(July 12, 2010) A California Chamber of Commerce-opposed “job killer” bill that would have increased fines and penalties on businesses failed to pass a key Senate committee.

The bill, AB 846 (Torrico; D-Fre­mont), significantly increases the cost of doing business in California by auto­matically adjusting maximum and minimum penalties upward according to inflation and raising penalties even higher according to an arbitrary rounding scheme.

The CalChamber and coalition of business and industry organizations opposing AB 846 pointed out that California is already among the most costly states in which to do business in a complex regulatory environment.

By further driving up costs, AB 846 may force California businesses to leave the state, taking jobs and a tax base with them, the coalition emphasized.

Reasons to Oppose

The CalChamber and the coalition oppose AB 846 because:

• It subjects a wide variety of laws to inflation adjustments and an arbitrary rounding scheme.
• It significantly increases maximum fines and penalties assessed against California businesses. To illustrate, the section affecting the state’s Water Code would result in maximum penalty increases as high as $30,000, all without any regulatory scrutiny under the Administrative Procedures Act. The need to adjust penalties against businesses upward in such a drastic fashion should merit more supporting evidence than a study carried out by the sponsors themselves.
• Tying maximum and minimum penalties to inflation reduces regulatory accountability. If maximum fines and penalties need to be raised for particular laws, it is appropriate that the authority for such a change remain vested in the Legislature. Legislative review and approval ensures that a big picture reassessment of a law can occur in a public forum, including an evaluation of the law’s effectiveness and whether the penalties fit the violation.
• The Department of Industrial Relations penalty provisions apply to both public sector and private sector employers.

Key Vote

AB 846 fell short of the votes needed to pass the Senate Governmental Organization Committee on June 29:

Ayes: Wright (D-Inglewood), Florez (D-Shafter), Padilla (D-Pacoima), Price (D-Inglewood), Yee (D-San Francisco).

Noes: Harman (R-Huntington Beach), Calderon (D-Montebello), Negrete McLeod (D-Chino).

No Vote Recorded: Denham (R-Merced), Oropeza (D-Long Beach), Wyland (R-Carlsbad).

Staff Contact: Robert Callahan