The California Legislature last month ended its 2020 legislative session where most of the final day of session was spent arguing about partisanship and figuring out how to conduct business virtually. I wrote a column about it, which was featured in Business Journal. You should go read it.
We know 2020 has been a year like no other. It has presented several challenges that many of us are still trying to navigate, but it has especially been challenging for businesses and business owners. The Valley Industry and Commerce Association fought hard and we keep fighting terrible policies which continue to be proposed by lawmakers. If it sounds like I have already told you about the awful bills coming out of Sacramento, it’s because I have.
It’s incredibly frustrating when I meet with lawmakers to discuss policies that are bad for business and I see that the business perspective and our concerns are not getting across.
Take AB 5 for example. I spent all of 2019 expressing to lawmakers the type of impact this would have on industries that depend on independent contracts and, of course, on the independent contractors themselves. Did they listen? No. What ended up happening? Well, several bills were introduced in 2020 which sought out exemptions from the law for certain industries like I said would happen. Some bills were even introduced to repeal the law altogether. But most importantly, people were out of work because no one would hire them as independent contractors due to the fear of being out of compliance with the new rules. Misclassifying someone as an independent contractor instead of an employee could cost an employer a large sum of money.
California has a number of labor laws that businesses need to adhere to, and AB 5 is just one of them. The problem with the abundance of laws, rules and regulations is that employers need to stay up to date with all of them. The more rules and regulations, the higher the chances are of an employer mistakenly being out of compliance. You know what happens then? Well, put simply – lawsuits.
Trial lawyers have been aggressively utilizing the Private Attorneys General Act to sue businesses for any kind of alleged minor labor law infraction.
PAGA was intended to give workers a way to protect themselves from employers who commit serious violations of labor laws, but some trial lawyers have been abusing the law to enrich themselves at the expense of small businesses and our economic well-being.
There are many examples of how abusive PAGA lawsuits are derived from very minor infractions that the employer could resolve quickly, such as details on a paystub. The commonsense way to address these minor problems for the benefit of employees, is to allow employers to fix them as soon as possible. But instead, businesses currently have to hire lawyers and pay out settlements, which is a lose-lose for employers and employees.
On top of all this, you have labor unions pushing these new labor laws that include a private right of action which will only make trial lawyers richer as they wait for employers to make a mistake where they can file a lawsuit.
During this pandemic, the business community has had to fight policies pushed by the unions as they’ve exploited COVID-19 to advance their policy agenda. They’ve used COVID-19 to push for workers’ compensation expansion, additional paid sick leave and a right of recall where employers would have been forced to recall workers who had been laid off and wait five days for the worker to respond. Thankfully, the governor vetoed the right of recall bill although the city of Los Angeles passed it for the hospitality industry.
California lawmakers are slowly killing businesses. Yes, we need to be supporting our workers, but we also need to be supporting the businesses who employ those workers. We need to allow them to make decisions that are best for their operations and services. Piling on more rules and regulations during this economic crisis is making it impossible for those businesses to recover, especially if they will need to spend money on settlements and lawsuits.
Here is my message to lawmakers: support businesses, reform PAGA, eliminate a private right of action in every bill and please listen to me when I tell you that a bill, especially one related to labor law, should not move forward.