The annual sessions of the Connecticut General Assembly always generate anxiety—and at times frustration—for small business people like me.
It’s the uncertainty, mostly. Will lawmakers raise taxes? Are they going to hit us with new fees? What new workplace mandates will we be forced to implement? What will change for my clients?
The 2022 session has created more concern than in many previous years, mainly for what many of my peers and I see as a widening disconnect between some lawmakers and the challenges small businesses face.
We hear everyday from our clients about the issues they’re encountering as they attempt to navigate past the disruptions of the last two years and rebuild their businesses.
Small Business Challenges
The obstacles are significant: Connecticut’s worker shortage is the worst in the country, with our labor force losses since February 2020 representing 41% of the national decline.
Inflation is hitting hard, driving up costs. Supply chain bottlenecks continue to play havoc with production and shipping schedules.
COVID has not gone away, and the recent surge in cases is impacting shop floors, offices, and storefronts across the state.
Amid this backdrop, you would expect understanding and support from our elected officials.
Unfortunately, while many legislators do understand what small businesses are enduring, there are those who do not and their influence on policymaking is troubling.
Take the legislature’s Labor and Public Employees Committee for instance, which raised over 40 new proposed workplace mandates at the beginning of the session and passed more than half of those.
That’s a stunning assault on Connecticut small businesses, even for a committee long recognized for pushing an agenda that undermines economic growth and job creation.
Leadership of that committee seems either oblivious or dismissive of small business concerns and issues—one of the co-chairs even denies that we have a labor shortage.
This year’s proposals range from the ridiculous to downright dangerous: allowing striking workers to collect unemployment benefits for instance, or deputizing labor unions to bring enforcement actions.
Many of them are recycled from previous years, such as the bill restricting what employers can and cannot say in the workplace and another invalidating most noncompete agreements.
HB 5249, the noncompete bill, hits my business and my clients hard.
It voids agreements involving hourly workers, exempt employees who earn less than three times the minimum wage, and independent contractors earning less than five times the minimum wage.
Noncompete agreements provide critical protections for many industries and are already highly restricted to protect employees.
While there certainly are instances where these agreements are not appropriate, HB 5249 removes protections where they are most needed—as a shield guarding trade secrets, emerging technologies, client lists, and other confidential or proprietary information.
The bill’s use of minimum wage multiples as a threshold is especially problematic.
Connecticut’s minimum wage is indexed, making it a moving target where an agreement becomes invalid over time due to wage increases. Who will administer or watch this?
This threshold also invalidates non-compete agreements for very highly skilled individuals who have access to sensitive information, including design engineers, skilled tradespeople, and software developers.
And it’s a mystery why the bill voids agreements between a business and its independent contractors.
HB 5249 also invalidates agreements where the employment relationship is ended by an employer or where an employee terminates the relationship for good cause.
The practical impact of that provision? An employee terminated for misconduct is then not prohibited from stealing a former employer’s clients or revealing trade secrets.
Or an employee that misguidedly believes they had good cause to end an employment relationship could cause irreparable economic harm to an employer before a court could invalidate their claim.
Lawmakers must do better. Employers are their constituents too, as are our team members and the people who live in the communities that are home to our businesses.
Bills like HB 5249 are part of an all too familiar pattern of policymaking over the last decade that erodes job and economic growth in Connecticut.
It’s time to focus on solutions that make the state more affordable for everyone, reduce the high cost of doing business, and help hard-hit small businesses recover.
They must make it easier for employers to create jobs here—not harder.