With more difficult economic news across the state and nation, there is growing concern about new California mandates increasing the cost and difficulty of doing business here.
Among recent court decisions to drive up litigation costs, McHugh v. Protective Life Insurance made a 2013 California law on policy lapses apply retroactively, leading to a series of class action lawsuits against life insurers.
Decisions like McHugh are emblematic of recent court rulings that have denied employers safe harbor liability protections, Jesse Rojas, an agricultural industry consultant and farmworker rights activist, told the Northern California Record.
“That's one of the most recent examples,” Rojas said. “Overall when you look at California, and back with Governor Brown 10 years ago, and look at our legislation or wage-and-hour decisions from let's say the California Supreme Court and how they work for normal practices, in the past it would allow employers to sort of get their act together,” Rojas said.
That meant fewer employers being sued before they could understand how the change in law would impact their business, Rojas said.
California’s litigation landscape was ranked Number One in the most recent “Judicial Hellholes” survey by the American Tort Reform Association.
But allowing companies time to retrain management and teams and otherwise work to comply with new interpretations of the law no longer appears to be normal practice, said Rojas, who is also a board member with the Central Valley Taxpayers Association.
Retroactive mandates can open up companies to multiple lawsuits, Rojas said.
“Litigation is extremely expensive – and it's not just the cost – most of the time what really hurts the company is the inability to run your regular day-to-day operations, and when you add up those things, it creates a domino effect,” Rojas said. “That is a reason why we look at huge companies like Tesla or Toyota, I mean, it goes on and on, the list of companies that continue to leave the state of California.”