Contributed by Pamela Wasley, CEO.
The California legislature struck another blow against business. As of August 28, AB 1897 (authored by Roger Hernandez, D – West Covina) passed in the California Assembly on a 47-24 concurrence vote and is now on Governor Brown’s desk awaiting his consideration. (Those of us in California know how these types of bills fare once they reach Governor Brown’s desk. They tend to become law).
AB 1897 is Unnecessary
This bill, if signed by the Governor, will require an employer to share with a labor contractor all civil legal responsibility and civil liability for the workers supplied by that labor contractor for the payment of wages and the failure to obtain valid worker compensation coverage.
Aren’t there already enough worker protection laws in place in California that protect unlawful practices and abuses? New laws are not necessary. The state just needs to do a better job enforcing current worker protection requirements. Because California fails in enforcement, our lawmakers continue passing more laws, which hobble a company’s access to a quick, flexible work force.
A Short-Sighted Bill That Will Reduce the Demand for Temporary Workers
Companies never could afford full time employees in all areas all the time. Today is no different. There is a real need for access to a temporary workforce. Reasons for temporary workers are varied – seasonal work, covering vacations, leave of absences, temporary expertise for quick projects, or staffing a vacant position until it can be filled permanently. All of these are valid reasons to employ temporary workers.
Roger Hernandez, author of AB 1897 says, “This bill focuses on companies that choose to use labor contractors to supply workers to do the work of their regular course of business.”
How can companies stay in business today without the use of an occasional, flexible contingent workforce when and where needed? Denied this option, businesses will not be able to compete in today’s rapidly changing conditions. AB 1897 makes the use of temporary workers unnecessarily onerous and complex.
The One-Two Punch Against Business Growth in California
Business owners in California are still reeling from SB 459 (January 2012). It discouraged businesses from hiring independent contractors by penalizing anyone who willfully misclassified such services with fines up to $25,000 per violation. No problem with the law’s intent. The problem with SB 459 is that it did not provide enough guidance on the difference between independent contractors and an employee. This left companies confused and unable to analyze their business practices adequately.
This new bill, like SB 459, will just cast a wider net to paralyze as many companies as possible in the snare of Worker Regulation rather then concentrate on finding and prosecuting the few companies that are violating the laws already in place.
AB 1897 Will Hurt Workers, Not Help Them
Let me paint a picture of what could happen if AB 1897 passes. Since more businesses are now afraid of hiring temporary labor, people who were at least partially employed and available for additional, temporary work, will now become unemployed due to lack of work opportunities. This lack of temporary jobs will increase the percentage of unemployment, and more money coming from our state budget. Is this what is needed for our state economy? It is definitely one more reason for businesses to leave California.
One More Reason for Businesses to Leave the State
Governor Brown wonders why Tesla’s battery business went to Nevada. Reno, Nevada enticed Tesla to come and build the largest lithium battery company in the world. Brian Sandoval, Governor of Nevada says it will create more than 22,000 new jobs and bring $100 billion into the state economy over the next 20 years. That is $5 billion a year! And what did Elon Musk, Tesla’s CEO say was the most compelling reason for the move? Sure incentives helped solidify this deal. But just as important was Nevada’s pro-business regulatory climate according to an article in Fox Business News.
Toyota just moved out of California to set up operations in Texas. Their main reason? To get closer to their manufacturing operations. But how could they pass up the opportunity to have lower corporate operating costs as well as a business climate that is very good for large corporations?
When is California going to finally wake up and realize we need to be more favorable to businesses?
The Sound of 73,000 Businesses Leaving
I warned in my op-ed “Squeezing Out Contractors” in 2011 we would lose more businesses to Texas and other business-friendly states if California did not stop passing bad legislation for businesses. This state cannot continue to bet on the weather and beaches to keep businesses in California! The Bureau of Labor Statistics shows that California lost 73,000 businesses in 2012. Was it our regulatory environment that drove them Out of State or Out of Business?
Businesses in California will become afraid to hire temporary workers. This will hinder business expansion and perhaps even put companies out of business because they cannot compete against companies in other states. Because it will reduce employment opportunities, more workers will find themselves not able to find work and having to file for unemployment, thus causing more expense to California’s budget. Is this what politicians want for their state?
Bottom line, stop making the regulatory environment more complicated and onerous for businesses. Enforce the worker protection laws that are already in place. Don’t create more.
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