CalChamber-Supported Job Creator Bill Protects Businesses from Proposition 65 Lawsuits

A California Chamber of Commerce-supported job creator bill that provides needed relief to small businesses will be heard in the Assembly Environmental Safety and Toxic Materials Committee today.

AB 1252 (Jones; R-Santee) will help protect small businesses from unwarranted lawsuits related to alleged missing or inadequate signage required by Proposition 65 by providing businesses with fewer than 25 employees a 14-day window to cure a signage violation and avoid a lawsuit.

Proposition 65

Proposition 65, “The Safe Drinking Water and Toxic Enforcement Act of 1986,” was designed to protect California’s drinking water from chemicals known to cause cancer or birth defects, and to warn members of the public about the presence of those chemicals in their environment to help them avoid exposure.

Since its enactment, Proposition 65 has helped protect the public by encouraging businesses to reformulate their products and to eliminate the use of listed chemicals. Proposition 65 requires, among other things, that private businesses with more than 10 employees post warnings when they knowingly expose workers or the public to listed chemicals. These warnings can take the form of placards in business establishments where listed chemicals exist or are released into the environment, or as part of the labeling of a consumer product that contains a listed chemical.

Unfortunately, because Proposition 65 incentivizes individual pursuits by entitling private enforcers to 25% of the penalty collected for successful enforcement in addition to legal fees, a limited number of plaintiffs have engaged in shakedown lawsuits against small businesses over a lack of a sign. These lawsuits can easily cost several thousand dollars to litigate, causing many small businesses to settle out of court regardless of whether they were required by law to provide a warning.

Eliminates Inappropriate Use of Litigation

In 2013, recognizing the impact of these lawsuits on businesses, the Legislature passed AB 227 (Gatto), which provides businesses with fewer than 25 employees a 14-day window to cure a signage violation relating only to specific situations, including exposure to alcoholic beverages, exposure to a chemicals created through food preparation at a restaurant, environmental tobacco smoke or engine exhaust in a noncommercial parking structure.

AB 1252, however, would have broader application than AB 227 in that it would allow businesses with fewer than 25 employees to cure any type of signage violation.

With so many chemicals on the Proposition 65 list, including everyday products, it’s easy to understand why business owners sometimes fail to realize a warning sign is required. In fact, according to the Office of Environmental Health Hazard Assessment, “determining anticipated levels of exposure to listed chemicals can be very complex.”

Further, many business owners determine that signage is not warranted given the exposure levels of a particular chemical at their business establishment, but attorneys will still make an allegation in a demand letter in order to pressure the business into handing over a small settlement or risk ruinous litigation. AB 1252 will help eliminate the inappropriate use of litigation against these small businesses that can least afford these drive-by lawsuits, while ensuring that the public does receive Proposition 65 warnings when appropriate.

Next Steps

Follow @CalChamber​ on Twitter to see how the Assembly Environmental Safety and Toxic Materials Committee votes.

Staff Contact: Anthony Samson

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