Good news for small business owners: One bill that would have paved “the path to economic hell” has stalled in committee, leaving that road “one good intention short.”
Martyn Hopper, California director of the Washington, D.C.-based National Federation of Independent Business, hailed the failure of SB-410 to get out of the Senate Judiciary Committee. The bill would have abolished pre-employment arbitration clauses as a condition for getting a job.
“Arbitration clauses have proved a remarkable success in solving disputes between employees and employers. In addition to keeping California’s courts unclogged of minor squabbles, arbitration clauses have kept costs down for consumers and have saved the state money in costly bureaucratic oversight,” Hopper said.
The catch is that arbitration is bad news for lawyers, who are among Sacramento’s most influential lobbies. That’s why it keeps coming back, he said.
Hopper noted that the author of SB-410, Sen. Sheila Keuhl, made a similar attempt last year with a bill to abolish pre-dispute arbitration clauses in health plans. That bill died when Kaiser Hospital, the state’s largest health-care provider, pointed out that arbitration clauses helped keep their costs down, and, as a result, enabled it to insure more Californians, he said.
Now, Keuhl is trying again, this time widening the scope to include all businesses. That’s bad news to small business, which employs about 60 percent of working Californians, Hopper said.
“A small-business owner’s worst nightmare is a lawsuit. The typical small-business owner makes around $40,000 a year, but can spend $100,000 on average defending himself or herself in court,” he said.
Pre-dispute arbitration helps prevent that, while also protecting workers, who, under state law, have a full year in which to file a complaint against a former employer, Hopper said.
The timing of SB-410 is bad, he said.
“Small businesses are reeling from trebling of their electricity bills, spikes in their health-insurance premiums, and raises in their workers’ compensation and unemployment insurance rates. How much more are they expected to endure? Certainly not much more if the rug of litigation protection is pulled out from under them,” Hopper said.
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Take A Bow:
Several small-business groups are giving a chance for local small businesses to stand in the spotlight next month.
The Emerging Business Center, the San Diego Regional Chamber of Commerce, and the Small Business Administration are presenting the annual Tribute to Small and Emerging Business Awards luncheon. The event includes a silent auction, lunch, networking opportunities and more.
The luncheon will be from 10:30 a.m. to 1:30 p.m. May 24 at the Town & Country Resort in Mission Valley. Cost is $65 for members, $75 for nonmembers and $600 for a table of 10.
For more information, call Samantha Bowman at the chamber at (619) 544-1354. To register, call (619) 544-1365.
Benefits A Hindrance:
Small companies have been hit hard by employee benefits, which made up more than a third of company payrolls in 1999.
So said the United States Chamber of Commerce, which released the results of its recent nationwide survey April 24.
Health insurance was the single most expensive benefit cost, said Dr. Martin Regalia, vice president and chief economist for the chamber.
Nor is this likely to change, since the labor market is tight. That forces employers to keep piling on the benefits, he said.
Employers spent an additional 36.8 percent over wages in 1999 on employee benefits. That works out to an average of $14,060 extra per employee, Regalia said.
Medical insurance premiums were the highest-cost single benefit, about one-fifth of total benefits. Paid time-off , vacations, holidays and sick leave combined , together accounted for about one-third of all benefits, or an average of $4,113 per employee.
The study also found that benefit costs were about 20 percent higher in metropolitan areas. Companies in rural and suburban areas paid 34 percent on top of wages, compared to urban companies, which averaged 40 percent of payroll, Regalia said.
Urban companies reported higher costs for paid time off and retirement and savings plan benefits, while rural and suburban companies reported higher medical benefit costs, he said.
Send small business and retail-related items to Zion at lzion@sdbj.com, or call (858) 277-6359, Ext. 112. The deadline for the May 14 issue is May 4.
