Half of our country’s workforce is employed in small business. Unlike large corporations, some of which grew during the COVID-19 shutdowns, small businesses are particularly vulnerable. About one-quarter of them closed during the pandemic.
Here in California, over one-third closed. Their owners and employees are still working to pick up the pieces. Our lawmakers have offered Paycheck Protection Program loans and loosened certain regulations to help them make it through the pandemic, but there’s still a big gap — protection against unwarranted litigation.
This need is not new. Small businesses have been threatened by frivolous lawsuits for years, particularly in California. You can sue a small business over anything you want. It costs just $400 to file. That’s not necessarily a bad thing. In America, everyone should have their day in court.
But easy access also means easy abuse. Each year the American Tort Reform Foundation looks across the nation to identify the states where lawsuit abuse is most prevalent. Our litigious environment has landed California on one of the top 10 spots on their Judicial Hellholes list for several years. In 2020, we earned the No. 3 spot. According to the report, almost 60% of Californians “believe that lawmakers are not doing enough to combat lawsuit abuse.”
Whether it’s an employee suing their employer over a technical recordkeeping nitpick or a trial lawyer bringing a frivolous Americans with Disabilities Act lawsuit against a small business over one video on their website without captions, California’s courtrooms are plagued with unwarranted lawsuits. These lawsuits sap the life out of the small businesses who are unfortunate enough to be the latest targets.
Fighting off a lawsuit is expensive. Big corporations can afford big teams of lawyers, but defense costs can cripple a small business. And when this happens, employees lose their jobs, business owners lose their source of income and the community loses a local institution.
And yet, lawmakers continue inventing more ways for trial lawyers to make money at the expense of hardworking, honest citizens who are simply trying to run a safe and upstanding business. We’re losing some of our neighbors to the hope of a better life in Texas, Arizona, Washington and elsewhere. In 2020, for the first time in 170 years since it was founded in 1850, California lost net population — down by 182,000.
Now add COVID-19 lawsuits, the latest tool in the trial attorneys’ toolbox. Teams of lawyers across the state have been gearing up to bring COVID-19-related lawsuits against California’s small businesses. It’s usually impossible to know exactly where someone catches the coronavirus, but that won’t stop claims that someone got it from a coworker or their server at the restaurant or their client at the office — and that it’s the owner’s fault.
Protecting the long-term health of small businesses is going to take more than payroll loans or pledges to “shop local.” California lawmakers need to take action to ensure the survival of the small-business community across the state.
Curbing COVID-19 lawsuit abuse will balance a deck tilted in favor of large corporations. By protecting small businesses from abusive lawsuits, we can calm a business environment paralyzed by fear, protect job creators from the ravages of litigation, stimulate our state economy and reduce income inequality.
As state lawmakers plan for rebuilding our communities and economy post-COVID, I urge them to consider how tort reform is part of the solution.
Christopher Schweickert is a Pleasant Hill attorney representing small business owners and trust/estate clients.
