2022 End-of-Session Report on the Colorado General Assembly

Date: May 15, 2022

NFIB gives Legislature a D- grade for passing a half dozen small-business-harmful bills

While there were a few pieces of legislation passed in the 2022 session of the Colorado General Assembly that will be helpful to the state’s job-creators, many others will increase costs on Coloradans and small businesses exponentially.

As of this story’s May 15 posting, Gov. Jared Polis has signed two of the following bills in law (noted below). The remaining seven await his approval or veto.

The Good

HB 22-1027 extends until October 1, 2022, the time for small retailers to begin using the sales-and-use-tax destination-sourcing rules. The rules were initially established by the Colorado Department of Revenue in reaction to the US Supreme Court’s South Dakota v. Wayfair decision, which stipulated businesses collect sales taxes at the point of delivery rather than the point of sale. This extension will allow small businesses to make the necessary preparations to implement available software-enabling compliance. (Signed by governor)

SB 22-124 would give businesses that choose to do so a workaround the federal cap on state and local tax (SALT) deductions. As of Jan. 1, 2022, the Colorado Act allows a pass-through entity to elect to be taxed at the entity level, which permits business income to be taxed to the entity itself rather than to individual owners. Prior to SB 22-124, this option was only available to C-Corps.

SB 22-238 would temporarily reduce residential and commercial property tax assessment rates, providing $700 million in savings over two years for Colorado homeowners and businesses. Property values across the state are rapidly rising. Because voters repealed the Gallagher Amendment in 2020 assessment rates are no longer constrained.

The Bad

HB 22-1071 states that in a class action under the Colorado Consumer Protection Act, a successful plaintiff may recover actual damages, injunctive relief allowed by law, and reasonable attorney fees and costs. Businesses could likely be targeted, and attorneys now will attempt to have these cases elevated to class action status. (Signed by governor)

SB 22-161. In 2019 an agreement was reached between NFIB and other business groups with the Colorado Department of Labor. The agreement led to the passage of HB 1267, which redefined wage theft as criminal theft. An agreement was reached expanding parameters under which an employer who knowingly withheld payment of earned wages would be penalized. SB 22-161 goes against the agreement by tilting the field in favor of the employee who would now be allowed to file a civil action for any infraction.

SB 22-234 will put $600 Million dollars into Colorado’s insolvent Unemployment Insurance Trust Fund, leaving a balance of approximately $400 Million dollars. NFIB Colorado fully supported putting this money into the fund. What it did not support is the unchecked expansion of benefits and the addition of new programs and beneficiaries who will be eligible for payments. NFIB Colorado believed SB 22-234 should have been divided into two separate bills.

The Ugly

HB 22-1244 would create a new program to regulate a subset of air pollutants, referred to as “toxic air contaminants,” which are defined as hazardous air pollutants, covered air toxics, and all other air pollutants that the Air Quality Control commission designates by rule as a toxic air contaminant. The bill creates additional reporting requirements on top of the current rigorous reporting requirements for air pollutant sources. This will be very costly for many small businesses.

HB 22-1317 would attempt to restrict the use of Restrictive Employment Agreements. Under current law, a noncompetition restriction cannot be enforced against a worker who isn’t “executive and management personnel.” The bill would allow the Department of Labor to determine at which level of compensation a noncompetition agreement could be enforced. These restrictions can impede protections taken by employers to prevent the theft of customer and vendor files.

HB 22-1355 would require the Colorado Department of Health and Environment to designate a nonprofit organization to implement and manage a statewide program that provides recycling services to covered entities in the state. The program would be funded by annual dues paid by producers of products that use covered materials. Covered materials are defined as packaging materials and paper products that are sold, offered for sale, or distributed in the state. This program would be the first of its to be implemented in the United States. Several other similar programs have faced constitutional legal questions still to be resolved.

 

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