California’s Regulations Are Killing Small Businesses, Says NFIB Director

November 16, 2020 Updated: November 17, 2020


IRVINE, Calif.—California’s small businesses are being strangled by excessive state regulations, a challenge exacerbated by the ongoing COVID-19 pandemic, says a small-business proponent.

“The doomsday scenario—hopefully it doesn’t come to this—is with these terrible laws that are coming down out of the capitol … combined with the pandemic and other terrible things like wildfires, we may see a lot of business owners shutting their doors,” John Kabateck, state director of the National Federation of Independent Business (NFIB), told The Epoch Times.

“The Golden State should be the California Dream like The Mamas and the Papas sing. So many are finding those dreams being more dimmed almost on a weekly basis, it seems. But you know, we hear from so many small-business owners, and I will say I’m so inspired by so many of them who really have taken their dream and they’re still working very hard to try to keep that dream alive in these very difficult, tragic times.”

The NFIB represents about 50,000 small businesses throughout California, and the future is looking bleak for many of them. A recent NFIB study showed that if economic conditions don’t improve by the beginning of 2021, one in five small businesses could close.

“It’s harrowing, it’s heartbreaking,” Kabateck said. “And then when you ask about what policymakers are doing, unfortunately, there’s a lot more rhetoric than action.”

State politicians haven’t done enough to support business owners, he said, noting that of the 200-plus proposed bills on Gov. Gavin Newsom’s desk, he would consider only two to be beneficial for small business.

“Many of the others were really terrible and really devastating,” Kabateck said. “A lot of them will do damage, because I think in Sacramento, we have either policymakers who either just never signed the front of a check … or many of them are just out of touch and have never experienced what it’s like to be a small business.”

Kabateck gave some examples of laws that he says have hurt businesses already struggling amid COVID.

Business Owners’ Responsibilities Amid COVID

In May, Gov. Gavin Newsom signed an executive order that entitled essential workers to compensation benefits if they could confirm they contracted the virus within 14 days of being at work. The order expired in July, but was expanded in September with the passage of Senate Bill 1159 (SB 1159).

Under this legislation, an employee’s COVID-related illness is considered an occupational injury; it is a disputable presumption (legal talk for “assumed true until proven otherwise”) that a person contracted the disease at work, and the business owners are responsible for it. The bill is effective through 2022.

Although there is a condition in SB 1159 that an outbreak must have occurred at the workplace for it to be considered a workplace injury, Kabateck says it’s still too difficult to determine where COVID was contracted and unfair to put the onus on business owners.

“The challenge with that, as we all know, is not even [National Institute of Allergy and Infectious Diseases director Dr. Anthony] Fauci and the greatest experts are understanding the depth and breadth of this terrible virus, which we should all take very seriously,” he said. “To put the onus on a small-business owner that the employee contracted it within the small business and now they pay heaping workers’ comp costs because of that … opens up a world of cost and liability.”

California employers are legally required to carry workers’ compensation insurance from a private company or the State Compensation Insurance Fund. California’s presumption policy could result in higher premiums for small businesses.

Additionally, the state has expanded the California Family Rights Act to provide 12 weeks of unpaid leave with job protection for employees of businesses with five or more employees. Kabateck said it was an unnecessary move in a state that already has generous leave programs, which small businesses are already required to provide and pay for.

“They now have to provide medical benefits to that employee and ensure that the position is returned there when the employee returns,” he said. “And again, as we found in an NFIB study, if things don’t improve by 2021, about one in five small businesses will be forced to close. The problem with an expanded leave bill like this is you need to now guarantee the position for the employee. But if that business is now forced to close or scale back, they’re going to be liable, and the plaintiffs’ attorneys will absolutely have a field day with this.”

State of the Union

Unions have also presented challenges for small-business owners, said Kabateck. They’ve become politically powerful, he said, with part of the union dues going toward political causes. They support legislation that favors the employee and can be less favorable toward the employer. Unfortunately, he said, employees don’t have the ability to choose to which parties and causes their union dues contribute.

“The business community is constantly fighting an uphill battle,” he said. “I talked to a small-business owner and I said: ‘Sir, it must be like swimming upstream for you.’” He grabbed me by the shoulder and said, “Son, it’s like swimming upstream in peanut butter.”

Kabateck added that it’s in everyone’s best interest to support small businesses at every level.

“Small businesses are the backbone of our economy. We should not be destroying them, especially in this economy,” he said. “Special interests have these great grips, but … small businesses are 99.2 percent of all businesses in the state and employ most of California, and we really are the interest that should be the most special and concerning because when small businesses are successful, our communities and our state are successful.”

“California Insider” is an Epoch Times show available on YouTube.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.

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