It’s not all gloom and doom at the city of Los Angeles, despite the budget chaos: Local business groups are cheering a City Council vote last week to create an office specifically to analyze the economic impacts of new regulations and ordinances.

The Office of Economic Analysis would evaluate the impacts of proposed ordinances on local businesses, job creation, sales tax generation, income growth and other economic factors.

The Los Angeles Area Chamber of Commerce, the Central City Association, the Valley Industry and Commerce Association and other groups have long complained that the city ignores harmful economic impacts when it passes ordinances. One example they pointed to was the move four years ago to extend the living wage to Los Angeles International Airport-area hotels. They contend the cumulative effect of ordinances like this is to make Los Angeles a much more costly place to do business, which in turn pushes businesses to move to nearby cities such as Burbank or Calabasas.

Last year, the L.A. chamber proposed that the city follow the example of San Francisco, which analyzes the economic impact of all proposed ordinances and regulations. In late 2009, City Council President Eric Garcetti and Councilman Greig Smith suggested that Los Angeles consider setting up an office to do that.

The report on the matter was presented last month to the council, which voted May 17 to establish the office.

“The creation of this new Office of Economic Analysis is a very important move for the city because it will provide the critical jobs information currently lacking from city policymaking,” said Gary Toebben, the L.A. chamber’s chief executive.

The office is expected to launch when the city’s fiscal year begins July 1.

Contractor Crackdown

The state is preparing to step up enforcement of wage and hour laws for contractors on public works projects.

Since 2002, public agencies have been allowed to contract out to third-party companies the oversight of public works contracts. The companies are supposed to make sure contractors that receive state funding comply with state prevailing wage, overtime and other wage and hour laws on projects such as construction of highways, light-rail lines, water systems and school buildings.

But unions and other worker advocate groups long complained that these private parties – called labor compliance programs or LCPs – often looked the other way when allegations of pay violations by contractors arose. One reason: Some of these LCPs have affiliates that bid on contracts so they don’t want to cause problems with agencies that might give them work someday.

As a result, the state Legislature passed SBX2-9 in February 2009. The law required the state to take over the enforcement of wage and hour laws on public works contracts.

The bill goes into effect in August, when a new Compliance Monitoring Unit will launch within the Department of Industrial Relations. This unit will review certified payroll records; verify that workers on these projects are paid at the correct rate; and enforce compliance with pay, overtime, recordkeeping and other requirements.

“The new compliance monitoring unit will provide a greater level of monitoring over the use of public dollars on projects,” said John Duncan, director of the Department of Industrial Relations.

In coming months, the unit will conduct seminars for contractors in order to review wage and hour laws, and proper payroll procedures.

For more information, contractors can go to the department’s website at www.dir.ca.gov and look for the link to labor compliance regulations.

Identity Theft Rule

On June 1, the federal government will begin enforcing a sweeping rule requiring banks, retailers and professional service firms to set up written programs to guard against identity theft.

While the rule chiefly targets financial institutions and credit granting companies, it also includes companies that “regularly defer payments for goods and services,” such as law and accounting firms, health care providers and retailers with extended payment plans.

The rule has been on the books for more than two years, but the Federal Trade Commission has delayed full enforcement several times to deal with objections from various industries. The most recent extension from Nov. 1, 2009, was granted to allow Congress to pass a law exempting companies with 20 or fewer employees from the program.

Nonetheless, there’s still considerable confusion among businesses about whether the rule applies to them.

“Most small businesses are confused,” said Scott Hauge, president of Small Business California, an advocacy group. “I’m an insurance broker and my state association says insurance brokers are not impacted, but the national association says we are impacted.”

The program requirements include tracking “red flags” of identity theft. The FTC can seek penalties and injunctions against companies that fail to implement the red flag requirement; the maximum fine is $3,500 for each individual violation.

For more information, log on to the FTC’s website dedicated to the rule at www.ftc.gov/redflagsrule.

Staff reporter Howard Fine can be reached at [email protected] or at (323) 549-5225, ext. 227.