In 2020, California Lawmakers Failed to Protect Californians Against Lawsuit Abuse

John Kabateck
NFIB State Director in California

Another legislative session has come to close here in California and, once again, lawmakers have let Californians down. Why? There is a fundamental issue that has been hurting our great state for many years that lawmakers simply refuse to address: lawsuit abuse.

You may be thinking that lawsuit abuse is an issue reserved for courtrooms and lawyers. That’s where you’d be woefully wrong. Unfortunately, lawsuit abuse affects you and me in many ways. For starters, lawsuit abuse takes away job opportunities from hardworking Californians – 197,776 jobs, to be exact. It also results in $11.6 billion in direct costs, which leads to a hidden “tort tax” of hundreds of dollars a year per person. 

While these are serious issues, today I want to talk about the horrendous impact that California’s lawsuit abuse problem has on our businesses, and the most crucial ways that our lawmakers failed business owners during this past legislative session.

A prime example of this is Americans with Disabilities Act (ADA) lawsuit abuse. Passed in 1990, the ADA was intended to ensure access for the disabled to public accommodations. Instead, it has turned into a vehicle to exploit small business owners over any minor, technical infractions that do nothing to impede accessibility. 

Rather than working to fix this problem, California lawmakers ultimately incentivize these shakedowns under the Unruh Civil Rights Act, which makes penalties for ADA violations much higher than in other states. With this financial motivation in mind, predatory lawyers run amuck, searching small businesses for any ADA violation they can find – no matter how minor or harmless – and use it to bring suit. Given the cost of fighting off a lawsuit, these extortionist claims force small business owners to settle and likely shut down their businesses for good. The longer this goes on without lawmakers’ intervention, the more businesses and jobs we’ll lose.

Proposition 65 is another great example of the kind of lawsuit abuse that crushes California’s businesses. Just like the ADA, Proposition 65, or Prop 65, was intended for good, and was turned into evil by the same greedy trial lawyers that are abusing the ADA. Enacted in 1986, Prop 65 was intended to protect consumers’ health and safety by requiring businesses to place ominous warning labels on products that contain even the slightest, most harmless trace of nearly 1,000 listed chemicals that environmentalists have deemed toxic. Instead of doing what it was meant to, it has since been turned into a popular tool used by trial attorneys to shakedown California businesses.

Now, these money-hungry lawyers look for any technical Prop 65 violation they can get their hands on. These violations can be completely harmless and do nothing to threaten the health of consumers. But, according to the law, it’s grounds for a lawsuit. Once again, these hardworking small business owners are targeted and forced to settle, despite the fact that their only crime was a harmless mistake. 

Lastly, lawmakers failed to fix California’s Private Attorneys General Act (PAGA). Originally intended to protect workers, PAGA has done little to help them and, instead, has done everything to hurt small business owners. PAGA allows employees to sue their employers over any nitpick such as a typo in one of their paychecks. As you can imagine, PAGA has turned into a weapon for trial lawyers as they use it as lawsuit-creating tool in order to line their pockets at the expense of businesses, as well as the employees that PAGA fails to protect.

To put it plainly, the 2020 California legislative session was a wash. Our businesses are left as vulnerable to lawsuits as ever. And, with the current legal climate surrounding COVID-19, there’s no telling how many more businesses and jobs we will lose due to the failures of our lawmakers this past session. If there was ever a time to address and fight against lawsuit abuse in California, it’s this upcoming session, and I urge lawmakers to do so. It’s what’s best for everyone.

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