OHIOCHAMBER.COM JANUARY/FEBRUARY 2016

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2016 economic forecast Action on key policy matters The race for 2016 candidates

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Employers penalized for hiring temp workers Join an Ohio Chamber committee Business drives the state’s workforce efforts What’s new for Ohio’s 2015 tax season

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FSLA rule changes and OSHA penalty increases An Official Publication of The Ohio Chamber of Commerce New penalties for not calling before digging Accel delivers full-service solutions 2016 Ohio Chamber political forecast

By Barry James and David James of James Investment Research

2016 ECONOMIC FORECAST: SLOW GROWTH, CHALLENGING MARKETS

ECONOMY goods orders have also fallen off this We expect manufacturing to have a We faced a range of hurdles in 2015. year. The strength of the dollar has tough time in 2016. The consumer is China experienced a significant caused a downturn in exports and healthy, but people remain cautious, slowdown, U.S. exports weakened sales for some firms. In fact, S&P which is why we do not expect to and corporate profits fell. As a result, 500 firms have now experienced two see a major pick-up here. China is our economy saw only sluggish consecutive quarters of negative having an impact on our trade, and growth. This is keeping with what we earnings growth. further troubles will cross over to our said last year, “In total, the economy economy, as well. During the election should grow in the coming year. Washington, D.C., has offered few year, we cannot expect Washington Unfortunately, with the heavy tax and pro-business policies and no relief to come up with meaningful regulatory burdens facing businesses, with the exorbitant U.S. tax rates. legislation to spur growth. Therefore, our economic growth will remain Meanwhile, Washington continues to we expect lower-than-normal (Chart 1: Consumer Fairly Healthy) below capacity.” increase spending, which is rarely as growth and even a negative quarter beneficial as politicians hope. As the or two. Consumers account for more than chart (Chart 2: Beware Washington two-thirds of our economy, and they Help) shows, spending cuts have led STOCKS are taking on added importance in to higher-than-normal U.S. economic After six years of generally rising 2016. Financially, consumers have growth, while spending increases do prices, the rally in the S&P 500 lowered their debt burden relative to not appear as helpful. slowed in 2015. The stock market is income to the lowest levels in about likely to begin a correction in 2016, 25 years (Chart 1: Consumer Fairly The economy and certain sectors will as lame-duck years tend to produce Healthy). In addition, the job picture benefit from sustained low energy the “gift” of falling stock prices for has improved. Unemployment levels and commodity prices. Import prices the next president. should remain low, helping those who are down, wages are starting to rise (Chart 2: Beware Washington Help) and hours have been expanding. Still, look to pass along discounts to their One of the most reliable long-term more than 100 million Americans customers and representing potential valuation measures, the market are not working and household net for improved margins. value of U.S. Equities/U.S. Gross worth is not growing like it should. Domestic Product (GDP), is close Consumers seem cautious, and that is to all-time highs (Chart 3: U.S. reflected in less-than-expected retail The economy and certain Stocks Richly Priced). sales and a low turnover of money in sectors will benefit from Margin debt — when investors the economy. borrow money to leverage their Manufacturing ranks as our chief sustained low energy investments — had reached an concern. The Federal Reserve reports and commodity prices. all-time high but has now started on new orders are mostly negative. to decline. Historically, this signals Industrial production and capital an early warning (Chart 4: Too (Chart 3: U.S. Stocks Richly Priced) Much Optimism). The market is likely to undergo style rotation. We believe value stocks will outperform growth stocks as profit margins fall. The types of stocks we favor in this environment are those that should benefit from a stronger U.S. dollar and lower U.S. energy costs. Active management will be important to take advantage of market volatility — and lower prices would offer excellent buying (Chart 4: Too Much Optimism) opportunities. Continued on page 3

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By Keith Lake, Vice President, Government Affairs IN 2016, EXPECT ACTION ON KEY POLICY MATTERS – JUST NOT IMMEDIATELY

QUICK GLANCE certainty is that the legislative year Among the top issues will begin slowly, with only a few Legislative year will begin slowly session days scheduled before the are unemployment March 15 primary. Ohio voters will Biennial capital budget on agenda fill all 99 House seats and 17 of the 33 compensation system 292 candidates filed for 116 seats Senate seats this year and there is no reform, repeal of the shortage of candidates. A total of 292 individuals filed to run for these sales tax on employment When the Ohio Legislature wrapped 116 seats. services, employment law up its legislative activity in mid- December and departed the capital The March ballot will include 12 uniformity legislation and city for the holidays, it left several Republican and three Democratic key employer priorities incomplete presidential candidates, including extension of the freeze on heading into the New Year. But 2015 Ohio Gov. John Kasich. Kasich is Ohio’s energy mandates. was not without some important, the first sitting governor of Ohio to pro-business successes. run for president since then-Gov. James Cox served as the Democratic some further tax reform ideas will and there’s no reason to think 2016 Early in the year, Ohio enacted nominee in 1920. undoubtedly be included. This should will be different in this regard. common-sense legislation that set off alarm bells for the business preserves the attorney general’s While the pre-primary legislative community, as both of the governor’s How much time does all this leave ability to contract with outside calendar may be light, we can previous MBRs and his past two for issues that would improve attorneys while ensuring the expect a comparatively busy April budget proposals have included plans Ohio’s business climate? Not much maximum benefit to taxpayers. and May. One item on lawmakers’ to pay for personal income tax cuts — and there’s no shortage of such Senate Bill 38 caps contingency agenda is a biennial capital budget, by raising taxes on Ohio employers. priorities. Among the top issues fees awarded to these attorneys, which provides appropriations And it’s unlikely Kasich is going to are unemployment compensation ensuring that litigation brought on for the repair, reconstruction abandon his ongoing pursuit of lower system reform, repeal of the sales behalf of the state is motivated by and construction of the state’s personal income tax rates. Fostering tax on employment services, the public good — not by anything educational and public service a more competitive tax system that employment law uniformity else. Another bill that is now a law, infrastructure, as well as local encourages business investment legislation and extension of the House Bill 3, makes it cheaper to or regional community is a worthy goal, but not if it is freeze on Ohio’s energy mandates. start a new business in Ohio by building projects. accompanied by further tax shifting. The Ohio Chamber will be front and reducing business filing fees by 21 center pushing for legislative action Less clear is whether there will In addition, a major tax MBR would on all of these issues. Several should percent. Last fall, the legislature also be another mid-biennium review, passed Senate Bill 208 and prevented fly in the face of the new Ohio 2020 make it out of at least one legislative or MBR. Created by the Kasich Tax Policy Study Commission, body in 2016, but final enactment an unintended tax hike on small administration, MBRs passed in businesses. which has just begun its work. isn’t likely until after the November 2012 and 2014 and included dozens The commission was established general election. That’s when the But perhaps the most significant of significant policy reforms and to allow the legislature sufficient legislature returns for its “lame triumph was one delivered by budget adjustments. Most prior time to take a longer-term and duck” session. the voters, not the legislature. On administrations waited the usual two more comprehensive approach Election Day, voters resounding years between budgets to propose to tax policy and tax reform. We expect a slow start but a busy defeated State Issue 3 and its attempt such changes. But Kasich has been Meetings are planned throughout spring, extended interruptions to legalize marijuana for recreational challenging the status quo since his 2016, and the commission has for both the March primary and and medicinal use in Ohio and create first day in office and — despite the until Oct. 31, 2017, to publish its November general election, and a a marijuana monopoly. demands of a presidential campaign findings and recommendations crazy, post-election finish to the — is said to be preparing an MBR for how to maximize Ohio’s tax two-year legislative session for 2016. Still, there is much more work for introduction in the first quarter competitiveness. For Ohio employers, it may be best ahead to make Ohio a better place of the year. to look upon the upcoming year to do business and keep our state The General Assembly is currently with the attitude of former British moving in the right direction. Of While the MBR package may look scheduled to finish its work for the Prime Minister Margaret Thatcher, course, 2016 is an election year, different than in previous years first half of the year no later than who once said, “I’m extraordinarily which always makes it tricky to — for starters, the administration June 15. In a typical election year, the patient, provided I get my own way in forecast how productive the Ohio may propose multiple bills, rather legislature wouldn’t return until after the end.” General Assembly will be. But one than one comprehensive bill — the November general election —

