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Employment Law: How Will the November Elections Impact Business Issues in 2019?


The November 6, 2018 Statewide Election just occurred and the voter turnout was the highest in recent memory with millions of ballots either turned in on election day or received in the mail by the November 9 deadline. The results show that the Republican Party once again elected no statewide office holders and the lone candidate with No Party Preference (NPP), former Republican Assemblyman Steve Poizner, barely lost his bid to become Insurance Commissioner. In the Legislature, the Republicans lost 3 State Senate seats returning the Democrats to the Super Majority. In the Assembly, the Democrats gained 5 more seats and defeated Assemblyman Dante Acosta from Santa Clarita. While there were some close elections, the Republican Party will now have only 20 State Assembly members, which is even lower that the 25 Assembly members they had in 1974 after the Watergate scandal and the lowest number in 100 years.

What impact will this have on the next session of the State Legislature, which begins in January 2019? Can businesses and individuals expect more regulation and higher taxes? While anybody’s crystal ball is probably a little cloudy, a look at what happened in 2018, when the Democrat had a super majority in the State Assembly and were just one seat short in the State Senate, might provide at least a small glimmer of hope that there are opportunities to continue to defeat what the California State Chamber has been calling for years “Job Killer Bills.”

In 2018, the California Chamber identified 29 bills as Job Killers and all 29 were either defeated, amended to delete the job killer provisions or vetoed by the Governor. Among these bills were:

AB 1745 (Ting) which would have banned the sale of combustion engine vehicles after 2040 which died in the Assembly Transportation Committee.

AB 2351 (Eggman) which would have further increased the top income tax rate from 13.5 to 14.3% on a category of Californians that already pay over 50% of State Income Taxes.

AB 3080 (Gonzalez Fletcher) which would have banned settlement agreements for labor and employment claims as well as banning arbitration agreements as a condition of employment. This would have added significant costs to businesses. Fortunately, Governor Brown vetoed this legislation.

SB 993 (Hertzberg) would have imposed a 3% tax on services purchased by businesses in California. This would have applied to professional services such as legal and accounting. While this billed died in the Senate Governance & Finance Committee, Senator Hertzberg has indicated a desire to reintroduce this legislation next year.

With the Democratic super majorities, there is certainly some concern that the Legislature will now be emboldened to revisit previous legislation to increase taxes on specific individuals or businesses, along with enacting restrictions and regulations which will increase the difficulty in doing business in California. However, that might not be the case.

Business organizations like the California Chamber have been active for years in cultivating Democrats who are more “business friendly”. In the State Senate, the Chamber and other Business PACS were instrumental in electing Bob Archuleta of Pico Rivera and Susan Rubio of Baldwin Park in races where the November election was between two Democrats as a result of California’s top two primary system. Two of the Senate Seats that the Democrats picked up are in the Central Valley where farm and water policy are much more important than in the urban districts represented by Democrats. The biggest surprise was the defeat of Senator Janet Nguyen in Orange County by former Assemblyman Tom Umberg. Senator Nguyen was negatively impacted by the millions of dollars spent on the Democrats’ campaigns, which flipped all 4 Republican Congressional seats in Orange County.

Some analysts have begun describing the new Legislature as containing different shades of blue. As a result, we could see labor backed members in conflict with those members who support tech companies (sometimes called the gig economy), which, while progressive on social issues, might be pushing a change in the limits on the use of independent contractors that were recently enacted by the California Supreme Court. In addition, it is likely that there will be a renewed effort, either in the Legislature or through an initiative, to change Proposition 13 to remove Commercial Properties from its protection. This would have a great impact on every business which leases property.

Regardless of your political beliefs, you should focus on the issues which impact your business and work with like-minded companies and individuals to advocate.

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