CalChamber-Sponsored Bill to Protect Businesses from Predatory Lawsuits Passes

Legislation sponsored by the California Chamber of Commerce to help educate businesses and protect them from predatory lawsuits passed an Assembly committee last week with unanimous support.

AB 1607 (Boerner Horvath; D-Encinitas) will provide notice about the Gender Tax Repeal Act to businesses when they obtain a business license.

The Gender Tax Repeal Act precludes businesses from charging different prices for services based upon gender and requires a select list of businesses (tailors, barbers, hair salons, dry cleaners) to post a notice of pricing for the standard services provided.

Violation of the posting requirement is a civil penalty of $1,000. Any alleged violation in pricing, however, is subject to a minimum statutory amount of $4,000 per violation, plus attorney fees.

Helps Small Business

Small businesses, unaware of this requirement, have been subject to frivolous and costly litigation. In Riverside County, an attorney targeted minority-owned businesses and demanded outrageous settlement requests for minor price differences, which were legitimately based on skill, expertise and/or effort.

The small businesses ultimately prevailed, but spent a significant amount of time and money defending against such litigation.

Providing notice to businesses of this law at the outset, as proposed in AB 1607, will provide businesses with an opportunity to protect themselves from these lawsuits by:

• posting a notice of pricing, if required; and

• making sure customers are aware of the price differences for any service.

Education and awareness of this law is critical for small businesses, who have suffered from the abuse of its provisions.

Key Vote

AB 1607 passed the Assembly Judiciary Committee on April 23, 12-0.

Ayes: Chau (D-Monterey Park), Chiu (D-San Francisco), Gallagher (R-Nicolas), Gonzalez (D-San Diego), Holden (D-Pasadena), Kalra (D-San Jose), Kiley (R-Roseville), Maienschein (D-San Diego), Obernolte (R-Big Bear Lake), Petrie-Norris (D-Laguna Beach), Reyes (D-San Bernardino), M. Stone (D-Scotts Valley).

AB 1607 will be considered next by the Assembly Appropriations Committee.

Staff Contact: Jennifer Barrera