State Rep. Sarah Lightner today led the Michigan House in approving a plan that will strengthen protections for small businesses and workers by setting clear, consistent rules for companies that handle payroll and other financial transactions.

Many Michigan small businesses rely on third-party companies to manage payroll, tax payments, and other deductions. When those services don’t have clear oversight, it can put both business owners and employees at risk if something goes wrong.

Lightner, R-Springport, said House Bills 5544-5550 ensure the companies handling those funds are held to strong standards, helping protect hard-earned wages and business assets.

“Small business owners already have enough on their plates. They shouldn’t have to worry about whether the company handling their payroll is playing by the rules or putting their employees’ paychecks at risk,” Lightner said. “This plan creates clear standards so businesses can have confidence their money is being handled responsibly and securely.”

The plan applies to companies that collect and send money on behalf of businesses, such as payroll processors that move wages, tax payments, and deductions. It does not apply to accountants or firms that simply calculate payroll without handling funds.

In recent years, the rapid growth of online payment tools and financial technology has changed how money is moved. Many payroll providers now operate across multiple states, but a patchwork of different state rules has made it harder for businesses to know who they can trust.

Lightner said the plan cuts through that confusion by adopting a common set of nationwide standards developed by state regulators, lawmakers, and industry experts.

“Right now, businesses are navigating a maze of different rules depending on where a company operates,” Lightner said. “By aligning with national standards, we’re making things simpler, safer, and more predictable for small businesses in our communities.”

The plan would require companies that handle these transactions to be properly licensed in Michigan and meet baseline financial and security requirements. That includes safeguards to ensure they have the resources and systems needed to protect client funds.

This is especially important because some companies currently move funds in Michigan without clear oversight. By bringing those firms under a consistent regulatory framework, Lightner’s plan will help ensure employees are paid accurately and on time, protect small business funds from misuse or mismanagement, hold financial service providers to clear standards and close gaps that could be exploited by bad actors.

The plan, called the Money Transmission Modernization Act, has already been enacted in full or in part by more than 30 states.

House Bills 5544-5550 now advance to the Senate for further consideration.