From your small-business-advocacy team in Sacramento
Welcome to the October 16-20 edition of the Main Street Minute from your small-business-advocacy team in Sacramento.
2023 is Over and Done
- The deadline for Gov. Gavin Newsom to sign or veto bills sent to him by the Legislature passed midnight Saturday (October 14). The Legislature had already adjourned for the year, so taxpayers and small business owners can have a few months of relative peace until January. We say relative, because now is the time everyone is analyzing the potential impact the bills he signed into law will have on them.
- To no one’s surprise, Labor got a lot of what it wanted, but not the big prize it was aiming for, Senate Bill 799, which would have extended unemployment benefits to striking workers. Newsom also disappointed Labor a few other times.
- From the more than 3,000 bills introduced this year, NFIB narrowed to 58 the ones most deserving of attention and resources. A brief description of them and what happened to them can be found in this final bill list of 2023. The 58 bills are under one of six categories:
— Bad for Small Business Bills NFIB Helped Stall
— Good for Small Business Bills Signed into Law
— Good for Small Business Resolutions Filed with the Secretary of State That Do Not Need Voter Approval (Resolutions do not require the signature of the governor)
— Bad for Small Business Bills Filed with the Secretary of State for Voter Approval/Rejection (Resolutions do not require the signature of the governor)
— Bad for Small Business Bills Signed into Law
— Good for Small Business Bills that Stalled.
- A deeper look into some of the bills that passed will be forthcoming in future Main Street Minutes. For this report, we begin with Assembly Bill 594 below.
A New Sue-the-Boss Player is Deputized
- For those new to the issue, and despite its anti-employer existence, the Consumer Attorneys of California does offer one of the better one-paragraph explanations of PAGA:
— “Enacted in 2004, the purpose of the Private Attorneys General Act (PAGA) was to increase enforcement of the Labor Code by ‘deputizing’ citizens to act as private attorneys general and allowing them to pursue civil penalties on behalf of the state for Labor Code violations. This private enforcement mechanism was meant to help address the reality that labor enforcement agencies could not keep up with the growth of the labor market and the number of Labor Code violations occurring in workplaces.”
- So, has it worked out as planned?
— Not for aggrieved – legitimately or imaginatively – employees. But there has been one big winner. “California’s small businesses and workers are being taken advantage of by shakedown lawsuits under PAGA, with lawyers taking billions and workers waiting years to have their claims resolved,” according to Californians for Fair Pay & Employer Accountability on its Stop the Shakedowns website.
— “Lawyers are the big winners in these lawsuits, walking away with millions and leaving employees with pennies on the dollar. Nonprofits and small, family-run businesses are easy targets for predatory lawsuits based on minor technical violations of the 1,000+ page labor code.”
— The California Restaurant Association, a coalition partner with NFIB on the PAGA issue, has produced this nicely informative three-minute video explaining the issue in more detail.
- OK, so who’s the new deputy?
— The governor introduced a whole new cast of them when he signed Assembly Bill 594 into law on October 10, which “Authorizes, until January 1, 2029, public prosecutors to sue for certain violations of the Labor Code independently of the Department of Labor Standards Enforcement (DLSE) and nullifies any agreements that limit an employee’s right to file in court on behalf of themselves or in a representative action. Permits, in an action for willful misclassification, the recovery of penalties by the employee as a statutory penalty or as a civil penalty.”
— AB 594 was authored by Assemblyman Brian Maienschein, a Republican-turned-Democrat who is term limited next year, and — wouldn’t you know it — is running for city attorney (one of the above mentioned “public prosecutors”) of San Diego.
— In a coalition letter NFIB signed asking for the governor’s veto, it pointed out, among other things, “The bill’s attorney’s fees provision also raises concerns regarding motivation. Because of the significant cost of litigating Labor Code claims, the vast majority of employers are likely to settle the case like they do now with private attorneys. Public prosecutors will have been spending significant taxpayer dollars to litigate the case (unlikely the DLSE, which is funded by employers’ annual assessments). There are concerns then about the motivation to increase settlement values to compensate for that and to add to the city or county’s own budget …”
- Meanwhile, PAGA continues to wreak havoc.
— Reports Dentons law firm, “On August 31, 2023, the California Court of Appeals issued two decisions that will create more challenges for California employers defending against lawsuits brought under California’s Private Attorneys General Act (PAGA). One decision limits the preclusive effect of PAGA settlements, while the other decision strengthens a PAGA plaintiff’s ability to intervene in, and object to, overlapping PAGA settlements. These decisions make it more important for California employers to implement a robust wage-hour compliance program.”
- Just in time for Christmas
— A new board game, Doing Business in California, on which every other square is a lawsuit, tax increase, or new or expanded regulation.
Today is the Deadline to File Your Taxes, if You Haven’t Already
- From the San Francisco Chronicle:
— “After deadly winter storms swept through much of the state at the beginning of the year, the Internal Revenue Service extended tax filing and payment deadlines several times for people in counties included in multiple FEMA disaster declarations — which ended up being almost all Californians. The state tax agency followed suit.
— “Only residents and businesses in Lassen County along California’s northeastern border had to meet the original April 18 deadline for filing their returns for the 2022 tax year. For Shasta and Modoc counties, the deadline was Aug. 15, according to the Franchise Tax Board.
— “For California’s 55 other counties, including the entire Bay Area, that final deadline is Monday [October 16], and the tax board expects 3 million more Californians to file.”
National
- The Senate was out last week. Members return today
- The U.S. House spent all last week looking under chairs and in remote cloakrooms for a Speaker to lead it.
- Last Tuesday (October 10), NFIB’s Research Center produced the monthly Small Business Economic Trends (SBET) report, also known as the Optimism Index. Next month’s SBET, due out November 14, will be the 50th anniversary one. Click here for a one-page history of the SBET, where you’ll come across the names of Richard Nixon and Charles Colson.
Next Main Street Minute, October 23.
