(July 14, 2004) The California Chamber has been flooded with e-mails over the past two days from California employers asking lawmakers to repeal SB 796 as part of the budget.

The Chamber issued a call to action on Monday enlisting the support of employers and members to write letters to legislators and the Governor asking for the full repeal of SB 796 (Dunn; D-Garden Grove) – the “sue your boss” law - as part of the budget.

In response, California employers have sent the Chamber copies of the hundreds of letters they sent to legislators and Governor Schwarzenegger asking for the repeal of SB 796.

“We already know that the repeal of SB 796 is part of budget discussions among key lawmakers,” said Dominic DiMare, Chamber vice president of government relations. “The huge response from California employers stresses the importance of repealing SB 796.”

Plaintiffs and their attorneys already are using SB 796 lawsuits to try to quickly pressure employers into settlement agreements before a case goes before a court.

Since January 1, 2004, more than 65 major lawsuits have been filed against California employers using SB 796.  Every type of industry and every size of business is being targeted by SB 796 lawsuits.  Analyzing just the first nine cases shows that over $336.1 million is being sought under SB 796’s excessive civil fine scheme. 

Since SB 796 went into effect at the beginning of this year, employers have shared personal accounts of their experiences with SB 796 lawsuits. 

A Bay Area employer wrote: “In 14 years of business, we have never had major problems with payroll issues. This year, after the “sue your boss” laws, we have had three complaints from former employees. In all cases, the firm spent up to 10 hours per claim at $30-$50/hour. In all cases we had overpaid each claimant. In one case there was fraud on the part of the former employee (doctoring time sheet evidence).”

A Southern California medical employer wrote: “I have been an employer for over 30 years in the State of California, and have never even been charged with one Labor Code violation prior to this. I pay my employees reliably every week. Now I am being targeted by a terminated ex-employee who falsified the original employment application to me. Already I sold one of my California investments and am relocating to states that are more friendly to business. This law will be devastating to small businesses. It certainly has been to mine.”

A Southern California attorney wrote: “I am an employment lawyer who has done defense work for 30 years. I have never seen anything like this case. It began with a letter, no back up, just a demand for a wage payment, and a statement that if the client did not pay it, he would wait until January when the law went into effect and he would sue. We tried to negotiate, but he refused, because he said we would pay more in January. We tried to get him to produce any evidence that his client was entitled to any wage payment, but he refused saying he would only produce evidence if we were in litigation …It is now six months later, and thousands of dollars spent. I still have not one shred of evidence that there are any wages due. He is not concerned about any of the fees because he is going to get all of them paid for by my client under the new statute. Because of the hammer of the new statute, he feels no need to produce any proof of his claim, no need to engage in any reasonable courtesies or cooperation, and just keeps raising his price because if one violation of the Labor Code is found, no matter how insignificant, he will get us to pay his fees. It makes no difference what the truth is, he will make this so expensive that my client may have no choice but to buy him off … This is not a big client. This is the owner of a 45-unit apartment complex. It is truly legalized blackmail of the most monstrous kind.”

A contractor in the Inland Empire sums it up: “As a construction company, our staff is vital to our success and we work hard to maintain top benefits with a great environment. However, this law takes money from the hands of our workers as wage increases, etc., and places it directly into the hands of plaintiff’s counsel. If these cases and the legal drain become too heavy a burden, it would be catastrophic to our business and to our workers’ job retention.”

For more information on SB 796 or to obtain contact information for legislators and the governor, please visit our website at www.calcahmber.com. 

Use our easy-to-edit position letter to contact key lawmakers to ask for the full repeal of SB 796 as part of the budget.