The Business Council of New York State, the State’s leading statewide business and industry association, opposes this legislation which would penalize a business for moving a discrete portion of its operations overseas or out of state by restricting their access to state contracts and loans, regardless of the size of its remaining in-state workforce, payroll and capital investment, its overall positive impact on the State's economy, and its future in-state expansion.
The legislation would require a call center employer to notify the Labor Commissioner of its intention to relocate a call center, or operating units within a call center, from New York State to a foreign country or another state 100 days prior to such relocation. Further, the law would also make notification necessary if the call center has experienced “at least thirty percent” reduction in call volume from the previous month as measured by the average monthly volume of the previous twelve month period. Failure to give such notice can result in a penalty of up to $10,000 per day. It would also mandate the Commissioner of Labor to compile a list of all New York companies that relocate call centers to foreign countries or other states and “prominently display a link to the list on the department’s web site.”
Once on this “list,” a company is no longer eligible for state grants, loans and procurement opportunities for a period of five (5) years from date of publications. Additionally, once on the “list”, a company must “remit the unamortized value of any grants or guaranteed loans, or any tax benefits of other government support it has previously received in the past five years.”
The law also mandates that all State agencies shall ensure “that all state-business-related call center and customer service work be performed by state contractors”, agents, or subcontractors, located entirely within New York State. Entities are granted two (2) years to fully comply with this mandate and, if contracts are in effect longer than two years from date of this act’s effective date, must comply “at the next point in which the contract is subject to renewal.”
This legislation could punish any business currently operating centralized offices that handle large volumes of telephone calls for the purposes of providing consumer support, conducting telemarketing and collecting debts. This will impose an unnecessary and undue financial burden on these businesses, impairing their ability to maintain and improve customer service, control costs, and manage employees.
Government agencies should not be in the business of monitoring and policing business transactions far outside of its jurisdiction. If enacted, this would lead to negative consequences for a wide array of business sectors including telecommunications, insurance, manufacturing, direct farm providers, energy, financial services and retail – industries that are located and do business in multi-state regions, nationally, and often internationally.
The law risks having other States enact similar laws in their states as a retaliatory measure. Existing Section 165 of the State Finance Law prohibits the state from entering into a contract with a business from a state that gives preference to in-state business (i.e., “employs a preference or price distorting mechanism to the detriment of or otherwise discriminates against a New York state business enterprise in the procurement of commodities and services by the same or a non-governmental entity influenced by the same”). Empire State Development is charged with maintaining a list of such discriminatory jurisdictions, currently listing Alaska, Hawaii, Louisiana, South Carolina, West Virginia, and Wyoming. In effect, businesses from those states are “blackballed” for New York procurement purposes.
Numerous other states have similar “discriminatory jurisdiction” provisions. As a result, if S.1826-C were enacted into law, New York businesses would be barred from wining procurement contracts with many other state governments. By closing off out-of-state procurement markets, we believe this legislation would have an overall adverse impact on in-state business.
It should be noted that similar legislation has been vetoed in the past. In a 2008 veto message, violations of the Commerce Clause were cited as a factor in vetoing a similar bill since it “discriminates against out-of-state call center businesses by prohibiting them from providing call center services to utilities.” Further, the same veto message cited the reality that in-State only call centers would run contrary to the public good and safety. To that point, having call centers in a variety of locations “enables utilities to provide call center services during emergencies, storm events, and service disruptions when local call centers may be overwhelmed, inaccessible to employees or out of service completely.” The veto message underscored the modern system of interlocking factors in telecommunications and utility services permeating a variety of communication means, methods, and technologies.
New York should be welcoming the business community by reducing taxes and the regulatory burdens on businesses to spur growth and job creation, not enacting laws that penalize companies for making necessary business decisions while damaging the reputation and image of companies that have chosen to make New York State home. This is not in the spirit of promoting a business friendly environment. New York should be encouraging innovation and investment as a way to keep jobs in the state, not threatening its employers and taxpayers.
The Business Council urges the legislature to defeat this bill.