| California
businesses are bracing for the full impact of a slew of new
laws, many of which will add to the cost of doing business in
an already lackluster economy. California Insurance laws increasing
workers' compensation and unemployment insurance benefits took
effect on Jan. 1, as did legislation temporarily taking away
business tax credits, raising the bar for employers to have
lawsuits dismissed, instituting new layoff notice requirements,
and allowing local jurisdictions to pass stiff new labor standards.
But most of the new insurance laws impacting California employers
are likely to have adverse impacts, costing businesses time
and money and further reinforcing the perception that the state
has become less business friendly. Topping the list is the increase
in workers' compensation benefits. AB 749. The insurance law
raised the maximum weekly benefit for injured workers from $490
to $602, effective Jan. 1. Two more increases, to $728 and $840,
kick in for 2004 and 2005, respectively.
While the benefit increases are not supposed to be felt until
claims payouts are made, employers are already feeling the increases
in the form of sharply higher insurance premiums. In many cases,
policy renewals are running more than 50 percent higher than
last year. The other high-profile insurance law passed last
year, SB 1661, which sets up a paid family leave program, doesn't
kick in until next Jan. 1, when employees start contributing
paycheck dollars to the state insurance fund to finance the
program.
Actual paid family leaves can't be taken until after
July 1, 2004. Employers are now feeling the pinch from higher
unemployment insurance benefit levels under a bill, SB 40 that
passed in 2001. The maximum weekly benefit rose on Jan. 1 from
$330 a week to $370 per week; that's on top of an even bigger
increase (from $230 a week to $330 a week) taking effect on
Jan. 1, 2002.
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Again, the main impact on employers is coming not from the benefit
increases themselves but from insurance premiums. Thanks to
higher benefit levels and increased usage of the unemployment
insurance fund in a slow economy, employers now pay an average
of $21 more per worker into the state fund. Higher taxes are
also on the way -- even for businesses that posted losses for
the 2002 calendar year.
Among other insurance laws that could
have negative impacts on business is AB 2509, which allows local
municipalities to set stiffer labor standards within their jurisdictions.
Another insurance law, SB 688, increases the time for objections
to be raised in court cases where an employer moves to have
a case summarily dismissed. Currently, plaintiffs have 28 days
to respond to a summary judgment; SB 688 increases that to 75
days. As a result, employer advocates say, it will become harder
and cost more to dismiss frivolous claims. On the workplace
injury front, employers now face tougher notification requirements.
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