Business Cheers, Jeers New Year

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Sacramento victories.

Postproduction executive Sunder Ramani typically views the new year with a sense of dread, because that’s when new state laws that could harm his business take effect.

But this year, the senior vice president of Westwind Media in Burbank sees some new laws he actually likes. Among them: reform of the state’s workers’ compensation system, limits on lawsuits alleging violations of the Americans With Disabilities Act and restrictions on implementation of regulations.

“We haven’t had many victories in Sacramento in recent years,” Ramani said. “So it’s great that small businesses like ours will be getting some relief this year.”

But other laws that could hurt his company also take effect this month.

Employers now face the prospect of new lawsuits on the issue of employees’ religious dress. In addition, many employers might no longer be able to keep legal settlements secret. Of course, the state sales tax has just increased a quarter-cent.

Still, Ken Devore, legislative director for the California chapter of the National Federation of Independent Business, sees this year’s new laws as relatively mild.

“Lawmakers were concerned about the economy and not doing too much to hurt business,” he said. “Plus, they were still preoccupied with the budget deficit.”

Also, Gov. Jerry Brown’s office needed the tax increases of Proposition 30 and let the business community know there would be rewards if it didn’t oppose the measure. Of more than three dozen bills that business groups labeled as job killers, only six made it through to his desk after he’d signaled to the Legislature that he didn’t want to upset business. Brown signed four of those. But he also signed eight bills that the California Chamber of Commerce and other business groups wanted.

One of those, SB 1099, makes it easier for businesses to track new state regulations. Instead of agencies implementing new regulations whenever they decide to start enforcement, the bill requires that all new regulations take effect on the first day of a quarter. And it designates a single website at the Office of Administrative Law where people can go to check on recently approved regulations or those under consideration.

Ramani said the bill will help his company avoid surprises.

“That avoids a gotcha mentality where you don’t know when a law kicks in,” he said. “And it’s easier for us to follow.”

ADA and workers’ comp

Another new law being welcomed by small business owners is SB 1186, which prevents attorneys from sending letters demanding money from businesses for alleged violations of the Americans With Disabilities Act. Over the last decade, tens of thousands of small-business owners in California have been hit with these “demand letters,” which have been likened to shakedown letters. Business owners are typically asked to pay several hundred dollars or face a lawsuit.

Under SB 1186, all letters demanding money up front are banned; any intent-to-sue letter must be sent 30 days prior to filing an ADA lawsuit. The author of the letter must detail specific problems and dates of violations of the ADA. If the business owner takes prompt action to correct the problems – typically within 60 days – damage payouts are capped at sharply reduced levels.

The new law also prevents attorneys or disabled persons from filing multiple claims against the same business for the same problems.

“This will sharply reduce the number of shakedown attempts on business owners for alleged failure to comply with the ADA,” Devore said. “It will have a huge positive impact on the business environment.”

Employers could also find significant relief in a sweeping set of reforms to the workers’ compensation system, though it could take some time. Starting this week, the reforms under SB 863 require an independent review panel to hear disputed injury claims. They also limit the practice of adding on injuries to existing claims and limit the ability of medical clinics to collect on old bills. In exchange, injured workers get higher benefits.

The benefit increases take effect immediately and have already been factored into some insurance policy renewals, leading to a rise in employer premiums.

The results of the reforms won’t be fully measured in the short term. Employers see promise and hope, however.

“On the whole, when all this is completed, we expect this to be a positive for business owners,” the federation’s Devore said.

New legal burdens

The Legislature still churned out dozens of laws that could hurt businesses, mostly by creating opportunities to bring lawsuits against business.

Chief among them: AB 1964, which extends discrimination protections to religious dress and grooming practices, allowing employees to sue if reasonable accommodations are not made. One example: head coverings required under some religious traditions that conflict with employee dress codes.

Another bill, AB 2386, extends discrimination protection to women who breastfeed their infants in the workplace.

Yet another bill, AB 2570, bans gag orders on settlements that companies or contractors in certain professions reach with plaintiffs over their business practices. The law covers professions where a license is required, such as building contractors, accountants, cosmetologists and behavioral therapists. Plaintiffs will be free to disclose the nature of their complaint along with the terms of their settlement.

The law’s intent is to inform consumers of questionable actions by professionals that result in settlements with customers. It also allows regulators and consumers to see patterns of such actions.

Business opponents of the law say banning gag orders could result in more meritless lawsuits against business owners because customers could be enticed by a big payout.