Since it started ranking states as the best and worst for doing business in 2006, up until the most recent measure, Chief Executive Magazine has placed California at the single worst, #50, for every year. This is an abominable record. It advertises that our state is hostile to business, and that companies thinking about locating in California would do better almost anywhere in the US.

Regulatory Reform

Except in the case of emergency of health or safety, California should issue no new regulations without conducting an analysis that California needs to exceed whatever federal standards exist in the relevant issue, and whether the cost of California doing so, including the cost in lost jobs, is outweighed by the benefits to California.

California should undertake a rolling sunset of all existing regulations that have been in force for more than 25 years, covering roughly 20% of all these regulations every year. The regulations would automatically expire, unless the state agency affirmatively and specifically re-promulgates each one, having passed the tests required in the immediately preceding paragraph.

All new regulations should carry an automatic sunset within 10 years. If they are valuable, they can be re-promulgated – but based on evidence relevant to the current time, not the past.

Revenue Derived from Regulatory Charges

Whenever the state imposes regulatory charges, the revenue should be directed to lowering the burden on doing business in California that resulted from the regulation in question. See, for example, the proposal that the cap-and-trade revenues currently directed toward the high-speed train be redirected to increase the earned-income tax credit for low-income Californians.

Litigation Reform

California’s legal system is costly, inefficient, and hinders job growth. Indeed, the United States Chamber of Commerce ranks California as having one of the “worst” legal liability systems in the United States (44th out of 50). (Source: 2008 US Chamber of Commerce State Liability Ranking Study “2008 Chamber Study”, page 15)

The Chamber further notes that businesses evaluate legal liability systems when they make major business decisions, such as locating in a particular state (Id. at p. 9). Every frivolous court case strains our legal system and imposes unnecessary costs on small, medium-sized and large businesses. We can reduce these unnecessary court cases very simply: if someone starts a court case and loses, that loser should pay the winner’s court expenses. We should apply this rule to cases between parties that have contracts and consequently encourage businesses to settle their disputes out of court. In applying it to tort lawsuits, we should be mindful that access to justice not be precluded by the prospect of paying huge attorneys’ fees run up by the other side. So, some portion of the other side’s legal costs should shift to the losing party, with the judge able to decide what is appropriate in each case.

California’s present legal system is like a lottery ticket, but with almost no price to enter. Thus, many frivolous lawsuits are filed. Why not? There's no downside. The “loser-pays” rule will immediately reduce unnecessary frivolous litigation and promote a more efficient legal system.

This idea is not theoretical. Our neighboring state Arizona has implemented this very concept (Arizona Revised Statutes §12-341.01). Not surprisingly, the US Chamber of Commerce ranks Arizona as having one of the “best” legal liability systems in the country (14th out of 50) (Id. at 15). States that have enacted litigation reform show improved economic and job performance. (“The Link Between Liability Reforms and Productivity: Some Empirical Evidence/ Comments," Brookings Papers on Economic Activity (1998) (Kessler, Shepherd, Klevorick and Campbell).

Employment Regulations

1) Unless employees by secret ballot vote to the contrary, time-and-a-half must be paid for hourly-wage employees in California who work more than 8 hours a day. Federal law requires the same after 40 hours a week. The difference penalizes California employers and employees who choose to work four ten-hour days, for instance. California should conform to federal law.

2) For all of its prior history, California exempted agricultural workers from the time-and-a-half requirement after 8 hours. This reflected the reality that farm work needs to be done when the season is at hand. However, this was changed in 2016, phasing in a new system where agriculture is treated no different from other industries. The result is an increase to the cost of growing crops in California.

Employers will incur an increase in cost by undertaking the administrative burden of swapping out groups of workers after 8 hours and bringing in a new group for the 2 hours in a typical 10-hour day during harvest. There is no guarantee that employers will simply pay the time-and-a-half to the original group of workers. Other employers will simply not carry on operations after 8 hours, resulting in a loss of take-home pay for farm workers. This law should be repealed.

3) California law does not require overtime pay for professionals; a 2005 law creates the presumption that an employee making more than $36 an hour is such a professional. However, this requires a huge amount of recordkeeping of actual hours. A simpler approach would exempt any worker making more than $75,000 a year.

4) Under existing law, all workers on "public works" must be paid prevailing wage. This has been defined to mean any project receiving state funding, with the result that volunteers can no longer be used for teaching, environmental clean-up, etc., if the project receives any state money. The law should be changed to allow volunteer teachers and other service-providers.