Gender Tax Bill Raises Litigation Concerns for California Businesses

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The California Assembly will soon be considering a California Chamber of Commerce-opposed job killer bill that could require businesses to settle consumer complaints with a minimum of $4,000 in damages or face further costly litigation.

AB 1576 (Levine; D-San Rafael) has been identified as a job killer because it will create the same type of litigation environment that has plagued the business community with respect to disability access.

The bill proposes to significantly amend the Gender Tax Repeal Act of 1998 so that businesses could easily be sued for a consumer’s assertion that there was a price difference for substantially similar goods due to the gender of the intended user.

Costly Litigation

Although the recent amendments to AB 1576 provide a limited list of “gender-neutral” reasons a good may be priced differently, proof of those reasons will come up only after litigation has already been filed and costs and attorney’s fees incurred.

“AB 1576 would create a situation where a consumer could go to a separate retailer or even the same retailer daily and purchase multiple items the consumer believes are substantially similar, yet priced differently—with even a penny difference in price—and request the business to settle with the consumer for a minimum of $4,000 or face costly litigation,” said CalChamber Senior Policy Advocate Jennifer Barrera. “While the business may very well be able to prove the price difference was based upon a gender-neutral reason, the cost of litigation to prove that defense is significant.”

CalChamber’s opposition letter states, “This is the exact type of frivolous litigation that businesses across California are struggling with for alleged ADA [Americans with Disabilities Act] violations with regard to construction disability access requirements, as it is the exact same section of the Civil Code that covers both issues. California businesses do not need exposure to another layer of such extortionist litigation as AB 1576 will create.”

Small Business Concerns

Several small business owners from Riverside came to Sacramento on May 10 in advance of AB 1576 being considered by the Assembly to meet with their legislators to explain just how detrimental these types of situations are for small businesses.

Francisca Dumlao explained that passage of AB 1576 would make it easy to sue her business. “These people have the opportunity to make demands that are ruining us because we don’t have much money. We just own small businesses which we’re never going to get rich from—we’re just living.”

Graciela Fountain said being faced with one of these lawsuits comes as a shock. “They come and surprise us, and tell us we are wrong and we didn’t get a chance to fix it. The only thing we see is the lawsuit. We go to court and spend a lot of money and a lot of time.”

Rosie Quintana shared what it would mean to her business if AB 1576 becomes law: “It will give them the right to come in and extort money…extortion is not the way to go…We need to stand up for our rights as small business owners.”

Action Needed

The CalChamber is asking members to contact their Assembly representatives to urge them to oppose AB 1576 as a job killer.

An easy-to-edit sample letter is available at www.calchambervotes.com.

For the current list of job killer bills, visit www.cajobkillers.com/priorities. The CalChamber will continue to identify other job killers as bills are amended or further analysis reveals detrimental impacts of other legislative proposals.

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