Businesses Turn to Courts to Fight Policy Changes

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

With the one-party dominance of the Democratic Party in California leading to more government controls on business, companies are turning to the courts for relief from legislative mandates.

As new laws were set to kick in on January 1, a number of lawsuits were filed by businesses seeking protection from the new laws. Many of the suits aimed at Assembly Bill 5 setting requirements to determine whether workers are employees or private contractors.

The law has met pushback from affected industries and it is certain that the question of which industries deserve exemptions from the law will be played out further in the legislature over the coming year.

In the meantime, the California Truckers Association went to court and attained a temporary restraining order blocking the law’s effect on independent truck drivers.

Freelance writers and photographers also turned to the courts to get out from under AB 5’s requirements. A judge turned down the request from the American Society of Journalists and Authors and the National Press Photographers Association for a temporary restraining order.  However, the case will be heard in March.  

Most attention will fall on the lawsuit filed by Uber, Lyft and Postmates, which argue that they are in the digital business and that their drivers should not be covered by AB 5. These firms have a full offensive against the law also threatening to go to the voters with a ballot initiative to void the law’s effect on their companies.

The National Retail Federation and the California Chamber of Commerce, along with other business groups, are in court to upend AB 51, which prevents companies from requiring that employees sign arbitration agreements as a condition of employment. Business believes any disagreements with employees should be resolved in an expedited and less costly process than forcing more lawsuits against the state’s businesses.

Then there is Senate Bill 826 that requires corporations in the state to add women to all-male boards of directors. While lawsuits filed against this law did not come directly from business, the notion that government continues mandating how businesses operates is a principle concern in this lawsuit. Indeed, the Los Angeles Times editorial board, not a bastion of conservative thinking, while praising the changes that are coming about because of the law, note the issue of quotas is “not a good way to accomplish societal goal.” Businesses are watching what the courts will do.

With the often cited hostile business environment in California and a constant flow of new regulations coming from a legislature that is not shy about mandating how institutions operate, the businesses are turning to courts for help as a last resort

If the courts don’t offer relief and the trend continues, a concern is that businesses will look to re-locate out of state.  It is hard to conceive that businesses will want to abandon the state with its rich markets and many consumers. Yet, there are signs that many California residents are seeking greener pastures elsewhere, driven away by the high cost of living, housing costs and other problems endemic to California. Frustrated businesses might choose to follow where these consumers lead.

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