Women Mired In The Bureacracy
Judy Hooper has two passions in life: her Evanston, Ill., bakery and the Occupational Safety and Health Administration, which slapped her with $13,000 in fines in 1994.
Her infractions? They included failure to warn employees of the hazards of dishwashing liquid and a failure to have a posted fire evacuation route, though her building is on the first floor with four clearly marked exits. To recoup the cost of these fines, she would have to sell 260,000 doughnuts, or 10,400 cakes, or 1,040,000 cookies. Instead, Hooper hopes to file a class-action lawsuit against the federal agency and enlist other victims of OSHA to help her cause.
She will find plenty of recruits. Millions of women entrepreneurs are finding out just how intrusive big government can be. One of the most overlooked issues in this campaign season is how the rising number of women-owned businesses - a third of all U.S. firms - are being beaten down by Washington’s overbearing laws, inflexible regulations and arcane tax policies.
If they mobilized, these women could be a potent force. The National Foundation for Women Business Owners (NFWBO) reports that 8 million women-owned businesses in the United States employ 18.5 million people and generate nearly $2.23 trillion in gross sales. Are women entrepreneurs feeling the big-government heat?
Ask Arlene Kaplan of Heart to Home Inc., a New York company that provides skilled nurses for patients needing home health care. Given their unpredictable hours, Heart to Home’s 70 nurses, like thousands of others in the health-care industry, work as independent contractors. This allows them to schedule work around their families and other commitments.
It also means they pay their own state, federal and Social Security taxes. Enter the Internal Revenue Service. Through reasoning criticized as “vague” and “subjective” by tax-law experts, IRS officials decided in a 1990 audit that nurses placed through Heart to Home were not independent contractors, but employees. Kaplan’s business was assessed $250,000 in back taxes and fines for “misrepresenting” her workers to the IRS.
Kaplan joins a cast of thousands. Over the last seven years the IRS has hit small businesses especially hard, reclassifying 439,000 independent contractors as employees and collecting more than $750 million in fines.
Yet Kaplan is not paying the IRS; instead she’s suing the agency - at a cost of more than $60,000 in legal fees. “If the government wins, they put me out of business,” Kaplan says. If she wins she merely gets them off her back.
One of the worst accomplices in this regulatory assault is the Americans with Disabilities Act, whose reach is affecting more and more women in business. Ask Karla Hauk, co-owner of a 32-room Days Inn in Wall, S.D. Her motel opened six months after the ADA went into effect. Following franchiser-approved plans, Hauk made two of the 32 rooms handicapped accessible and made the entrance wheelchair accessible. It was the first motel in town to provide rooms with accommodations for the handicapped.
Her reward? Hauk and everyone involved in the motel’s construction are being sued by the Justice Department for “unlawful discrimination” toward individuals with disabilities. The ADA says the owners must build an elevator (estimated installation cost of $100,000) for access to the motel’s basement, plus a ramp leading to the whirlpool located there. The ADA also requires the owners to widen all of the bathroom doors in the non-handicapped rooms in case a handicapped person wants to visit another guest. Because Hauk’s business nets only $20,000 to $25,000 a year, a battle with the feds will force her out of business, her lawyer says.
Environmental regulations can be equally troublesome. Anita Cragg’s Florida firm fought a losing battle against the U.S. Fish and Wildlife Service over the scrub jay. Cragg, the owner and president of Space Coast Management Services Inc., bought an existing subdivision with plans to build new homes. In 1993, federal investigators observed two Florida scrub jays - a bird listed as threatened under the Endangered Species Act - flying onto Cragg’s lots.
The officials claimed that Cragg’s planned development posed a potential hazard to land “suitable for occupation by scrub jays.” They suspended construction on the site, although the owner reports that neither the investigators nor an independent environmental engineer found any scrub jay nests on her property. Her four-person company fought government officials for 18 months until Cragg was forced to purchase four acres off-site for every homesite to compensate for the loss of potential scrub jay habitat. That little bargain cost her more than $100,000.
There may be some legislative help on the way for business owners. Congress is seeking to clarify the ambiguity of tax laws regarding the status of independent contractors, for example. But as more women start their own businesses, they are becoming more cynical about government’s helping hand.
Women business owners are bumping against a ceiling all right: But it isn’t made of glass - it’s made of red tape.
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