By Rich Thompson, Director, Political Programs FILING DEADLINE BEGINS THE RACE FOR 2016 CANDIDATES

With December’s filing deadline Committee (OCCPaC) previously of Agriculture under former Gov. for candidates in Ohio, there came endorsed Barnes in his 2012 race. Ted Strickland. a new slate of candidates for races throughout the state. Below is an HD18 – In the race to replace Rep. HD27 – Rep. Tom Brinkman Jr. analysis of the top primary races for Michael Stinziano, who will vacate defeated incumbent Peter Stautberg the Ohio General Assembly. his seat to serve on Columbus to claim the surprise victory of the City Council, there is a three-way 2014 primary. This time around, Ohio House Democratic primary. The House incumbent Brinkman is on the HD12 – Incumbent Democrat Rep. Democratic Caucus will likely receiving end of a primary bid from John Barnes Jr. has long frustrated appoint a successor to serve out education activist Heidi Huber include Paul Booth, a former his caucus and constituents with his his term, allowing for a candidate of Cincinnati. Cincinnati City councilman; Brian penchant for independent thinking. to run as an incumbent in 2016. Garry, a former candidate for Thus, Barnes finds himself in a Democrat Kristin Boggs is the HD31 – This seat is being vacated Cincinnati City Council; Nicholas three-way primary. His opponents likely front-runner for the seat that by Rep. Denise Driehaus, who Hollan, another former candidate are Jill Miller-Zimon, a former encompasses a number of urban is running for Hamilton County for Cincinnati City Council and Pepper Pike City councilwoman communities in Franklin County. commissioner. The front-runner is owner of a construction company; and blogger, and Earl W. Campbell Boggs is the daughter of Bob Boggs, Brigid Kelly, a union organizer for Ben Lindy, a regional director at of Cleveland. The Ohio Chamber the former Senate minority leader the United Food and Commercial of Commerce Political Action and director of the Ohio Department Workers Local 75. Other candidates Continued on page 3

