Business Regulations

Business regulations are of two kinds: government-imposed regulations on businesses and business-imposed regulations on employees and customers. From the standpoint of liberty and property, the first kind of regulation is always bad and the second kind of regulation is always good, even when the regulations are bad.

Let me explain.

First of all, there are government-imposed regulations on businesses. These can take many forms.

The Family and Medical Leave Act (FMLA) requires employers with 50 employees or more to provide 12 weeks of unpaid leave to “eligible employees” because of the birth or adoption of a child or for the serious illness of the employee or the employee’s spouse, child, or parent.

Most people are aware that the Obamacare individual mandate dictating that every American not covered by Medicaid, Medicare, or private health insurance must purchase health insurance or pay a penalty was eliminated in the Tax Cuts and Jobs Act of 2017 and then declared unconstitutional. However, the Obamacare employer mandate is still in force. It dictates that all employers with 50 full-time or full-time-equivalent employees or more must offer them “affordable” health insurance that provides “minimum value” or pay an annual tax penalty of $2,000 per employee.

There are also minimum-wage laws that dictate that an employer cannot pay an employee less than a certain amount per hour even if the employee agrees to work for that amount. The Fair Labor Standards Act also requires that employers pay a “covered employee” overtime pay of one-and-one-half-times the regular rate of pay, even if the employee agrees to work overtime for his regular rate of pay. The U.S. Department of Labor (DOL) actually administers and enforces more than 180 federal laws.

Most employers with at least 15 employees must comply with anti-discrimination laws enforced by the Equal Employment Opportunity Commission (EEOC). The EEOC mandates that employers cannot discriminate in hiring or promotions on the basis of race, religion, age, sex, national origin, disability, sexual orientation, or gender identity.

Manufacturers must comply with labeling laws on everything from mattresses to canned goods.

Businesses that employ more than 100 people are required to report each year to the EEOC how much they pay each employee, broken down by race/ethnicity, job category, and gender.

Businesses must also comply with environmental regulations, safety regulations, antitrust regulations, advertising regulations, licensing, and permits.

And then, of course, there are the various taxes that businesses must collect for federal, state, and local governments: sales taxes, excise taxes, Social Security tax, Medicare tax, unemployment tax, withholding tax.

Government regulations on business are a tremendous burden and a costly drag on the economy. According to economist Dan Mitchell,

  • Americans spend 8.8 billion hours every year filling out government forms.
  • The economy-wide cost of regulation is now $1.75 trillion.
  • For every bureaucrat at a regulatory agency, 100 jobs are destroyed in the economy’s productive sector.

And that was just a few years ago. According to the Competitive Enterprise Institute (CEI), “The aggregate total of regulations issued since 1976 (when the Federal Register began itemizing them) has increased from 195,189 at the end of Obama’s tenure to 204,802 now.” (And “now” was before the coronavirus pandemic.)

Then there are business-imposed regulations on employees and customers. These are generally misunderstood. Should they be allowed? Should they be limited? Should they be enforced by government? Are they constitutional? Two recent incidents relate to this subject.

When the Black Lives Matter (BLM) movement was the focal point of the news earlier this year, some employees of Whole Foods Market in Canada came to work wearing insignias and clothing in support of BLM. In response, Whole Foods Market prohibited all employees from wearing such items. But then the company went a step further. It prohibited the wearing of Remembrance Day poppies during Veterans Week. “The poppy represents those who’ve served, fought, and died for Canada, and it’s deeply personal to everyone here,” said Lawrence MacAulay, Canada’s Minister of Veterans Affairs. Ontario Premier Doug Ford, who termed the ban “disgusting and disgraceful,” said that his family would be boycotting Whole Foods Market. But he also announced that “he would seek legislation in the province to ban employers from prohibiting staff from wearing poppies during Remembrance Week.” Other grocery stores in Canada took advantage of the public outcry directed towards Whole Foods Market. Some posted photos of employees wearing poppies. Whole Foods Market then reversed its poppy-wearing policy and issued a statement: “Our intention was never to single out the poppy or to suggest a lack of support for Remembrance Day and the heroes who have bravely served their country.”

But it’s not just Whole Foods Market in Canada that is in hot water. In the United States, Whole Foods Market was sued in July by employees in Massachusetts, New Hampshire, California, and Washington when it barred them from wearing BLM face coverings while on the job. The company said in a statement that employees “must comply with our longstanding company dress code, which prohibits any visible slogans, messages, logos or advertising that are not company-related, on any article of clothing.” The plaintiffs allege that “the company has allowed other messages on workers’ attire, including rainbow pins and flags, and sports team names and logos.” The lead attorney said that Whole Foods Market “‘selectively and arbitrarily’ enforced the dress code to specifically suppress the Black Lives Matter message.”

The other incident concerns business regulation of customers. And it is more than just one incident. It actually affects millions of Americans every day. Since the advent of the coronavirus “pandemic,” many businesses have begun requiring not just their employees, but their customers as well, to wear face masks while patronizing their place of business. Now, much of this is because of government mask mandates that exist in many states, counties, and cities, but not all of it. In some places where there are no mask mandates, businesses have instituted their own.

Should they have the right to require their customers to wear face masks? Of course they should, but not because (so they say) masks help to limit the spread of coronavirus, are recommended by the CDC, keep everyone safe, or are just a minor inconvenience. Businesses should have the right to require their customers to wear masks for the same reason that they should have the right to require their customers to wear plaid shirts, dress pants, or blue suede shoes. No one has the right to shop at a particular store. Just as no store has the right to any customers.

In a free market, before a business makes any regulations, it must take into account whether a particular attire or conduct regulation — or any regulation — will upset employees or alienate current (or potential) customers. Mistakes can cost them employees or customers, or both.

It is never the business of government to regulate business. But it is perfectly acceptable for businesses to regulate the attire and conduct of employees and patrons. We may not like working for or shopping at businesses that have certain attire and conduct regulations — just as we may not like the prices they charge, their return policies, their hours of operation, the cleanliness of their restrooms, their employee benefits, or the snacks available in their employee break rooms — but in a free society it is businesses that decide those things and employees and consumers who decide if they will go along with them or work or shop somewhere else. In a free society, the government wouldn’t be involved in any way.

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