamber of Commerce and Industry, said the Fix the Six agenda would have “no fiscal impact on state revenues.”

The Fix the Six Coalition is the result of several employers and employer organizations meeting for the past several months to form a unified agenda of core business issues. Businesses from every corner of the state and of every size and type have participated and joined the coalition.

Fix the Six Agenda:

Employment Law Reform: The Fix the Six legislative priorities seek to address the erosion of discrimination law that is putting Missouri business at a competitive disadvantage. One important change would reform the Missouri Human Rights Act regarding discrimination claims to more closely reflect federal Title VII protection. The MHRA has been interpreted in ways more plaintiff friendly than the federal statutes. Missouri also sets a lower threshold for employer liability under the MHRA than is required under federal laws and the laws of neighboring states. This lower threshold makes it much easier for employee plaintiffs to avoid summary judgment, to get claims to an expensive jury trial, and to impose liability on the employer and individual supervisors. Another change sought would cap compensatory jury awards and impose lower limits on punitive damages. Also among legislative priorities is a tightening of whistleblower protection, so that it applies only in cases when an employee alerts authorities to an actual illegal act.

Workers’ Compensation Reform: Unintended consequences of workers’ compensation reforms passed in 2005 could catch businesses off guard, because these changes are being interpreted to exclude protections for incidents that have been covered by the workers’ compensation system for decades. Following the court case Robinson v. Hooker, employees who sustain work-related injuries may sue co-employees for negligence in a civil action. Missouri employers may find it difficult to recruit and retain employees in key supervisory and safety positions without offering to indemnify them against lawsuits from co-workers. In the Franklin v CertainTeed Corp case, the court ruled that occupational diseases are no longer the exclusive domain of workers’ compensation. As a result, such cases may instead be pursued in civil court for damages against employers – vastly increasing the time and expense necessary to resolve cases. The Fix the Six Coalition will advocate legislation to reverse these dangerous court cases and codify the intent of the 2005 reforms.

Franchise Tax Cap: Missouri’s corporate franchise tax also impedes Missouri’s competition with other states. Missouri is one of a few states that imposes both a corporation income tax and a franchise tax. The corporate franchise tax is an antiquated tax that was enacted as a temporary tax in 1914 before there was a corporate income tax. Still imposed today on Missouri’s large employers, it represents double-taxation and should be eliminated. The Fix the Six agenda contains a provision to limit the annual assessment of corporate franchise tax at 2010 levels and seeks to phase out the tax over time.

Minimum Wage Escalator Elimination: Missouri’s minimum wage law allows an automatic inflation adjustment based on any increase in the cost of living as measured by the Consumer Price Index (CPI). This automatic increase could result in a higher minimum wage in Missouri than the federal minimum wage. Missouri stands out among its neighboring states with its minimum-wage escalator and is poised to rise to a level higher than any other adjoining state. The Fix the Six Coalition seeks to eliminate the automatic escalator so that Missouri’s minimum wage levels do not exceed federal levels.

Tort Reform: A specific area in Missouri’s tort system that is putting the state at a competitive disadvantage is the current law for assigning fault and business liability known as modified joint and several liability. It means that businesses can be held liable for the entire cost of litigation if found to be 51 percent or more at fault in the case. Businesses can be on the hook for the entire cost of a claim and settlement, even if there are multiple businesses at fault for alleged damages. In fact, a Missouri business can be held liable for the damages of a third party that was not in the litigation, but is also at fault. Several neighboring states have reformed laws to move toward a pure several liability system to determine fault and liability, apportioning cost between all parties according to the percentage of fault attributed to each. The Fix the Six Coalition also is advocating for Missouri to adopt a pure several liability system.

Unemployment Insurance Reform: Missouri’s sagging economy and growing unemployment rates during the economic downturn has bankrupted the state’s unemployment insurance trust fund and is pointing Missouri employers toward a tax increase to pay back federal loans. Missouri has borrowed more than $722 million from the federal government to pay unemployment claims. Employers will begin losing Federal Unemployment Tax Act (FUTA) tax credits this year if the state does not repay its loans, which next year could result in a tax increase of $21 per employee employed by a Missouri business. That amount doubles the following year and triples in the year after that. Missouri could avoid this increase through bonding. The ability to issue bonds to repay these loans to the federal government already exists in the law, but the term of the bonds must be lengthened. Without lengthening the term, the principal and interest payments would exceed the amount allowed under the Hancock provisions of the Missouri Constitution. Among the Fix the Six legislative agenda is a provision to lengthen the term of bonding to aid in paying back federal UI loans, reducing interest and securing FUTA credits.

Participating organizations include the Missouri Chamber of Commerce and Industry, the NFIB, Associated Industries of Missouri, the Missouri Merchants and Manufacturers Association, the Missouri Grocers Association, the Missouri Restaurant Association, Associated General Contractors of Missouri, the St. Louis Regional Chamber and Growth Association, the St. Louis Regional Business Council, and the Springfield Area Chamber of Commerce. Together, these associations represent thousands of Missouri businesses, collectively employing more than 500,000 Missouri workers, according to the coalition’s announcement.

Source: Missouri Chamber of Commerce and Industry

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