A California Chamber of Commerce-opposed bill that will deter companies from creating jobs in California is awaiting action by Governor Gavin Newsom.
The proposal, AB 1601 (Weber; D-San Diego), improperly seeks to penalize California companies who move their call centers out of the country. The bill exceeds the boundaries of California’s jurisdiction by regulating activities in other countries and, therefore, is likely unlawful.
Disincentivizes Job Creation in California
California’s costly laws and regulations make it difficult for companies to do business in this state. Instead of alleviating some of those burdensome regulations, AB 1601 adds to the problem by disincentivizing businesses from creating call center jobs in California.
AB 1601 would require companies to give 60 days’ notice under the California WARN Act if they plan to move 30% or more of call center operations to a different country. Further, those companies would be barred for all state grants and tax credits for five years and would be identified on a public list.
Similar Bill Vetoed in 2019
In 2019, Governor Newsom vetoed a similar proposal, AB 1677 (Weber; D-San Diego), because it would deter investments in California.
“…While I am supportive of efforts to protect jobs in our state, I cannot support this bill. The significant penalties and restrictions proposed by this bill might dissuade businesses that have no intention of moving their operations from making any further investments in California—which could hurt, not help, California workers. For these reasons, I am returning this bill without my signature,” the Governor stated in his veto message.
The CalChamber has emphasized repeatedly that instead of establishing punitive measures to discourage the relocation of call centers outside of the state, legislation should be directed at encouraging businesses to stay in California by alleviating some of the burdens that are forcing them to leave in the first place.
Likely Violates International Agreements
AB 1601 also likely violates international trade agreements.
Both multilateral trade policies established by the World Trade Organization and bilateral, regional trade agreements such as the North American Free Trade Agreement assure international obligations to prevent impediments to global trade.
“We believe that AB 1601 represents a return to protectionism that will surely be seen as an affront to our trading partners,” the CalChamber said. “Therefore, this matter should be more appropriately addressed by the federal government.”
The CalChamber is asking businesses to contact the Governor and urge him to veto AB 1601.
Staff Contact: Ashley Hoffman