If you run a small business in California, you won a victory last week.
That’s because the governor signed a bill that puts a stop to so-called demand-for-money letters that lawyers often send to businesses that may be in violation of some provision of the Americans With Disabilities Act.
In case you don’t know, here’s how it worked: A lawyer sent a letter to a business stating that his handicapped client visited recently and noticed the railing was half an inch too high under the ADA rules. The lawyer demanded, say, $5,000 or he would sue. The business typically paid to make the lawyer and his client go away, figuring it’s much cheaper than the lawsuit.
If you think that’s a silly example, it’s not. Stories abound about how companies were sued – or threatened to be sued – because the mirror in the rest room was an inch too high or the lane lines on the parking lot were the wrong color. ADA rules are numerous and sometimes they change; businesses aren’t aware of all of them or assume their landlord has complied.
Smaller businesses were the main target.
And if you think ADA demand letters and lawsuits were rare, you’re wrong. Until last week, California was one of only three states that allowed demand letters. Of all ADA lawsuits filed, 40 percent are in California.
This is unfortunate, of course. The ADA was passed in 1990 as a way to make sure the handicapped have reasonable access to office buildings, shops and the like. But in California it was perverted into a shakedown racket. Lawyers sent out handicapped clients who looked for one or two specific violations among many businesses in one particular area. Demand letters and lawsuits followed.
The Oakland Metropolitan Chamber of Commerce said that one plaintiff specialized in going around measuring whether toilet paper dispensers were the ADA-required 40 inches from the floor. If not, he alleged it caused him emotional pain and humiliation. He filed more than 700 lawsuits in California and collected millions from small businesses in settlements.
Under the new rules, businesses still must comply with ADA regulations. It’s just that letters demanding money are outlawed. The demand letters are replaced by so-called notice letters telling the business it may be out of compliance. The business has at least 30 days after getting the notice letter to fix any ADA deficiencies before a lawsuit can be filed.
California still has a lot of ways for lawyers to hector businesses with frivolous but damaging lawsuits. At least the ADA demand letters are a thing of the past; the legislation signed last week went into effective immediately.
“Our elected officials heard the voices of small business owners who have been repeatedly victimized by abusive lawsuits at a cost to all Californians,” said Maryann Marino, who is regional director of California Citizens Against Lawsuit Abuse. “While this is a step in the right direction, much more work remains to be done to rid our state of abusive lawsuits that cost Californians jobs.”
Charles Crumpley is editor of the Business Journal. He can be reached at email@example.com.
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