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Teach for America; and Dr. Paul Larry Householder has launched potential to strengthen and/or crowded general election. Sohi, a dentist. a campaign to return to the Ohio weaken the eventual winner based House. Householder served as on how each campaign runs its race. To help you keep track of the HD47 – A four-way Republican speaker from 2001 to 2005. He If the race turns negative early, the candidates for the General Assembly, primary for the term-limited state will face Coshocton City Council eventual winner will likely need to Congress and Court of Appeals, Rep. Barbara Sears’ district is President Cliff Biggers and Newark make inroads with moderate and I have compiled a comprehensive under way. The district consists of businessman Randal Almendinger independent voters in the general list, with candidate names, political portions of western Lucas County, in the primary. election. Conversely, a competitive parties and mailing addresses, on our including Sylvania and Monclova primary will go a long way in website at www.ohiochamber.com. Township. The candidates for the HD74 – Rep. Bob Hackett’s building name recognition with seat are former Sylvania Township departure to run for the Ohio Senate nontraditional voters, which will Trustee Kevin Haddad, former has created a four-way primary provide advantages during 2016’s Waterville Mayor Derek Merrin, made up of political newcomers. Monclova Township Trustee The district consists of Madison Barbara Lang and Sylvania school County and portions of Greene board member Vicki Donovan Lyle. County. The candidates are health CONTINUED FROM PAGE 1 care lobbyist Joe Russell of London, HD51 – Despite pledging that financial planner Brendan Shea of he would not seek re-election London, attorney Chris Wallace of 2016 ECONOMIC FORECAST without the Butler GOP primary Plain City and Bill Dean of Xenia. endorsement, incumbent Wes Retherford will try to retain his HD87 – Three candidates are vying seat. Retherford squares off against for this seat. Wesley Goodman, a This year, stock investors will face challenges in the form of: former state Rep. Courtney Combs, conservative GOP activist from 1. Volatility – U.S. stock market volatility may be partially attributed to a who previously served in the seat Cardington, and Morrow County slowing Chinese economy. Analysts have suggested the 10 percent decline in from 2004 to 2012. Commissioner Tom Whiston have U.S. stock prices that began in the third quarter of 2015 was caused, for the both been actively campaigning for HD57 – Another four-way most part, by concerns over the much larger decline in the Chinese market at the seat since summer. Former Rep. that time. Chinese stock markets may be even more volatile in the future. Republican primary has emerged Steve Reinhard of Bucyrus quietly for term-limited Rep. Terry filed his petitions in December, 2. Cessation of Federal Reserve Stimulus – With the desire to improve Boose’s seat. The district consists making the race more competitive. employment and capital investment, the Fed has been extremely active in of Huron County and portions of The district consists of Wyandot, attempting to stimulate the economy since 2008 through quantitative easing. Lorain County. The candidates are Crawford and Morrow counties, This is reflected in the total assets of the system, which had been rising for Rochester Mayor Kathy Frombaugh, as well as parts of Marion and years until fall 2014. The Fed may have confirmed what analysts suspected, small business owner Tim Opsitnick Seneca counties. that the stimulus funds have been flowing to those who need it least and used of Avon, small business owner Dick for purchases of equities and residences. In fact, some analysts claim the Stein of Norwalk and Lee Charles Ohio Senate correlation between Fed asset increases and stock prices is in excess of Waldrup of Bellevue. SD4 – Incumbent Bill Coley will 90 percent. have to fend off three opponents, HD62 – Warren County is a including Eric Gurr, a Butler County Stock prices have had trouble making substantial progress since quantitative difficult area of the state in which businessman who dropped out of easing ended. We expect the Fed has learned its lesson and will not resume its to handicap political races. The the 8th Congressional District race stimulus program unless an emergency occurs. In fact, we anticipate modest four-way primary is indicative of to challenge for the state Senate. increases in interest rates, which would undermine growth and not be helpful the factions at play within the GOP The 4th Senate District includes the to stock investors. in the region. The seat is being majority of Butler County. vacated by Rep. Ron Maag due to While there are challenges for the stock investor, the following factors might term limits and covers portions of SD12 – Former Ohio House help investors identify firms that are generating strong profits. Warren County. The candidates colleagues Matt Huffman of for the seat are Jake Fryman of Lima and John Adams of Sidney 1. Weakening demand from China has created down trends in many Carlisle, businessman Scott Lipps will square off in a primary that will commodities. Some industries have also benefitted from improvements in of Franklin, Steve Muterspaw of factionalize GOP and conservative extraction due to technology. Oil, for example, has declined from more than Lebanon and Warren County GOP activists throughout the district’s $100 a barrel to less than $40 a barrel. Chairman Ray Warrick. seven counties. The district The key is to identify users, not producers, of commodities. In the case reads +16 Republican on the of oil, seek out industries that can take advantage of lower oil prices by HD63 – A three-way Democratic Partisan Index. primary has emerged in light of increasing margins and generating higher profits. Examples include refiners Rep. Sean O’Brien’s announcement SD22 – Senate Majority Whip Larry and transporters, airlines, railcars and automobiles. These industries have that he will seek Sen. Capri Cafaro’s Obhof has drawn lobbyist Janet prospered, in part, due to lower oil prices. 32nd Senate District seat. The Folger Porter in the Republican 2. We can extend this example to other commodities. Copper fabricators, for seat encompasses southeastern primary. Porter, the leader of a social example, would be a better stock selection than copper miners if one desires Trumbull County. McDonald values special interest group, has rising profits. Mayor Glenn Holmes and Hubbard spent the better part of three years Councilman Ben Kyle both trying to push the controversial 3. The strong U.S. dollar may generate opportunities. Generally, one might announced their candidacies for the “heartbeat bill” through the General avoid multinational U.S. firms that sell heavily abroad because their seat this summer. A third candidate, Assembly. Her candidacy is based products — when priced in local currencies — appear more expensive. Marianne James – a retired on the Ohio Senate’s alleged In fact, falling sales and a profit squeeze on many of these firms have public educator from Niles – ran indifference to the legislation. crimped profit margins. unsuccessfully against O’Brien in The Senate has not moved on the 2014 primary. the legislation due to concerns 4. Firms that import may have the advantage. These firms purchase goods for from Ohio’s leading anti-abortion fewer U.S. dollars and bring them back for resale in America. Their profit HD68 – A four-way Republican organization – Ohio Right to Life – margins are enhanced. Clothing stores and many variety stores may benefit primary for the 68th District is that the bill would undo measures from this factor. under way. The seat consists of that have reduced the number of 5. Cheaper energy in America is a major advantage. American technology eastern Delaware County and all abortions in the U.S. in recent years. leads the world in fracking and production of natural gas. It almost of Knox County. The candidates Regardless, Porter pushes on. guarantees we will never again be held at the mercy of a handful of are Genoa Township trustee Rick Her bid for the Senate seems to petroleum-producing countries. All manufacturers are aware of the cost Carfagna, education consultant be a publicity stunt to draw of energy. In some cases, major foreign users in industrial operations Beth Lear of Galena, insurance attention to this issue. The district have resettled in America just to be close to fracking and natural gas agent W. Myles Bancroft of consists of Medina, Ashland production facilities. Delaware County and Centerburg and Richland counties and parts school board member Jason Rogers. of Holmes County. James Investment Research is a longtime member of the Ohio Chamber of Commerce and the official provider of our annual economic forecast. The firm HD72 – Following the SD24 – State Rep. Nan Baker, is located in Alpha, Ohio. To reach it and to view its work, visit its website at announcement from Rep. Bill Hayes state Rep. Mike Dovilla and former www.jir-inc.com. that he would seek the position of state Rep. Matt Dolan have filed Licking County prosecutor, an old to succeed Sen. Tom Patton in name began to surface to replace this Cuyahoga County seat. This him. Former Speaker of the House Republican primary has the

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By Samantha Cotten, Director, Public Policy Communications OHIO EMPLOYERS JOIN AN OHIO CHAMBER PENALIZED FOR HIRING COMMITTEE

