Business office or store shop is closed/bankrupt business due to the effect of novel Coronavirus (COVID-19) pandemic. Unidentified person wearing mask hanging closed sign in background on front door.

JLF Submits Public Comments on Proposal for Harmful Business Rules

“Adding more and more red tape to an economy is like adding more and more bricks to the trunk of your car. Over time the engine loses fuel efficiency, the car can’t go as fast, and it takes longer and longer and costs more and more to reach mileposts than before. Take the bricks out, and you will restore speed and performance. Take the red tape out and keep more from creeping in, and the state’s economy will then grow faster and better.”

That’s how John Locke Foundation’s Director of Regulatory Studies, Jon Sanders, illustrates the impact that burdensome rules and regulations have on the economy.

Now, let’s take this analogy a step further. Imagine the impact of COVID-19 government shutdowns on businesses is like the car being in a severe accident. The car starts and drives, but not very well. Now consider the car’s performance after adding more bricks to the vehicle after the accident. The extra load would almost be catastrophic for the car’s sustainability.

A recent petition for rulemaking filed before the North Carolina Department of Labor (DOL) would have the exact same impact on businesses in North Carolina if it were implemented. The petition asks DOL to impose stringent and expensive COVID-19 protocols and reporting requirements on North Carolina businesses because of an alleged lack of safety precautions taken by North Carolina employers. The extra layer of regulations would be the equivalent of adding several bricks to the car after the accident and expecting it to run.

We at the John Locke Foundation believe the proposed rule the petition asks for is unnecessary and would be extremely harmful to North Carolina business. The rule is unnecessary because a large portion of what it asks for is already mandated or recommended by top health agencies. Businesses’ livelihoods depend solely on the employer’s ability to provide a safe environment for both employees and consumers. Also, taxpayers will be on the hook for much of the cost of these rules and requirements because they also apply to state employers. Lastly, the cost of these rules requested by the petition would fall disproportionally on the small employers as they are much less likely to absorb the costs than large employers.

Our organization submitted the below public comment to DOL to urge a rejection of the petition as it would do much more harm to already struggling businesses than good.

Ms. Jill Cramer

General Counsel and Rulemaking Coordinator

North Carolina Department of Labor

1101 Mail Service Center

Raleigh, NC  27699-1101

Dear Ms. Cramer,

The John Locke Foundation is a North Carolina-based, public policy think tank dedicated to successful communities and limited, constitutional government. We write today to voice our opposition to the petition for rulemaking filed on 10/12/2020 by the North Carolina Justice Center, the Lawyers’ Committee for Civil Rights Under Law, and the Southern Poverty Law Center. The proposed rule purports to be a measured response to alleged shortfalls in employers’ handling of COVID-19 workplace safety. In fact, however, while it is true that governments, businesses, and employees across the state have all felt the enormous shock from the COVID-19 pandemic, subjecting employers to compliance with the proposed rule would only exacerbate the impact, especially for small employers and their employees.

Business is not as usual during the pandemic for public and private-sector employees. There is far less consumer activity than in normal times because of the perceived risk of contracting the virus in public. Employers who are fortunate enough to still engage in commerce have a powerful incentive to implement proper COVID-19 safety precautions during this time. To operate their businesses successfully, employers must protect employees and provide enough safety precautions so that consumers feel safe to enter the business. Many businesses have already implemented safety plans, which could be for nothing if the proposed rule is adopted. Public awareness of the virus is high, so for businesses to neglect these safety precautions would be at their peril.  

There exist numerous safety requirements for employers mandated by the governor through executive order and recommendations from the Centers for Disease Control (CDC), the Occupational Safety and Health Administration (OSHA), and the North Carolina Department of Labor (NCDOL). The burdensome reporting, preparedness, and facility requirements outlined in the proposed rule would subject employers across the state to excessive costs above and beyond what these firms have already incurred. Taxpayers would also bear the cost of many of these requirements as state entities from local municipalities to state government employers would be subject to the arduous task of compliance. As state and business revenue continue to be in flux, the last thing employers need is a vast set of new rules with which to comply.   

The blanket requirements in the proposed rule apply to “every employer, employee and place of employment in North Carolina within the jurisdiction of the North Carolina OSHA.” However, compliance with the new rules outlined in the petition would disproportionately affect smaller firms. Larger firms operating in North Carolina are better able to absorb the additional overhead and liabilities than smaller, locally owned firms may not. The proposed rule could drive a significant number of small firms out of business and discourage new ones from forming. This would be disastrous for North Carolina workers and the state as a whole.

While North Carolinians will feel the impact of COVID-19 for a significant amount of time, the state should not impose this perpetual set of rules and requirements on already struggling businesses. Businesses and employers across the state need to act quickly as they respond to the ever-changing environment during the pandemic. If the government were interested in this end, state officials should consider reducing red tape, regulatory restrictions, and policy carve-outs for the well-connected. The state should be working with the business community, not taking away its power to adopt freely safety measures that allow firms to continue to operate under significant government restrictions already in place.

Thank you for the opportunity to comment on the petition for rulemaking, which we believe is bad policy. We would welcome the opportunity to discuss this important matter in greater detail.

While our organization believes the proposed rule is a bad idea, the issue here brings up a larger one about proposed rulemaking in the state. The John Locke Foundation has steadfastly supported Regulatory Reform Acts, which help to reduce unnecessary red tape that hinders economic growth. We also support the introduction of a “rules throttle” in the state. This type of regulatory safeguard would require legislative scrutiny on all rules that impose significant costs on the private sector.

A streamlined rulemaking process and review process is essential for freedom in the state. The legislature is the lawmaking body that is accountable to the people, not unelected administrative bureaucrats. Our rulemaking process should reflect that balance.

The proposed rule discussed above would be disastrous for North Carolina workers and businesses. The state should be working with these businesses who have experienced unprecedented consequences from the virus and subsequent government shutdowns, not taking away their freedom to impose the safety precautions they believe are necessary.

Jordan Roberts / Health Policy Analyst

Jordan joined the Locke Foundation in the summer of 2018 as Health Care Policy Analyst. He analyzes state and national health policy issues with an eye toward removing governm...

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