Gov. Gavin Newsom’s signing of SB 1383, mandating small businesses comply with the same unpaid leave law as large companies, benefits workers but companies with few personnel will be vulnerable to litigation and at higher risk of having to close permanently, opponents say.
“We are gravely disappointed that the governor who often talks up his small business background and expertise took little time to understand the economic carnage that this law will leave among small businesses on Main Street,” John Kabateck, California state director with the National Federation of Independent Business (NFIB) told the Northern California Record.
There already are more than a dozen leave programs with which California businesses must comply.
Kabateck said while SB 1383 may be well-intentioned, mandating a job be held open for three months, with health insurance, while a worker is gone makes small business survival even more challenging amid the COVID-19 pandemic.
Many small businesses only have five to nine employees.
“The five-person threshold is too low for these microbusinesses, which may have to relocate our shut their doors altogether,” Kabateck said.
The California Chamber of Commerce posted a statement on the passage on its website: “While we are disappointed that Governor Newsom signed SB 1383 and added a new burden to small employers at this time, CalChamber is urging small business owners to become familiar with the new requirements of this law as any mistake could result in a lawsuit.”
The Chamber, along with a coalition of more than 110 organizations, wrote to Newsom Sept. 4, asking him to veto SB 1383. The letter references McKinsey & Co. data on COVID-19’s impact on small and midsize businesses – contained in the Legislature’s own Aug. 2 analysis by the Assembly Committee on Jobs, Economic Development and the Economy – which found:
“55% of businesses felt that the economic impacts of the coronavirus were going to last over one year, with 29% responding the impacts were going to be felt for three years.
"25% of businesses said they would be filing for bankruptcy within six months.”
Kabateck noted that even amid the pandemic’s economic fallout, state lawmakers only passed a handful of bills this session that could be considered pro small business.
“I truly wish I could be hailing a slew of small business relief,” Kabateck said. “It’s just tragic that time and again the bills that pass are a giveaway to plaintiff’s lawyers and unions with no consideration for the very people and merchants that fund our public entities and services. When small businesses are thriving, our potholes are filled, our cities and towns are safer. The reverse can be said when they are destitute and struggling.”