The eight standing committees are the lifeblood of the Ohio Chamber of TEMP WORKERS Commerce. Each committee focuses on a particular area that is important to Many Ohio Chamber members tell Ohio’s business community. The committees study the needs of the business our staff that they have difficulty community and recommend policies to the board of directors. They also finding trained, reliable employees. review pending legislation and recommend what action, if any, the chamber Companies both large and small should take on a bill. around the state face similar issues Attendance is encouraged but optional. Committee members also receive when trying to fill job openings. regular emails that keep them abreast of topics impacting their committee. Committee membership is open to anyone who is employed by an Ohio One avenue many of our members Chamber member company. If you are interested in joining a committee, take is to contract with staffing firms please contact Sherry Heffner at [email protected] or to find qualified workers who fit (614) 228-4201. their company’s needs. Employment service companies have the ability to EDUCATION & WORKFORCE DEVELOPMENT recruit, hire and train workers in high- for helping individuals off of public Mission: To respond to the needs of Ohio employers for qualified, well- demand fields. assistance. Our industry provides a trained employees by promoting policies that meet the demands of today’s bridge to full-time employment that workplace. We do this by pursuing strategies that link education and “Staffing firms have greater and many would otherwise struggle to workforce development in a seamless system and embed skills-based learning different access to employees than obtain. We help many individuals with into academic instruction. employers,” says Larry Kidd, president employment challenges, including and CEO of Reliable Staffing Services. Staff contact: Dan Navin, assistant vice president, inconsistent work histories, criminal Tax and Economic Policy – [email protected] Hiring temporary workers through backgrounds, disabilities, lack of staffing firms gives the employer and experience, even homelessness.” EMPLOYMENT LAW To protect employers’ right to manage their workplace with limited the employee time to see if the job is Many of our member companies, Mission: governmental involvement and regulation and to simplify Ohio’s employment the right fit. In addition, using third- whether they are staffing firms or law statutes in a way that’s fair to both employers and employees. party staffing firms often relieves companies that use staffing firms companies of having to retrain or to help with employment, want to Staff contact: rehire workers. Employment service see the employment services tax Don Boyd, director, Labor and Legal Affairs – [email protected] companies provide a valuable service repealed. That’s because the tax puts to enhance the overall workforce of the Ohio businesses at a competitive ENERGY & ENVIRONMENT state of Ohio. disadvantage, particularly when Mission: To advocate for energy policies that promote Ohio’s economic competitiveness and protect businesses’ access to affordable, dependable The Ohio Chamber has been working competing with companies in energy, while ensuring environmental policies and regulations are based with policymakers to provide a surrounding states. on both sound science and comprehensive information and avoid creating pathway for companies to address “Ohio businesses will be better unnecessary red tape. their employment needs. One barrier positioned to compete with Contact: Charles Willoughby, director, Energy & Environmental Policy – we have identified is that Ohio is competitors located in states [email protected] taxing companies that use staffing where the purchase of employment services to find qualified temporary services is not taxable. Ohio taxing personnel. The Ohio Chamber these services adds several hundred HEALTH CARE To advocate for an affordable and sustainable market-based strongly supports House Bill 343, thousand dollars every year to our Mission: health care system that provides access to quality, affordable health care for which would repeal the sales tax on bottom line,” says Don Brown, all Ohioans. employment services. This legislation of Cargill. has already been the subject of four Contact: hearings in a House committee. It also prevents some companies from Keith Lake, vice president, Government Affairs – [email protected] doing business in Ohio. The employment services tax has OHIO SMALL BUSINESS COUNCIL impeded the growth of Ohio’s economy “Some employers I have worked with Mission: To promote and protect the establishment, growth and vitality by increasing the cost of job creation. have had to make tough decisions as to of small business in Ohio. Members of the Ohio Small Business Council That’s because the tax charges an whether to invest in projects in Ohio (OSBC) learn how to be an advocate for their businesses and voice their Ohio company an additional 6 to 8 utilizing temporary labor, and some of concerns directly to Ohio’s decision-makers. Participation in OSBC is limited percent when it hires a worker through those decisions not to invest here were to individuals representing a for-profit business that employs fewer than an employment service contract. affected by the existence of this tax. 400 directly supervised persons. Small business owners and managers are By increasing the cost of hiring, the There is no question that employee especially encouraged to join this committee. employment services tax prevents wages have been negatively impacted smaller businesses from paying higher, and fewer jobs have been created,” Contact: Brandon Ogden, director of the Ohio Small Business Council – more competitive wages and larger says Daniel Schivitz, president of [email protected] companies from hiring more workers. Lincoln Tyler Management. Thus, imposing the tax has led to fewer PUBLIC AFFAIRS new jobs and less economic growth It’s obvious that this tax deters Mission: To monitor and evaluate public affairs issues and activities in Ohio. companies from locating temporary including elections, campaign finance, ethics and lobbyist regulations when projects in Ohio and prevents they are of interest to the business community, and to examine proposed state “The sales tax the state of Ohio is companies from hiring more workers constitutional amendments or initiative petition efforts that affect the charging is a tax on employee wages. through employment service electoral process. It is a penalty for hiring people to work companies. It is time that the General Contact: in Ohio when using a third party to Assembly repeals the sales tax on Keith Lake, vice president, Government Affairs – [email protected] do so,” says Tia Ramlow, president of employment services that is hindering

Great Work! Employment Services. the ability of Ohio companies to TAXATION & PUBLIC EXPENDITURES hire a qualified workforce and Mission: To foster a fair and equitable tax system that stimulates Opponents of HB 343 claim that hiring inhibiting economic growth. The Ohio temporary workers is bad for Ohio. growth, innovation and job creation and minimizes compliance costs and Chamber is advocating on behalf of administrative burdens. They argue that employment service our members to make sure the state companies are inadequately servicing creates a more business-friendly tax Contact: Dan Navin, assistant vice president, disenfranchised workers and, in effect, climate, which will help businesses Tax and Economic Policy – [email protected] are forcing their employees onto grow and attract new companies to public assistance by not providing Ohio. Repealing this egregious penalty WORKERS’ COMPENSATION competitive wages. on Ohio employers is a step in the Mission: To ensure Ohio’s workers’ compensation system runs efficiently and right direction. effectively for both state-funded and self-insured employers, is effective in Tom Erb, president of Tallann providing proper medical treatment for injured employees and keeps the cost Resources, refuted this misleading To follow the progress of HB 343 in the for employers competitive with other states’ systems. claim, saying, “While it is true that Ohio General Assembly, please read our half the employees we place are in Contact: Legislative Update, as well as our blog Don Boyd, director, Labor and Legal Affairs – [email protected] unskilled or semi-skilled positions, and social media updates. we are one of the state’s best resources

