It is no secret that COVID-19 has crushed small businesses across Orange County and California. I know this because I own two businesses myself, and I interact with small business owners, entrepreneurs and workers nearly every day through my non-profit, Asian Industry B2B (AIB). Our goal is to uplift southern California’s Asian community, particularly business owners. Through this lens, I have witnessed the terrible impact of the pandemic, and our state’s associated policies, on business owners in our community.
The pandemic’s health effects have been direct and severe, and we all know it has claimed too many family members and friends. But with case rates on the decline and hope on the horizon, now is the time to start thinking about the longer-term impacts of this pandemic on our communities.
Many are unaware of the virus’s indirect impact on Californians that can destroy families, jobs and fracture communities who lose essential services or other businesses that were once vital to their growth or survival. The very policies put in place to put our state on the road to recovery are the same policies standing in the way, ensuring long-term devastation lasts well beyond bringing the coronavirus under control.
Possibly the biggest offender of them all—lawsuit abuse. State lawmakers have allowed existing legal loopholes and backwards policies to persist, while adding even more to the mix over the past year. It is no wonder California was just ranked the 3rd worst “Judicial Hellhole” in the nation, according to the American Tort Reform Foundation (ATRF). Businesses were struggling to stay afloat before the pandemic, and COVID-19 has only accelerated bankruptcies and spiked unemployment thanks to greedy plaintiffs’ attorneys and vague, overreaching statutes. If they are not closing for good, companies are fleeing the state or laying off workers when unemployment is already at an all time high.
Did you know that right now, a business must prove that patrons did not get COVID-19 in their store, instead of the other way around? Innocent until proven guilty seemed too outdated in Sacramento, so now a business must risk its survival to stay open—knowing a possibly meritless virus lawsuit could leverage an enormous settlement or bankruptcy in court if they are unable to prove what can be impossible (despite even the most stringent safety precautions). On top of the shifting regulations are aggressive bureaucrats that harass businesses and organizations that try to stay afloat but struggle to keep up with the shifting regulations.
Want to close down and avoid this risk? Good luck continuing to pay rent, taxes and your workforce, while hoping you can survive long enough to see life return to normal. This is an impossible decision that should never have to be made.
But while COVID-19 might be the news of the day now, California was a perennial lawsuit abuse offender well before the pandemic.
Trial lawyers seize on Prop-65 to force massive settlements from small businesses who cannot keep up with the latest everyday products that the state decides could cause cancer. At the current rate, regulators will say the air we breathe is even cancer-causing. But who will there be left to sue? The trees?
On top og this, our state actually has a “Sue Your Boss” law—the Private Attorneys General Act (PAGA). You know things are bad when our laws get their own nicknames. PAGA throws arbitration to the wind and adds equally crushing burdens on small businesses who cannot afford to fight often frivolous lawsuits.
To round out the heavy-hitters of lawsuit abuse, our decisionmakers have decided that public nuisance litigation will also carry the flag for climate change. Aggressive, politically-motivated legal actors have figured out how to bypass state and local legislative bodies in order to push their massive environmental agendas, the scale of which is far too large for any municipal setting. These actions spit in the face of democracy and stymie business operations that could alleviate our state’s skyrocketing rent, homelessness and unemployment struggles.
While I could write a book on how California’s backwards legal climate clogs our courts, increases prices on consumers and poses a daily threat to small businesses and workers with or without an ongoing pandemic, I hope the theme is clear—lawsuit abuse hurts everyone. But state lawmakers are at a unique inflection point. Instead of adding onto the pain of COVID-19, they can instead use the crisis to reverse course and prioritize the consumers and businesses that hold the key to helping us recover. We can change the story and bring businesses back to our booming state, while keeping folks employed and underserved communities with the local businesses and jobs they need to survive. If lawsuit abuse persists, California’s pain is here to stay.
Marc Ang is a financial planner and owner of Mangus Finance. He also serves as President of Asian Industry B2B.