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An Autocratic Presidency

By Karen Harned, Executive Director of the National Federation of Independent Business Small Business Legal Center

In his State of the Union address, President Obama announced that 2014 would be a “year of action.” Ironically, his first big move since then was to announce further delays to implementation of the Affordable Care Act (ACA). And again this month we hear about even more delays. So, does this mean the President was blowing smoke when he said this was a year of action?

If you are a supporter of the ACA, the President’s decision to further delay enforcement of essential ACA provisions may be frustrating—even bewildering. Of course, rather than acknowledging the delay for what it is, the Administration pronounced that it was giving “transition relief” for businesses that would otherwise be required to offer “affordable” health insurance options to their employees. How magnanimous!

Sure, this delay will come as a relief to some small business owners who were struggling to figure out how to comply with the mandate to cover higher premiums, without laying folks off. But a temporary delay is not a real fix. Moreover, the President is picking winners and losers here. Among the losers are those businesses that the President will require to comply with the mandate. Indeed, the President has arbitrarily chosen to enforce the Employer Mandate against some businesses (those with 100 or more employees), while essentially exempting others (those with 50-99 employees). But who is the President to decide who the law will, and will not, apply to?

The ACA was abundantly clear in spelling out the law: Beginning in 2014, employers with 50 or more full-time employees must provide affordable health insurance options to their employees—meaning an offer of coverage that will cost the employee no more than 9.5% of his or her income. But last July, without regard to what the ACA actually says, the Obama Administration announced that it would not enforce the Employer Mandate until 2015.

And now the administration is saying that it will not fully enforce the Employer Mandate until 2016.But this partial delay of the Employer Mandate is even more concerning because the Administration has essentially decided to rewrite the law as it sees fit with executive orders—deciding who it will require to comply, with which provisions, and when.

Even more concerning is that the President’s “transition relief” regulations require businesses to justify why they are making personnel changes, or laying-off employees. Apparently the measure is designed to prevent businesses from laying off workers in an effort to avoid serious financial liabilities under the Employer Mandate.

But, this new rule–applicable to businesses with over 100 employees—is especially alarming because it gives us good reason to worry that the Administration will eventually seek to force even smaller businesses to justify why they make personnel changes. Given that there is nothing in the ACA authorizing the President to force employers to justify personnel decisions, one must ask: what is stopping the President—and his czars—from creating similar extra legal requirements for other mandates?

To be sure, the President’s new rule—requiring employers to justify personnel changes—goes beyond picking winners and losers; he is now affirmatively pronouncing rules without any authority in the law. So, while delaying implementation of essential provisions of the ACA may seem contrary to the President’s pledge to make 2014 a year of action—the reality is that the President is doing some pretty big things. He is now rewriting the ACA as he goes—without any basis in the law other than the proverbial: “Because I said so.” And he is doing all of this to serve his expedient—ever shifting—political goals.

Accordingly, there should be no surprise that the small business community is concerned about regulatory uncertainty. To be sure, there is no way for anyone to know what to expect out of Washington when one man is moving the goal posts with mere pronouncements of Presidential authority.

Needless to say, many of us have serious questions about what the Administration is planning to do next, and over the legality of these fly-by-night regulatory decisions. Accordingly, the NFIB Small Business Legal Center recently submitted a letter to IRS Commissioner Hon. John Koskinen asking several hard-ball questions. We specifically hope the IRS will disclaim the authority to require business owners to justify personnel changes once the Employer Mandate is fully enforced. But we also want the IRS to explain its authority for arbitrarily enforcing the mandate against some businesses, and for ignoring important procedural rules that are designed to ensure open and transparent governance.

Karen Harned serves as Executive Director of the National Federation of Independent Business Small Business Legal Center, a post she has held since April 2002.  Prior to joining the Legal Center, Ms. Harned was an attorney at a Washington, D.C. law firm specializing in food and drug law, where she represented several small and large businesses and their respective trade associations before Congress and federal agencies.  She also served as Assistant Press Secretary to U.S. Senator Don Nickles of Oklahoma from August of 1989 to March of 1993.  Ms. Harned received her B.A. from the University of Oklahoma in 1989 and her J.D. from The George Washington University National Law Center in 1995.  She is admitted to practice in the District of Columbia.

As Executive Director of the NFIB Small Business Legal Center, Ms. Harned comments regularly on small business cases before federal and state courts, as well as the U.S. Supreme Court.

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