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By Ryan D. Burgess, Director, Governor’s Office of Workplace Transformation By Joe Testa, Ohio Tax Commissioner BUSINESS DRIVES WHAT’S NEW FOR THE STATE’S OHIO’S 2015 TAX SEASON

For business owners, investors and all residents of WORKFORCE EFFORTS our great state, the 2015 Ohio tax filing season will Since Gov. John Kasich took office in be unlike any other. The changes you’ll see this year 2011, Ohio employers have created are significant and numerous. They include new 378,000 private-sector jobs, job tax cuts for most individuals and small business retention is up and first-time jobless income taxpayers as well as major modifications to claims are within reach of an all-time our primary income tax forms, which we believe will low. Positioning the state for economic simplify the tax filing process. I would like to share success comes, in part, by having a some highlights with you that I hope will be helpful workforce system that works for both when filing your 2015 Ohio income tax return. businesses and job seekers. Leading TAX CUTS this effort, Kasich created the Office For individuals, the 2015 tax rates reflect a 6.3 percent income tax cut from of Workforce Transformation in 2012 the 2014 tax year. This reduction drops Ohio’s top rate to just below 5 percent, to ensure a unified workforce system the lowest level in more than 30 years. In addition, many business owners and that is aligned with the needs of investors will not only benefit from that reduction, they will enjoy a maximum Ohio employers. employees that businesses need tax rate of 3 percent on business income exceeding $41,700. This, along with the As the foundation of this work, the to succeed and grow, the state is business income deduction (previously named the small business deduction) Office of Workforce Transformation prioritizing veterans throughout that allows taxpayers to once again deduct 75 percent of the first $250,000 created the In-Demand Jobs Report the workforce system. Through of net pass-through business income, will free up additional funds to further — a list of Ohio employers’ most OhioMeansVeteranJobs.com, strengthen Ohio and Ohio businesses. urgent job needs. Understanding the veterans can translate military TAX FORMS workforce needs of Ohio businesses experience to college credit or The Ohio Department of Taxation is continuously looking for ways to simplify allows students and job seekers to see certification from one of Ohio’s the income tax filing process. This year, several tax forms have been revamped what jobs are available now and will be licensing boards. OhioMeansJobs. to make the process easier and more efficient. Most prominently, the IT 1040, in the future. Additionally, the state is com prioritizes veteran resumes, IT 1040 EZ and amended IT 1040X forms have been consolidated into one able to better align resources to meet allowing employers to review these Universal IT 1040 tax return. Combining these forms will allow amended those needs. first when looking for workers. returns to be filed electronically, rather than on a paper form as previously And to more directly connect We have coordinated the state’s required. It will also enable refunds from amended returns to be directly employers with skilled veterans, deposited, rather than issuing paper checks — as was done in the past. This will largest workforce programs under one the state created the Veterans strategic plan to cut bureaucratic red speed up processing and the delivery of refunds. Taxpayers will also benefit Business Support Center — by seeing all of the tax credits in one place (see “Schedule of Credits” below), tape and improve customer service. accessible at OhioMeansJobs.com We are connecting education and making it easier to identify those credits for which they are eligible. Similarly, — which has personnel available the SD 100 and amended SD 100X school district forms have been merged careers, requiring career counseling at OhioMeansJobs.com centers plans at the K-12 and post-secondary into the Universal SD 100 tax return. The Universal forms and new schedules across the state to assist employers should be used for tax year 2015 and thereafter. However, the relevant old forms level, as well as embedding work in finding veteran talent. experiences — co-ops and internships should still be used for tax years 2014 and earlier. — into the curriculum of degree • Industry-Driven Solutions: SCHEDULE OF CREDITS AND OTHER SCHEDULE CHANGES programs at Ohio’s public colleges The state is further developing All nonrefundable and refundable credits have been combined into the new and universities. And we are breaking partnerships among employers, Ohio Schedule of Credits. The Schedule of Credits includes line items that down barriers to employment by training providers and community were previously individual line items on the IT 1040, such as the joint filing taking an individualized, holistic leaders to address emerging skill credit and personal/dependent credit. Additionally, the schedule has all lines/ approach to removing obstacles and gaps — collaborations we call credits previously reported on Schedules B, C, D and E, so these forms are not providing quality jobs for Ohioans. Industry Workforce Alliances. available for 2015 personal income tax filing. The Schedule E is still available These alliances enable employers The Office of Workforce for pass-through entity filings. Please also be aware that, beginning with the to define workforce needs in a 2015 tax return, space has been added to Schedule J to capture the dependent Transformation has made great region or industry while training strides to ensure that our workforce “relationship” for each dependent being claimed on an Ohio income tax return, providers and local workforce which will help deter fraud with these exemptions. system works for all Ohioans. stakeholders to craft innovative Though just a snapshot of this work, solutions to meet those needs. TAX FRAUD the following efforts elaborate on For example, the Manufacturing Last year, the department intercepted a record number of fraudulent returns, some of our successes in connecting Careers Council — launched in the and we expect no let-up in this illegal activity. More than $533 million in businesses to qualified workers. second half of 2015 — represents fraudulent income tax refund claims have been stopped since 2014. We a business-led collaboration are committed to combatting tax fraud and ensuring that tax refunds are • OhioMeansJobs.com: Once a simple job board and resume bank, with the Ohio Department of paid only to legitimate filers. We believe we’re among the leaders in the OhioMeansJobs.com is now a full- Higher Education focused on country in aggressively combatting these fraud schemes. Last year, the service online career counselor and increasing careers pathways into Identity Confirmation Quiz was instrumental in that fight, and we will be business services resource. Ohio manufacturing, a pillar industry utilizing it again this year. After listening to taxpayer feedback, we made a businesses have free access to more in Ohio. The state has invested in few modifications to the types of questions asked. We’re confident that those than 2 million resumes — a service six alliances throughout Ohio and changes will improve the process and provide a better experience for taxpayers that would normally cost more than plans to evaluate their results in who take the quiz. Plus, with further improvements to our tax return analysis $10,000 through other online tools. 2016 while continuing to develop this year, we expect significantly fewer taxpayers will be asked to take the quiz. additional alliances. Employers can also find dozens of MORE INFORMATION SHARING = MORE SECURITY employment programs that offer The work of our office covers Behind the scenes, there were some important agreements made last year potential funding opportunities and numerous reforms, and the that will support much more information sharing between the IRS, state tax available services. And the Business foundation of that work is ensuring departments and public and private sector tax groups. The goal is to help us all Support Center helps businesses our efforts are laser-focused on quickly identify and adjust to new and emerging tax-related fraud schemes. post jobs, review job descriptions meeting the job needs of Ohio Unfortunately but unavoidably, safeguarding taxpayer dollars from tax fraud and even send prescreened resumes employers. Looking ahead to 2016, the theft can slow the processing of returns and issuing of refunds. We truly of qualified workers. For many Office of Workforce Transformation appreciate the understanding and patience shown by Ohio taxpayers. Ohio businesses, having access will build upon its successes by to OhioMeansJobs.com and the updating the state’s workforce plan, TECHNOLOGY TOOLS Business Support Center is the strengthening OhioMeansJobs.com We continue to utilize technology to help improve customer service. We invite next best thing to having an and leveraging partnerships to break you to follow us on Twitter via @OhioTaxation for the latest news and updates. HR department. down barriers to employment. We’ve also expanded our presence on YouTube with a number of instructional videos. If you’d like to check on your refund or sales tax rates around the state, • Supporting Veterans: Ohio For more information on how Ohio download the Ohio Tax App through Apple or Google Play. Finally, visit our is proud to be home to nearly is improving its workforce system, website — tax.ohio.gov — if you’d like additional information on the topics 900,000 veterans and military or to access employer resources, covered in this article or to sign up for our Tax Alerts and receive Ohio tax news service members. Recognizing visit OhioMeansJobs.com. year-round. veterans as the talented and skilled Thanks for your time and attention. Have a great year.

