By Gilbert Chan -- Bee Staff Writer
Published 2:15 a.m. PDT Monday, October 20, 2003

There was no signing ceremony, not even a signing message accompanying the enactment of the employment legislation.

Business leaders, however, lambaste the new law, which allows workers to sue their employers over wage and labor code violations. They argue it could have far-reaching financial consequences to employers across the state and be more costly than the landmark employee health bill, SB 2, signed by the governor earlier this month.

"Seven ninety-six is a horrible bill. We think long term it will be worse than SB 2," said Richard Costigan, chief lobbyist for the California Chamber of Commerce.

Carried by Sen. Joe Dunn, D-Santa Ana, labor-backed SB 796 was among dozens of lesser known business-related measures signed by the governor by the Oct. 12 deadline.

Of the 909 measures signed, the Davis administration touts nearly three dozen as "business-friendly bills." Those new laws call for cutting billions of dollars from California's financially troubled workers' compensation system, cracking down on moviegoers recording motion pictures at local theaters, improving loan guarantees to small businesses and allowing the Department of Corporations to accept electronic signatures.

Business leaders aren't impressed.

Other than the workers' comp bills, they argue the legislative report card falls far short of reversing the rising cost of doing business in California as well as reviving an anemic state economy.

"The (governor's) pro-business job bills are on the periphery," Costigan said. "Most of the bills that the chamber and the business community promoted died in the first policy committee."

While hot-button measures like the workers' comp package and SB 2 garnered plenty of headlines and attention from business lobbyists, other business bills swept through the Democrat-controlled Legislature and were signed by the governor -- many only days after the recall election.

"It could have been worse, but not by much," said Dorothy Rothrock, vice president of government relations for the California Manufacturers and Technology Association. "(Davis) did veto a few bills. He really didn't do much more for us after the recall."

But Davis backers, especially labor leaders, applauded Davis' record.

"He has acquitted himself well," said Nathan Ballard, spokesman for the California Labor Federation.

Among the 33 "business-friendly bills" signed by the governor was legislation:

* Exempting venture capitalists from reporting requirements of state lending regulations.

* Promoting bioscience education and job training.

* Restoring the California Film Commission and the Film California First program, which were originally cut in this year's state budget. The state also will target online music piracy.

* Reinstating a state and local tax exemption for furnace fuels and fuel oils.

* Developing a strategy to improve the state's tourism marketing plan.

Some critics contend the governor signed legislation pushed by labor unions in exchange for support during his recall election fight.

Labor officials disagree. "Even after the election, we had mixed results," