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Opinion: Let’s take a real look at regulatory reform

In recent months, it seems that the most popular topic among those under the Capitol dome is regulatory reform.  The National Federation of Independent Business and small businesses across the state are encouraged by this recent call to action from both sides of the aisle for regulatory reform in California – indeed, a “Sacramento Reg-aissance”, so to speak.

We appreciate the growing interest and commitment to fixing our broken regulatory process and system. Small business owners pay 45 percent more to comply with regulations than larger businesses and the average small businesses pays about $143,000 a year to comply directly or indirectly with state regulations. Just asking the average mom and pop owner to interpret complex, duplicative regulations at every level forces them to wear the hat of compliance or legal expert instead of doing what they do best – support their communities, feed the economy and create jobs.

NFIB and other job creators throughout California have long been calling upon our leaders to reform the regulatory process for quite some time.  We had hoped to achieve meaningful reforms through SB 365 (Wright) last year, but to no avail. We are heartened that various members of the legislature and Governor Brown have raised the volume on the need for sustainable policy that will achieve those goals. 

But while regulatory reform is an important way we can help California’s leading job creators get out of the hole they’re in, it is merely one rung of the ladder. Our leaders have a real opportunity and should not forget other important rungs that will help the corner machine shop owner, baker, dry cleaner and small businesses in all of our communities get back on the road to recovery, create jobs and contribute to the local and state economy.

First, our leaders need to take a serious look at bills that will impose a new cost. Call it a fee, assessment, levy or tax, in the end, these are all new and unanticipated costs that small business owners can ill-afford to absorb at this time. Most will tell you they’ve already slashed costs wherever possible – overhead, utilities, infrastructure – to make ends meet and avoid the last dreaded option: their valued employees. So, any new costs will result in the “law of unintended consequences” and have the opposite effect – employees struggling to keep their jobs sent packing and to the unemployment line.  Bills increasing taxes and fees do nothing to get businesses back on track.  Small business owners and Californians spoke two years ago and this past November, making that clear.

Our leaders also need to understand the impact new health care mandates will have on small business. Yes, small business believes health care reform is the #1 concern – as evidenced by our national surveys over the past twenty years. Obviously we want change. But new mandates are the wrong approach – again, because small businesses are in a deep hole. Forcing them to comply with new costs and requirements they cannot absorb will have a net negative effect on employees – the unintended consequence for health care. That is why NFIB members in California and across the nation overwhelmingly opposed  the federal health care law and why NFIB is the only business organization in the country joining 26 attorneys general challenging the constitutionality of an individual mandate. Yet, the California legislature is considering almost twenty health care benefit mandates that drive the cost of health insurance coverage in our state higher. These measures should be held until the federal government determines what is an essential benefit policy and the California Health Insurance Exchange is operational. 

Americans with Disabilities Act (ADA) lawsuits are rampant in every community – this is not about justice, it’s about plaintiffs’ attorneys making a fast dollar.  More than one-third of small business owners have been sued in the past five years and nearly 6 in 10 have been threatened with a lawsuit during the same period.  Small business is preyed upon more than any other size business because attorneys know they’re more willing to settle.  We are heartened to know that we have a Governor and many other leaders in the Capitol who come to the table with legal experience and understanding. There is a great opportunity for them and others to seize the day and truly be champions for fixing our broken legal system and ensure it’s doing the right thing with the right outcomes – not padding the pockets of greedy, malicious lawyers who want nothing more than a fast payout.  

Now is the time to act in California – never has there been a time when the stars have aligned so that real reform can take place.  NFIB and small businesses stand ready to work with our elected leaders to make that happen.


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