WWW.OHIOCHAMBER.COM 5 JANUARY/FEBRUARY 2016

By William J. Wahoff, Esq. and Nelva J. Smith, Esq., Steptoe and Johnson PLLC IN COMPLIANCE? Be prepared! FLSA rule changes and OSHA penalty increases will happen in 2016

Two seemingly unrelated thresholds for exempt employees, developments at the U.S. employers will face significant cost Department of Labor (DOL) will increases by the end of 2016, and affect employers in 2016. The with significant bipartisan support. first is in regard to the Fair Labor Standards Act. Under FLSA, At this time, employers need to the threshold for salaries that self-audit their occupational qualify for “salaried exempt” safety and health programs and status will increase more than wage and hour programs to ensure 100 percent. The second involves compliance in the new, higher- congressionally mandated dollar regulatory atmosphere. increases in Occupational Safety William J. Wahoff and and Health Administration (OSHA) Nelva J. Smith are with Steptoe penalties at a minimum of 80 and Johnson PLLC. Contact them percent, which will be implemented at Bill.Wahoff@steptoe-johnson. by Aug. 1, 2016. com or 614-456-1654 and FAIR LABOR STANDARDS Assistant Secretary for OSHA [email protected] ACT CHANGES The DOL’s goal is to David Michaels, Ph.D., has stated or 614-456-1656. In March 2014, President Barack minimize the risk that that OSHA is very pleased with Obama directed the DOL to update the increase because OSHA 1 Presidential Memorandum – Updating and Modernizing Overtime and modernize its overtime employees legally entitled penalties have been too low to Regulations, March 13, 2014 (https://www.whitehouse.gov/ regulations.1 On July 6, 2015, have the necessary impact.6 OSHA the-press-office/2014/03/13/presidential-memorandum-updating- the DOL issued the proposed to overtime will be is currently waiting on the Office and-modernizing-overtime-regulations) regulation changes and published 2 Federal Register – Defining and Delimiting the Exemptions misclassified based solely of Management and Budget to for Executive, Administrative, Professional, Outside Sales and those changes with additional issue guidance on implementing Computer Employees, July 6, 2015 (https://www.federalregister. gov/articles/2015/07/06/2015-15464/defining-and-delimiting-the- requests for comment in the on their salaries. the new penalty authority, but the exemptions-for-executive-administrative-professional-outside- Federal Register.2 It has been process will need to be accelerated sales-and) reported that the proposed salary and compensation levels due to the August 2016 deadline. 3 http://www.wsj.com/articles/ changes generated around 270,000 annually using the most recent newruleforovertimepaycominglaterthananticipated1447284341 comments, which is the most data as determined and published CONCLUSION 4 The rules however do not require payment for vacation, sick leave or other types of pay for not working. comments received for a proposed by the Bureau of Labor Statistics. With the Republican House and 5 regulation in recent history. The It would publish a notice with the Senate’s approval of the 80 to https://www.congress.gov/bill/114th-congress/house-bill/1314 3 150 percent increase in OSHA 6 http://www.natlawreview.com/article/osha-gets-authorization-to- DOL’s solicitor general also new salary levels in the Federal boost-penalty-amounts recently reported that the new Register, as well as on the Wage penalties, the first increase since regulations might not go into effect and Hour Division’s website at 1990 (the OSHA act became law until late 2016 due to the number of least 60 days prior to the updated in 1970), and the “catch-up” of comments received, as well as the rates taking effect. more than 100 percent to salary complexity of implementation. The DOL’s goal is to minimize the Certain employees must be paid risk that employees legally entitled overtime at one and a half times to overtime will be misclassified their rate for any hours over 40 based solely on their salaries. hours worked in a given week.4 The proposed regulatory changes OSHA PENALTY INCREASES 2016 SEMINARS apply to executive, administrative, On Nov. 2, 2015, Obama signed the computer and professional Bipartisan Budget Act of 2015 into 5 employees who are covered law. Not widely publicized but PRESENTED BY THE under the FLSA’s minimum wage included in that act is Section 701, MANUFACTURERS’ EDUCATION COUNCIL and overtime protections. If an “Federal Civil Penalties Inflation employee qualifies, the current Adjustment Act Improvements Act AND THE OHIO CHAMBER OF COMMERCE salary threshold for exemption of 2015,” which requires OSHA to is $455 per week, or $23,660 per increase its civil penalties for the year. The proposed regulations first time since 1990. Presently, reset the salary level at 40 percent the maximum penalty OSHA can of weekly earnings for full-time assign to the following violations 25TH ANNUAL OHIO TAX CONFERENCE salaried workers, either $921/week are: Other-Than-Serious – Tuesday, Jan. 26, and Wednesday, Jan. 27, $7,000, Serious – $7,000, Repeat or $47,892 annually based on 2013 at the Hyatt Regency Columbus in downtown Columbus data (and $50,440 based on 2016 – $70,000 and Willful – $70,000. data). The proposed regulations The proposed change mandates a also increase the total annual one-time catch-up adjustment to 20TH ANNUAL OHIO ENERGY compensation required for highly take place in 2016, with penalties compensated employees to qualify increasing from 80 percent to MANAGEMENT CONFERENCE for exemption, from $100,000 to 150 percent. Tuesday, Feb. 16 and Wednesday, Feb. 17, 90 percent of weekly earnings OSHA must increase the at the Columbus Renaissance Hotel of full-time salaried workers, penalties through an interim in downtown Columbus or $122,148 annually based on final rulemaking no later than 2013 data. Finally, the proposed Aug. 1, 2016. Assuming there is regulations establish a mechanism a minimum 80 percent increase, 25TH ANNUAL SUSTAINABILITY AND for automatically updating the the maximum penalties will be ENVIRONMENTAL SAFETY & HEALTH CONFERENCE salary and compensation levels as follows: Other-Than-Serious – going forward to ensure they will $12,600, Serious – $12,600, Repeat Tuesday, March 22, and Wednesday, March 23, continue to provide an “accurate – $126,000 and Willful – $126,000. at the Duke Energy Center in downtown Cincinnati test” for exemption. The DOL The revised penalties are expected has suggested either updating to reflect the present inflation rate, the thresholds based on a fixed but they will continue to percentile of earnings for full- keep pace with rate changes. time salaried workers or updating Currently, the new requirements For more information on these highly regarded seminars, the thresholds based on changes only apply to states under federal including agendas and registration information, in the Consumer Price Index. OSHA jurisdiction; however, Regardless of how thresholds are OSHA-approved State Plan states please go to www.mecseminars.com. automatically updated, the DOL has are expected to follow the proposed publishing the revised federal changes.

