Assembly Bill 1897 Threatens Innocent Businesses:
Guest Commentary by Ruben Guerra

POSTED: 09/17/14
San Gabriel Valley Tribune

California’s job market is showing signs of improvement, which represents hope for the Latin Business Association (LBA). Our mission is to build economic wealth and opportunity for Latino and minority-­owned businesses and entrepreneurs, which is why Assembly Bill 1897, authored by Assemblyman Roger Hernández, D (West Covina), could be devastating to more than 800,000 Latino-owned businesses in California.

Assembly Bill 1897 attempts to shift accountability in a subcontractor relationship by unfairly holding the majority of California employers liable for the wage and hour violations of another that they could not control or prevent.

Although the legislation is being touted as a pro-­employee measure, that could not be further from the truth. The only thing Assembly Bill 1897 will accomplish is to discourage the use of contractors and their employees — essentially crushing future job creation in California. What’s more, Assembly Bill 1897 will not protect California’s workforce, nor will it prevent labor violations from happening.

It will, however, allow bad-­actor employers to shift liability to a company that did not create the violation, know of the violation or have the ability to prevent the violation. And nearly every industry will be impacted, including construction, agriculture, hospitals, restaurants, newspapers, retailers, food processors and banks, among many others. Instead, a more reasonable approach would be to enforce California’s current, sufficient worker protection laws, as laws are already on the books for such issues.

It’s not surprising that the California Department of Finance came out against the legislation, noting that Assembly Bill 1897 will result in non-budgeted state costs. The Department goes on to say that the bill “also exposes California employers to liability for Labor Code violations that are committed by other employers. This additional liability could diminish incentives for businesses to operate in California and therefore be a sole or contributing factor to a business’ decision to close or downsize. Such actions by California businesses would have state fiscal impacts, such as reduced tax revenues.”

Latino and minority-­owned businesses are just now starting to recover from the recession and Assembly Bill 1897 thwarts that progress, threatening the future growth of Latino and minority­‐owned businesses in California. In fact, Assembly Bill 1897 has the potential to diminish or completely eliminate supplier diversity programs that directly impact many of our California members.

And that’s not all. AB 1897 will also increase unnecessary litigation, which will burden the state’s judicial system. Our courts are already struggling and overworked and AB 1897 will only make it worse.

We need policies that create economic opportunity, not laws that eliminate jobs. Gov. Brown is moving California is the right direction by taking a balanced approach to creating a healthy business environment while also protecting our state’s workforce, and Assembly Bill 1897 undermines his vision for California. As the voice for Latino businesses in the Golden State, we ask Gov. Jerry Brown to veto Assembly Bill 1897.

Ruben Guerra is Chairman of the Board and CEO/President of the Latin Business Association, based in Los Angeles