Last year the Utah Department of Insurance issued a ruling prohibiting small businesses across the state from utilizing the services of , a company that provides employers with a free online platform to manage human resources activities such as hiring, payroll, retirement plans, and health insurance. This behavior is highly unusual for a state that prides itself as a haven for innovative businesses, both small and large. Recognizing the direct damage this regulatory edict places on Utah’s technology sector, Representative John Knotwell introduced House Bill 141 in the Utah House of Representatives. If passed, HB 141 would lift the ban on Zenefits and make clear that Utah supports innovative companies and technologies.
Below is a copy of the letter Americans for Tax Reform sent to Utah representatives urging them to support HB 141:
Dear Members of the Utah House of Representatives,
Utah currently has the dubious distinction of being the only state in the nation to ban an innovative new technology that provides tremendous benefits for small businesses. On behalf of Americans for Tax Reform and our supporters across Utah, I urge you to support and vote for House Bill 141, legislation introduced by Representative John Knotwell that would fix this problem and ensure Utah retains its reputation as a pro-business state that welcomes innovative companies and entrepreneurs.
Last year the Utah Department of Insurance issued a ruling prohibiting small businesses across the state from utilizing the services of Zenefits, a company that provides employers with a free online platform to manage human resources activities such as hiring, payroll, retirement plans, and health insurance.
20th century brick and mortar health insurance brokers, rather than try to compete, decided to instead get state regulators to shut down their innovative competition. Imagine if early in the 20th century, horse and buggy operators successfully shut down the emerging automobile industry. That might sound ridiculous but it is analogous to what the health insurance brokers got Utah regulators to do to Zenefits.
This situation represents a classic case of protectionism, in which entrenched actors in an industry use the heavy hand of government to shutdown competition. The result of this is less choice and higher costs for consumers. In the case of the Zenefits ban, the victims are Utah small businesses, the engines of job-creation, who are now needlessly deprived of easy-to-use technology that was reducing costs and increasing their job-creating capacity. Such a misguided ruling, aside from the economic harm it does to in-state employers, does great damage to Utah’s reputation as a business-friendly state that is attractive to high tech companies, entrepreneurs, and startups. HB 141 would reverse this damage and ensure Utah retains its status as a hub of commerce and innovation.
HB 141 would, if passed, lift the ban on Zenefits and make clear that Utah supports innovative companies and technologies. Passage of HB 141 would clarify a confusing law that does unnecessary harm to Utah small businesses. Lifting the ban on Zenefits will provide Utah employers with an easy-to-use online platform that reduces costs, thereby freeing up resources to invest in their businesses and hire more workers. As such, I urge you to support HB 141, legislation that is important to Utah’s economy and reputation.
Americans for Tax Reform will continue to follow this issue closely throughout the session and will be educating your constituents as to how you vote on this important matter. If you have any questions, please contact Patrick Gleason, ATR’s director of state affairs, at (202) 785-0266 or [email protected].
President, Americans for Tax Reform