What's New

Zack Hutchins
Director of Communications

June 23, 2000

Legislative session ends with some key wins for business
No agreement on minimum-wage hike; Council defeats new trade-secrets bill; stock-options bill, procurement act extension approved

The state Senate and Assembly adjourned Friday June 23, ending a session marked by a number of wins for The Business Council and New York's business climate.

"Lawmakers have passed some key business-friendly bills and rejected some harmful ones," said Business Council President Daniel B. Walsh. "If you consider the gains earlier this month and the repeal of employers' energy gross receipts tax and other cuts enacted in May, business has had a good year." (For information on the tax cuts and other business-friendly provisions of the state budget, click here. For a summary of legislative actions taken before activities were suspended June 15, click here. For a report on how The Business Council fared on its top legislative priorities for 2000, click here.)

Issues that were debated during the last few days of the session include:

Minimum wage: The Senate adjourned without passing any increase in the state's minimum wage. The Business Council and its members have strongly opposed a proposal to increase the state's minimum wage by 31 percent, to $6.75 per hour, and to provide further automatic hikes that would be driven by increases in the state's average annual wage. That bill passed the Assembly.

The Business Council has long maintained that the minimum wage should be set in Washington, and that a minimum wage in New York that is higher than the minimum wage in surrounding states would be a significant competitive disadvantage for New York businesses, especially in communities near borders with other states.

Physician profiling: Both houses passed a new bill (S.8127/Hannon) that would make information on all physicians available on the Internet. This bill would give consumers access to more information than would have been made available by earlier bills. The Business Council has supported the idea of making such information available to consumers, including information on the professional and educational backgrounds of physicians, their current specialties and board certifications, and hospitals where they have privileges.

Stock option plans: Both houses passed a bill strongly supported by The Business Council that would make it easier for corporations to issue stock rights and options to officers, directors, and employees. Specifically, the bill would require that the corporation issue such rights and options in compliance with the rules of the exchange upon which its stock is traded.

At present, New York law requires a vote of shareholders to approve all stock-option plans. The New York Stock Exchange (NYSE) requires shareholder approval of stock-option plans for officers or directors unless the plan is also offered to a majority of U.S. employees and a majority of shares are awarded to employees who are not officers or directors. NYSE also permit the issuance of stock options without shareholder approval as an inducement to employment.

The Council argued that this bill would help New York companies compete with other corporations in attracting and retaining a top-quality workforce, especially within emerging high-tech sectors, in which stock options are often a critical component of recruitment and compensation packages. Only six other states, Alaska, Hawaii, Maine, New Mexico, Vermont, and West Virginia, now require shareholder approval for such stock-option plans.

Trade secrets: Strong last-minute opposition from The Business Council helped defeat a trade-secrets bill that included some damaging last-minute amendments.

The original bill would have set forth specific statutory remedies for businesses whose trade secrets had been misappropriated. But last-minute amendments would have undermined trade-secret protection by stipulating that protections do not apply if the secret was determined to pose a "risk" to public health or safety, or if it might be out of compliance with a state regulation.

In opposing the amended version of the bill, The Council argued that the amendments would gut the original bill and would raise serious Constitutional questions. For example, The Council noted that the bill did not provide any procedure for judicially determining whether information that is otherwise protected as a trade secret might pose a risk or constitute unlawful conduct. This would violate the due-process clause of the Fourteenth Amendment to the Constitution, The Council argued.

The Council also argued that the amended bill might violate the Fifth Amendment of the Constitution, which protects against unlawful taking of property. Trade secrets are a form of property, and because this bill would have likely caused the destruction of trade secrets, it amounted to an uncompensated, and therefore unconstitutional, taking of property.

The Council had supported the original bill.

Extension of state procurement law: The Senate and the Assembly agreed to extend for five years the state's procurement law, which outlines how the state will purchase goods and services. The Business Council had strongly supported an extension of the current law, and it argued successfully for rejection of several less business-friendly alternative bills that were part of the debate this year.

The extension includes some changes to the law that The Council supported, including: creation of a centralized list of commodities and services offered by small businesses; introduction of annual training programs, in each economic development region of the state, focusing on small businesses and on business development for minority- and women-owned businesses; an increase, from $30,000 to $50,000, in the dollar amount under which the state Office of General Services may purchase goods and services without formal competitive bidding; and creation of a preference (not based on price) for commodities that are recycled or remanufactured.

New York Stock Exchange: Lawmakers agreed on a bill that would enable the state to condemn a site in lower Manhattan for a new home for the New York Stock Exchange. The bill would also permit New York City to issue $255 million in bonds to acquire land for the construction and to help build a new exchange building.

HMO liability: The Senate adjourned without passing an "HMO liability" bill, which would authorize lawsuits against health-maintenance organizations arising from disputes over insurance coverage. The Business Council strongly opposes this bill because its ultimate effect would be increased health-care costs.

Prescription drug price controls: Lawmakers declined to pass a bill that would have eliminated imposed government price controls on prescription drugs. The Business Council had raised concerns about this bill and has urged lawmakers to seek free market-based approaches to ensuring that prescription drugs are available to all sectors of society.

Retail divorcement: The Business Council helped defeat a "market divorcement" bill that would have sharply limited the rights of petroleum refiners and producers to directly operate service stations that they own and build. Specifically, the bill would have required petroleum refiners seeking to locate a company-operated service station to gain the written consent of any franchised petroleum operation within 2.5 miles of the proposed site.

The Council argued that this legislation could harm consumers by driving up gasoline prices, since the number and convenience of available service stations is one factor that determines gasoline prices. Legislation that effectively limits the number of service stations would have the effect of driving up prices. The Council cited a study by the Maryland State Department of Fiscal Services, which concluded that prices typically go up after a legislative or regulatory mandate of "market divorcement" of the sort proposed in this bill.

Infertility mandate: The two houses did not agree on a compromise bill that would require that health insurance include coverage of treatments for infertility. The Senate and the Assembly had passed separate infertility-mandate bills. The Business Council has been voicing strong opposition to any infertility mandate, citing national studies that show such a mandate would likely increase health-insurance premiums by 3 to 5 percent.

The Council strongly opposes all health-care mandates because they drive up health-care costs and increase the likelihood that employers will be unable to offer any health insurance benefit at all.

Energy surcharges: As expected, lawmakers took no action on a variety of proposals to extend and/or increase a surcharge on energy that contributes to New York's high energy costs. The similar "systems benefit charge" already added to consumers' and businesses' energy bills is to be evaluated by the New York State Energy Research and Development Authority (NYSERDA) beginning this fall before the surcharge expires next June. Discussion of a series of bills on this topic in recent weeks was considered an initial skirmish in a debate that is likely to become more prominent in the next 12 months. (For details on the current systems benefit charge and a description of some of the new proposals, click here.)