New federal laws a boon for local craft brewers
The GOP tax plan, federal changes related to unions and marijuana, and a recent directive regarding free internships and paid employment are just a few of the dynamics at the national level that will have an impact on local businesses.
Signed into law on Dec. 22, the Tax Cuts and Jobs Act significantly reduces the income tax rate for corporations and eliminates the corporate alternative minimum tax, among other benefits for large companies. Architecture and engineering firms, as well as investment services such as brokerage and investment advisory services, stand to gain from a new deduction for qualified business income. Technology and real estate companies also will benefit from the new tax plan, according to Moss Adams.
A reduction in the federal excise tax for craft breweries drew cheers throughout Portland when the plan was unveiled. Brewery owners will now pay $3.50 per barrel for their first 60,000 barrels compared to the $7 per barrel they were paying before.
Art Larrance, co-founder of the Oregon Small Brewers Coalition and owner of Beaverton's Cascade Brewing, illustrated the impact by noting a brewery that produces 3,000 barrels will save $10,500 in excise taxes.
"I think everybody is going to use that money to pay for increased labor costs and buy equipment," he said. "This has been attempted for years and thankfully it was included in this tax bill."
Representatives from the Northwest Cider Association and the Oregon Distillers Guild could not be reached for comment in time for publication about how the reduced excise tax may or may not impact their members.
Marijuana still murky
Attorney General Jeff Sessions' recent reversal of an Obama administration policy that directed federal law enforcement authorities not to pursue individuals in states that have legalized recreational marijuana has generated some uncertainty for local owners and customers of pot shops. The policy, called the Cole Memo, also provided some legal protections for marijuana businesses operating in states that allow and regulate cannabis sales.
Dan Grinfas, of counsel with Portland's Buchanan Angeli Altschul & Sullivan, said other business owners have simply adhered to federal laws regarding cannabis use all along.
"Most of my employer clients in Oregon are still saying they have a zero-tolerance policy when it comes to employee marijuana use," he said, adding the Oregon Supreme Court has previously ruled that federal law trumps state law when it comes to the issue. Medical marijuana, however, poses a murkier dilemma.
"We now have 28 or 29 states that have medical marijuana laws and require employers to accommodate employees who use it, so it's still in flux and getting more complicated," Grinfas said.
Donald Trump's appointees to the National Labor Relations Board have overturned several Obama-era policies, including the Browning-Ferris joint employer test and a law allowing "micro-units" of employees to unionize. The latter reversal will make it much more difficult for unions to get their foot in the door when there are only small groups of employees in micro-bargaining units, he said.
The NLRB's revision of employer handbook policies should actually help business owners, Grinfas noted. Previously, the NLRB had invalidated many employer policies due to language it deemed as overbroad, such as "civility," working "harmoniously" with others, conducting oneself in a "positive and professional manner," as well as policies on social media, confidentiality, at-will employment and the use of cameras or recordings in the workplace.
Under the new standard, the NLRB will use a balancing test that considers the extent of the possible impact of the policy on employees' rights against the employer's legitimate business justifications for the policy.
"I think a lot more employer policies are going to survive under that standard," he said.
In addition, the U.S. Department of Labor recently announced an updated, seven-part test that attempts to more clearly define who is classified as an unpaid intern, a trainee and a paid employee. The new version of the test focuses on who gains the primary benefit from the arrangement — the employer or the person in the internship/training program.
"It will be easier now, I think, for employers to have nonpaid interns without the risk of them turning around and saying, 'I'm really an employee and I should be paid and receive worker's compensation and all of that,'" Grinfas said.