California Businesses Get Breather on New Laws

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As the new year dawns, most Los Angeles employers are finding they don’t have to rush to comply with a host of new and burdensome state laws. For the first time in two years, they won’t face an increase in the minimum wage.

However, some businesses do face a few new laws and regulations, especially from the federal government. And, given the state’s budget mess, more taxes may be in the offing.

Actually, the state budget crisis prevented lawmakers from drafting as many anti-business laws as in previous years, and the handful that were sent to Gov. Arnold Schwarzenegger were blocked by his veto.

“The budget eclipsed most everything else in terms of meaningful legislative action,” said John Kabateck, executive director of the California chapter of the National Federation of Independent Business.

Among the proposed laws that Schwarzenegger vetoed last year were a fee on shipping containers and increased penalties for employers who misclassify employees as independent contractors.

The most burdensome legislation that did pass requires chain restaurant owners to post nutritional information on their servings. It takes effect July 1.

A few other laws impacting specific types of companies and employees take effect this week. Wages for temporary service employees must now be paid weekly if the employee is assigned to a client company on a day-to-day basis. And computer service professionals can now be paid on a monthly or annual salary; previously, they could only be paid at an hourly rate.

The relief from anti-business laws may be short-lived. When the plans to close the state’s $40 billion budget deficit come together over the next few months, business leaders fear that they will face much higher taxes and fees.

To deal with the budget crisis, Schwarzenegger has proposed increasing the sales tax, while Democratic lawmakers passed a plan last month laden with new fees on business that the governor said he intended to veto.


Call for rollbacks

Business groups, their Republican allies and Schwarzenegger have said they will not approve any new taxes or fee increases unless they get some relief in the form of rollbacks on rules that hit businesses’ bottom lines, such as overtime requirements, meal and rest periods, and environmental rules. Democrats have resisted these rollbacks in the past, but things may change as the crisis looms.

There’s also concern about how to close a looming $2 billion shortfall in the state unemployment insurance fund, caused by the rising numbers of jobless. California will probably apply to the federal government for a loan, but will likely still need to enact some combination of tightening of benefits and boosting of employer contributions.

Meanwhile, business groups are concerned about what may happen with the incoming administration of President-elect Barack Obama, especially with his selection of Rep. Hilda Solis, D-Los Angeles, to be secretary of labor. Solis has said that she wants to shift the current balance of power between management and labor more toward labor. The first battle is expected to be over pending union-backed legislation basically restricting secret ballots used in votes for union representation.

The major changes that businesses face this month come from the federal government: updates to the Americans With Disabilities Act and the Family and Medical Leave Act.

On the disability law, Congress acted to blunt the impact of a series of court rulings narrowing its scope. The biggest change, according to Patricia Eyres, an attorney with Stuart Baron & Associates in Los Alamitos, concerns workers with chronic illnesses who may be asymptomatic most of the time, such as people with asthma or epilepsy. Under previous court rulings, employers did not have to accommodate such illnesses. The update requires them to do so.

A state law that now takes effect will grant employers some relief in dealing with the ADA: SB 1608 attempts to stop the spread of often frivolous lawsuits targeting employers for noncompliance with the act.

Under SB 1608, employers can bring in a certified ADA compliance officer to do a workplace inspection and suggest any additional compliance measures. Once the workplace passes inspection, it should shield the employer from liability and dissuade attorneys from filing suits.

“This is definitely a step in the right direction and should help small business owners who often find themselves the victims of these extortion lawsuits,” Kabateck said.

The update of the family leave act was designed to address the impact of hundreds of thousands of soldiers serving in Iraq and Afghanistan. While military spouses had previously been eligible for family leave in some circumstances, the new law expands the act to include such things as obtaining leave for short-notice deployment of spouses and arranging child care.

Because employees at any workplace might be eligible for these benefits, all employers must now update their workplace posters. Also, there are some minor changes to state laws that have to be displayed. The updated posters should be available from local chambers of commerce or the California Chamber of Commerce.


Texting ban

One new state law that will affect some businesspeople is a follow-up to the ban on holding a cell phone while driving. This law SB 28 by Sen. Joe Simitian, D-Palo Alto is aimed at reducing the number of traffic accidents. While teenagers texting each other is the popular image, some businesspeople, particularly younger ones, do send text messages while driving.

“Many businesses put in policies on texting when the cell phone ban went into effect,” said Marc Burgat, vice president of government relations for the California Chamber of Commerce. “Now, what’s really left is a lifestyle change: Those who do text while driving will simply have to find other ways to communicate or wait until they can stop for a few minutes.”

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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