6 STAY CONNECTED.

NEW PENALTIES PACKAGED UP HIGHLIGHT Accel Inc. delivers full-service contract packaging solutions to meet its clients’ THE NEED TO CALL high standards

In 1995, Tara Abraham was 811 BEFORE DIGGING working for the world’s number one personal care retailer. As part of her job as an associate product manager, she was responsible for finding contract packaging solutions for the chain’s line of personal and home fragrances. However, after a months-long search for a contract packaging partner that could perform all of the required functions — sorting products, shrink wrapping, packaging engineering and many An example of that innovation other services — Abraham was is Accel’s decision to partner at a loss. with LGS Staffing, a staffing “Every packaging company I visited services firm that provides the failed to meet our standards, and company with on-demand talent, by a pretty wide margin,” she says. allowing it to scale quickly when Starting in January, a new demand rises. At peak business law puts teeth into the long- The search process uncovered times, Accel employs more than standing requirement to call the need for a full-service contract 1,100 temporary and permanent 811 at least two days prior packaging solutions provider. employees. to digging. Whether you To meet that need, that year, are a professional excavator or a homeowner, you could face a fine for Abraham co-founded Accel Inc. And that ability to scale will ignoring this important safety requirement. with her now-husband David continue to increase in the coming years. Accel recently became “Homeowners often think they know where their gas lines are, and Abraham. L Brands was the company’s first client. Accel’s first ISO 9001:2008 certified, opening many contractors believe someone else is responsible for calling 811,” the door for it to expand beyond the says Dan Creekmur, president of Columbia Gas of Ohio. “The reality is client was the parent company of Abraham’s retail employer. retail space into more regulated that digging in any form near underground utilities without having them industries. properly marked can be extremely hazardous to people, property and “When I left, I told them that the environment.” they were losing a team member “It will allow us to explore more but gaining a contract packaging opportunities in industries where Calling 811 is free. Representatives from Columbia Gas of Ohio and ISO certification is needed, such as other utilities will then come out to locate and mark their underground company,” she says. “They are still a huge client of ours to this day.” automotive and pharmaceutical,” lines so that you can proceed to dig safely. Abraham says. “Regulatory Ohioans put themselves and others at risk when they fail to have Today, Accel counts 15 Fortune 500 standards are critical in those underground utilities located before beginning projects that involve companies among its clients and industries and in many others. digging. Since 2012, there have been more than 1,000 gas lines damaged can deliver full-service solutions You need certification if you’re in the state because people did not call 811. for multibillion-dollar retail going to work in them.” companies, due in large part to If you’re a homeowner doing your own digging in your back yard, you how it is positioned — as the Because regulatory compliance is must call 811. And if you’ve hired a professional excavator, make sure centerpiece of a large office park an important issue for Accel, the he or she has called 811 before digging begins. An excavator is “the in New Albany, Ohio. company has also looked to the person or persons responsible for making the actual excavation.” Even Ohio Chamber of Commerce as an if someone else has already had a site marked, the person doing the Eight packaging manufacturers educational and strategic resource. digging must call 811. You must also call 811 at least two days — but not in the personal care, health Abraham says the chamber has more than 10 days — before you dig. and beauty space occupy the provided guidance and information easternmost portion of the New on key laws and regulations as well Columbia Gas expanded its “Call 811 Before You Dig” campaign on Albany Business Park — and Accel as other business and labor topics Aug. 11 — 811 Day. The campaign focuses on educating homeowners, is the final assembly point for all to help the company. excavators and anyone involved in digging about calling 811. The of the manufactured components. company also talks to public officials and emergency responders about This arrangement allows the “The Ohio Chamber has been a their special role in ensuring that communities are aware of their companies to collaborate, fantastic resource for us and an responsibilities when it comes to safe digging. communicate and scale production advocate for businesses statewide,” with maximum efficiency. Abraham says. “They’re working In addition, Columbia Gas is taking its safety messages to highways and with companies like ours to make neighborhoods around the state. Many of the company’s vehicles now “That is important because the sure we can thrive as the world carry signs reminding customers to call 811 and to “Smell and Tell” — way we do business, we look to go of business gets more and more or call Columbia Gas and 911 if you smell natural gas. deep with each client,” Abraham complicated. I’m from Ohio, I love says. “We’re not looking to do it here and I’m all for anything that Even though natural gas is invisible, there are several signs that can business on a project-by-project our business community can do to indicate its presence. Columbia Gas of Ohio encourages the public to be basis. We want to develop strategic strengthen itself, strengthen our aware of the following warning signs of natural gas: partnerships that will allow us to economy and create jobs.” maintain relationships for the 1) If you smell rotten eggs long run.” 2) If you see dead vegetation, blowing dirt or bubbles in This approach works because standing water “Our value is in our human Accel’s market differentiator isn’t talent, our ability to 3) If you hear a hissing sound volume — it’s brainpower. engineer solutions.” If you detect natural gas, leave the area immediately and call 911 and “We’re extremely innovative,” Abraham says. “Our value is in Columbia Gas of Ohio at (800) 344-4077. Wait for Columbia’s crew to – Tara Abraham our human talent, our ability to arrive to make the situation safe. co-founder, Accel Inc. engineer solutions. That’s why, For more information on safe digging and natural gas safety, visit throughout the industry, we’re https://www.columbiagasohio.com/stay-safe/stay-safe. looked at as problem-solvers. We can solve a packaging or assembly issue through innovation.”

