It’s no secret that small businesses are the driving force behind California’s economy, but many people are unaware that they are increasingly the target of frivolous litigation.
A trio of laws — Proposition 65, the Americans with Disabilities Act and the Private Attorneys General Act — come to mind as being especially egregious. While they regulate different things, predatory trial lawyers abuse these regulations to file frivolous lawsuits against defenseless small businesses.
Trial lawyers use the ADA to shake down small businesses for minor violations. For example, a bathroom mirror being 1 inch too high or a counter being 1 inch too low can result in a small business owner being forced to pay large settlements that can lead to bankruptcy with no chance to correct the infraction.
Prop. 65 has similar issues to the ADA. It requires businesses to provide warnings for products that contain chemicals known to cause cancer or reproductive harm. While this law has helped to increase public awareness of potential health risks, it has also led to a surge in lawsuits filed by lawyers looking to cash in on minor technical violations.
Finally, lawyers take advantage of the issues with PAGA, which allows individuals to file lawsuits on behalf of the state for labor law violations. While this law intends to protect workers, lawyers abuse it to extract unfair settlements from small businesses.
Only state lawmakers can take action to protect small businesses from abuse of these laws.
One solution could be to provide a safe harbor for small businesses that make good-faith efforts to comply with these laws, which would give small businesses a level of protection from frivolous lawsuits while still allowing legitimate claims against those that are willfully violating the law.
In addition, lawmakers need to reform PAGA to prevent abusive lawsuits. At the very least, PAGA lawsuits should require plaintiffs to demonstrate that a violation has caused them actual harm.
Protecting small businesses from frivolous lawsuits is not only the right thing to do but also crucial for California’s economic success. Small businesses are the engine of economic growth, and we must do everything we can to ensure their survival.