Is Regulatory Relief in Sight for California Small Businesses?

Land of sun and happy cows, California is a great place to do business. The weather cannot be beat and the economic landscape is constantly expanding and growing. These and other factors combine to create a unique and fertile place for businesses of all sizes and in every industry. But one of the downsides of this landscape can be the regulations that place heavy burdens on businesses trying to succeed here.

One of those intrusive and costly regulations was passed in 1986 through a voter initiative known as Proposition 65. The official name, Safe Drinking Water and Toxic Enforcement Act, created a requirement than businesses to notify Californians about toxic chemicals their products contain that may cause cancer or reproductive harm.

The list of chemicals and toxins that make it on this list is wide and ever expanding. Admittedly, the risk a company must warn about amounts to whether a toxin or chemical has a 1 in 100,000 chance of causing cancer. This covers the gambit and puts so many products in that category that it has become a running national joke that one thing or another is labeled as causing cancer in California, but in reality it really is no laughing matter.

The law created by then Proposition 65 has devolved into a scheme that simply represents an additional costs to businesses. If a person finds a product that fails to warn of its potential to cause cancer, they can bring a lawsuit and force the company into huge settlement amounts. It is estimated that in 2015 alone businesses spent $26 million to settle such lawsuits.

Implementation of the Law

While a good idea in theory, what has resulted from this is a track record of heavy handed regulation and expensive lawsuits for businesses who fail to comply. Forget that studies show the law does little to nothing to reduce or prevent cancer rates or other problems, but it can cost companies up to $25,000 a day for violating it. What it really does is enrich law firms and put a stumbling block in front of small businesses who want to succeed.

Fighting this law requires a several front strategy and plan. First, a business must know what they are selling and whether this law applies to them. At The Royse Law Firm our team of regulatory compliance attorneys are experts and helping businesses understand federal and state regulations, and what a company needs to do to be compliant. This is when sage legal counsel is priceless.

Another front fighting this law is coming from the public and politicians. It is becoming clearer and clearer that this law and others do not fix the problems they are supposed to and are better off repealed or reformed for the benefit of businesses seeking to grow and succeed. That is the message being sent by the governor and others in public life around California.

It is clear that doing nothing in cases like these is the worst option. If you are a small business in California, or who does business in our state, contact us at the Royse Law Firm. Our team of business attorneys can address your every need in this state, federally, and internationally. We look forward to hearing from you soon.

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Roger Royse

Roger Royse, the founder of the Royse Law Firm, works with companies ranging from newly formed tech startups to publicly traded multinationals in a variety of industries. Roger regularly advises on complex tax structuring, high stakes business negotiations and large international financial transactions. Practicing business and tax law since 1984, Roger’s background includes work with prominent San Francisco Bay area law firms, as well as Milbank, Tweed, Hadley and McCloy in New York City.
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