WWW.OHIOCHAMBER.COM 7 2016 OHIO CHAMBER POLITICAL FORECAST – SPOTLIGHT ON OHIO

As we move into 2016, one thing Republican candidate is selected delegation is expected to stay at the is certain: The national political in July, he or she might as well take 12-4 Republican to Democrat split. spotlight will once again be on Ohio. up residence here in Ohio, as it will In real estate, the saying is “Location, certainly pay off. Ohioans have voted We have some important in-state location, location.” In a presidential for the presidential winner in every elections, as well. Due to age race it’s “Ohio, Ohio, Ohio.” election cycle since 1960. restrictions in the Ohio Supreme Court, two seats held by incumbents Simply Google “Battleground states With Ohio’s primary election — Justices Judith Lanzinger and 2016” to see the plethora of maps moved up from May to March 15, Paul Pfeifer — will be on the ballot. that show Ohio and its 18 electoral 2016, Ohioans will start hearing Chief Justice Maureen O’Connor is votes (the seventh most of all states) and seeing presidential candidates running for re-election. The Ohio as a toss-up. Politico, 270toWin, sooner than usual this year. The date Chamber will be very active in these POTUS2016, ConservativeIntel — of the primary is also important, three races as we strive to preserve all list Ohio as a battleground state. as it is a winner-takes-all scenario. fairness on the state’s highest court. Even the United Kingdom’s Daily This means that the Republican and Mail shows Ohio as neither blue Democratic presidential candidates In the Ohio House, all 99 seats nor red. who receive the most votes in the are up. There are also 16 Senate Ohio primary will secure all of the seats opening up, some of which The importance of our state in this Ohio delegates going into their have primary races. (See Rich year’s presidential election was a respective conventions. Thompson’s article on page 2.) You major reason that the Republican might notice some familiar names Party selected Ohio to host In addition, many political pundits because we have some members who this year’s national convention are watching our U.S. Senate race are term-limited switching from in Cleveland July 18-21. It’s a as Democrats — former Gov. Ted House to Senate, and vice versa. great unknown as to why the Strickland and former Cincinnati majority of Ohioans voted for the City Councilman P.G. Sittenfeld — To keep track of the political Democratic candidate in the last battle it out in the primary before happenings, you can view election two presidential races. Our state moving on to go up against Sen. Rob information on our website at is led by a Republican governor Portman in the general election. www.ohiochamber.com by clicking and has Republican majorities Again, expect to see a lot of attention on “2016 Election” under the in the House and Senate, with 11 on this race as Republicans try to Politics tab. It’s going to be another (former U.S. House Speaker John protect their majority, while the interesting political year here Boehner’s seat is currently open) of Democrats try to pick up a seat. In in Ohio. 16 Ohio members of Congress being the U.S. House, besides filling an helped by a Republican. Whichever open seat, Ohio’s Congressional

EDITORIAL POLICY POSTMASTER OHIO CHAMBER OF COMMERCE DESIGN AND PRODUCTION Articles written by guest columnists do not necessarily reflect the Please send address changes to Ohio 230 East Town Street • P.O. Box 15159 Ohio Matters is published by position of the Ohio Chamber of Commerce. The Chamber’s position on Matters, Attn: Database Manager, Ohio Columbus, Ohio 43215-0159 SBN Interactive key issues will be clearly stated. The Ohio Chamber of Commerce does Chamber of Commerce, P.O. Box 15159, 614.228.4201 • 800.622.1893 835 Sharon Drive, Suite 200 not necessarily endorse the products and services advertised in Ohio Columbus, Ohio 43215-0159. Fax 614.228.6403 Cleveland, OH 44145 Matters. Articles can be reproduced, but only with permission from, and [email protected] 440.250.7000 • www.sbninteractive.com attribution given to, the Ohio Chamber of Commerce. For authorization, FOR MORE INFORMATION CONTACT www.ohiochamber.com Laura Green, Managing Editor please contact Ohio Chamber Vice President of Communications Julie Julie Wagner Feasel www.ohiobusinessvotes.org Erin Walker, Marketing Manager Wagner Feasel at 614.228.4201. The Chamber reserves the right to Vice President of Communications Lori Smith, Art Director reject advertising based on content and does not accept advertising [email protected] that is in conflict with a position of the Chamber. Kristy Amy, Advertising Sales 440.250.7011 • [email protected] Ohio Matters is a bimonthly publication for members of the Ohio Chamber of Commerce. Subscription cost is included with annual dues.

OHIO CHAMBER OF COMMERCE ANNUAL MEETING & LEGISLATIVE RECEPTION TUESDAY, APRIL 5, 2016 #ALLFOROHIO RIFFE THEATRE, DOWNTOWN COLUMBUS RECEPTION: SHERATON HOTEL

Register online soon at www.ohiochamber.com/events then click on Annual Meeting.

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