Last Week In the Legislature

Source: PA Chamber of Business and Industry

Members of the Pennsylvania House and Senate returned to Harrisburg last week to kick off the first voting session of the year. Here’s a rundown of some of the action that occurred last week in the Legislature relevant to employers.

Data Privacy (H.B. 1201)

The House of Representatives voted 139-62 to pass House Bill 1201 on Monday.

This bill would regulate the collection and use of consumers’ data by providing consumers with certain rights and requiring businesses to protect and limit collection of personal data.

The PA Chamber believes a national framework for data privacy regulation is preferable to protect consumer data, promote transparency, and provide regulatory certainty in the marketplace, rather than a patchwork of state and local laws. Congress, however, has not yet advanced consumer data privacy legislation, and in the meantime, 11 states have adopted data privacy laws.

We have advocated that if lawmakers are to advance data privacy legislation at the state level, they should look to states such as Virginia and Connecticut, which crafted their laws with input from the business community.

Several key PA Chamber recommendations have been incorporated into H.B. 1201, including exempting already regulated employers and ensuring may continue to offer popular customer rewards and loyalty programs. At the same time, concerns with the bill remain, including the low threshold for covered entities (currently triggered when an employer obtains the data of 50,000 individuals) and a short compliance window (six months) that will make it difficult for small businesses.

We urge lawmakers to continue working to improve H.B. 1201 and incorporating feedback from affected employers (CLICK HERE for our memo) as the legislation now heads to the Senate.

Employer 529 Savings Tax Credit (H.B. 1745)

The House of Representatives voted unanimously to pass House Bill 1745 on Wednesday.

This legislation would create a credit for employer contributions to 529 tuition savings accounts. Any employer that contributes to an account owned by an employee under the Tuition Account Program would be able to claim a tax credit against its state tax liability.

The amount of the tax credit would be equal to 25 percent of the employer’s aggregate contributions made to accounts owned by employees during the tax year. The total amount of contributions that an employer may make to accounts owned by employees would not exceed $500 per employee during the tax year. This legislation now heads to the Senate.

Lowering the Commercial Driver’s License Age (H.R. 322)

The House Transportation Committee voted unanimously to report House Resolution 322 out of Committee on Monday.

This resolution would urge Congress to pass legislation to allow individuals under the age of 21 with a Commercial Driver’s License to drive across state lines and participate in interstate commerce.

Trucking companies report significant workforce shortages, which is a challenge for their industry and the many businesses and customers that rely on trucking to move goods to market. While individuals can obtain a CDL in Pennsylvania at age 18, federal law prohibits drivers from crossing state lines until the age of 21, which limits opportunities at an early stage in their career and exacerbates workforce challenges for the industry.

We supported this legislation (CLICK HERE for our memo). It now heads to the full House for final consideration.

Social Media Access for Minors (H.B. 2017)

The House Consumer Protection, Technology & Utilities Committee voted 21-4 to report House Bill 2017 out of committee on Tuesday.

This legislation would require social media companies to monitor the chats of two or more minors on the platform and notify parents or legal guardians of flagged sensitive or graphic content. Additionally, the bill would require consent from a parent or legal guardian for anyone under 16 to open a social media account and notify parents or legal guardians if a child under 16 opens a social media account without consent. The bill would also prohibit data mining for users under the age of 18 and allow any individual to request the deletion of data that was mined while they were under the age of 18.

The bill originally included a private cause of action and concurrent jurisdiction for local district attorneys and other governmental entities such as school districts. The PA Chamber supported an amendment offered by Rep. Jim Marshall (R-Beaver) that instead gives the Attorney General exclusive jurisdiction. The amendment passed by a vote of 24-1.

This legislation now heads to the full House for consideration.

Critical Infrastructure Trespass/Vandalism (S.B. 819)

The Senate Judiciary Committee voted 9-5 to report Senate Bill 819 out of committee on Tuesday.

This legislation would increase criminal penalties against individuals who knowingly trespass onto or vandalize critical infrastructure facilities. The legislation also establishes civil liability and allows the owner of a critical infrastructure facility to recover damages from someone convicted of trespass or vandalism.

Assets such as water treatment facilities, pipelines, telecommunications, dams, ports, and manufacturing facilities are vitally important to the well-being of our economy and to the health and safety of our citizens. This legislation puts in place reasonable measures to protect these assets.

We supported this legislation (CLICK HERE for our memo), which now heads to the full Senate for consideration.

Clarifying Flexibility for Work from Home (S.B. 416)

The Senate Finance Committee voted 7-4 to advance Senate Bill 416 on Wednesday.

This legislation would clarify that the imposition of corporate net income tax for out-of-state employers shall not include employees who are residents of Pennsylvania and who work from home during fewer than 50 percent of their normal working hours on an annual basis.

Businesses have seen a significant increase in remote workers post-COVID-19. This legislation provides relief to out-of-state companies via an exemption from triggering the CNIT for their employees who are residents of Pennsylvania.

We supported this legislation (CLICK HERE for our memo), which now awaits further action by the full Senate.

Optional Entity-Level SALT Cap Workaround (S.B. 659)

The Senate Finance Committee also voted 9-2 to advance Senate Bill 659 on Wednesday.

This legislation would allow Pennsylvania partnerships or S-corporations to elect to recognize income from the operation of the business at the entity level, as opposed to the existing pass-through methodology used for income tax purposes.

The Tax Cuts and Jobs Act (TCJA) imposed a $10,000 limit on the maximum deduction taxpayers may claim for certain state and local taxes through 2025 on individuals but not business entities. This bill would shift state tax liabilities for pass-through entities’ (PTEs) income from the individual back to the PTE, providing relief to owners and shareholders.

We supported this legislation (CLICK HERE for our memo), which now awaits further Senate action.

The Senate Finance Committee also voted 7-4 to advance Senate Bill 1051 on Wednesday.

This legislation would allow the Pennsylvania Board of Finance and Revenue (BF&R) to consider late-filed tax appeals from the Department of Revenue (DOR) if the taxpayer shows good cause. It also establishes a settlement process at the BF&R as an alternative to the formal and lengthy court appeals process.

Taxpayers who disagree with a final decision made by DOR currently have 60 days to appeal the decision to the BF&R. Without the ability to accept late-filed appeals, cases are dismissed on technicality rather than on merit. The ability to settle disputes at the BF&R will provide for a quicker and fairer resolution to tax disputes, particularly for smaller businesses that do not have the resources for a drawn-out appeals process or litigation in the Commonwealth Court.