A California Chamber of Commerce-sponsored bill to help protect businesses from predatory lawsuits has been signed into law by Governor Gavin Newsom.
AB 1607 (Boerner Horvath; D-Encinitas; Chapter 293) requires that businesses receiving or renewing their licenses get written notice of the Gender Tax Repeal Act, which precludes businesses from charging different prices for services based on gender.
The act requires certain businesses—tailors, barbers, hair salons, dry cleaners—to post a notice of pricing for standard services provided.
Businesses that violate the posting requirement are subject to a civil penalty of $1,000. Any violation of the pricing requirement is subject to a minimum penalty of $4,000 per violation plus attorney’s fees.
“We applaud Assemblymember Boerner Horvath for authoring this important legislation that will protect small businesses from unnecessary lawsuits and allow them to continue to provide services to their customers,” said CalChamber Executive Vice President Jennifer Barrera.
Small businesses in particular have been subjected to costly, frivolous litigation for being unaware of the Gender Tax Repeal Act requirement.
For example, an attorney in Riverside County targeted minority-owned businesses and demanded settlements ranging from $20,000 to $123,000 for minor price differences. Those differences were legitimate, being based on skill, expertise, and/or effort.
Although the small businesses ultimately prevailed, they spent a significant amount of time and money defending against the meritless claims.
Education and awareness of the Gender Tax Repeal Act is critical for small businesses, which have suffered from abuse of the law’s provisions.
Providing notice to businesses of the law in multiple languages at the outset, as required by AB 1607, will give businesses an opportunity to protect themselves from litigation by posting a notice of pricing if required and making sure customers are aware of the price differences for any service.
The requirement to provide businesses with the notice begins January 1, 2021. The state Department of Consumer Affairs is required to develop and make available for download by October 1, 2020 the written notification in English, Spanish, Chinese, Tagalog, Vietnamese and Korean.
