Success in Moderation

The 2013 Legislative Session was unprecedented and a bit of a contradiction: Despite a Democratic supermajority in both houses and a Democratic governor, the business community netted a handful of important victories. In fact, the Valley Industry and Commerce Association, or VICA, had a 90 percent success rate in the Senate and Assembly, and an 84 percent success rate once Gov. Jerry Brown’s signatures and vetoes were factored in – a record legislative session for VICA. This exceptional score can be traced to the success of VICA-supported Proposition 14, which created a nonpartisan top-two primary for elections. The result: While California continued to elect mostly Democrats, the process encouraged more moderate candidates. You can see the moderate landscape in play by looking at many of the business priorities that VICA and other groups brought to the Legislature that successfully passed. One of the biggest accomplishments for business this year was Assembly Bill 227, which is only the second reform to Proposition 65 in 30 years. Prop 65 requires private businesses with more than 10 employees to post warnings when they knowingly expose workers or the public to any one of the 774 specified chemicals. These signs are posted on nearly every building and large companies have the resources to affix them on all of their properties. The intent is noble, but the result has been a cottage industry of drive-by lawsuits. Small businesses are being slapped with expensive lawsuits just because they are unaware of the complex regulations related to Prop 65. AB 227 gives those mom-and-pop shops 14 days after receiving a non-compliance notice to add the necessary signage before facing legal action. Such important reforms to our tort system, authored by Assemblyman Mike Gatto, D-Los Angeles, would not have been possible without a more moderate Legislature that understands the difference between helpful tort regulations and the unfair realities of the legal system. Another piece of legislation encourages growth in the important manufacturing sector. Senate Bill 12, Ellen Corbett, D-East Bay, establishes a “Made in California” program to encourage purchases of products manufactured in California. This bill is the right step to improve state business revenue growth and job creation, both of which heavily rely on consumer spending habits that have changed with the growing presence of foreign manufacturing. That being said, a Democratic supermajority was able to pass this year’s most damaging legislation: Assembly Bill 10, Assemblyman Luis Alejo, D-Salinas, increases the state minimum wage to $9 on July 1, 2014 and $10 in Jan. 1, 2016. By 2016 California will have the highest minimum wage of any state, and it will be a full 25 percent higher than the current minimum wage of $8. VICA spent more time fighting this bill than any other; we explained to our elected officials that while wages will go up, so will prices, rendering the wage increase useless in terms of purchasing power. Additionally, we can expect small businesses to cut hours and delay hiring more employees, perpetuating a stagnant business climate. Additionally, SB 435, Sen. Alex Padilla, D-Pacoima, showed a clear misunderstanding of how businesses operate. This harmful bill extends existing rest period protections to workers paid on a “piece-rate basis” – meaning a fixed rate for each unit produced or action performed regardless of time. This is a difficult requirement for employers because they typically do not track the time schedules of exempt employees – including piece-rate employees. The law makes it practically impossible for employers to defend themselves from frivolous litigation pursuant to this law. While these two bills are going to cause headaches for businesses across the state, most of the business-related bills that will become law will improve California’s business climate: AB 633 (Assemblyman Rudy Salas, D-Bakersfield) – Protects an employer from civil or criminal liability resulting from an employee providing emergency medical services to a patron or co-worker.  AB 116 (Assemblyman Raul Bocanegra, D-Pacoima) – Encourages development by extending the expiration date of tract and parcel maps, which are used by municipal planning agencies to legally account for an individual property or to sub-divide properties into up to four smaller properties. AB 1309 (Assemblyman Henry Perea, D-Fresno) – Eliminates a loophole where businesses’ workers’ compensation fees pay out-of-state retired professional athletes who claim damages for cumulative injuries sustained partially in California. AB 576 (Assemblyman V. Manuel Pérez, D-Coachella) – Creates a multiagency partnership to combat illegal underground economic operations, which have grown more than 10,000 percent in the past two decades. The Valley Industry and Commerce Association (VICA) is a business advocacy organization based in Sherman Oaks that represents employers throughout the Los Angeles County region at the local, state and federal levels of government.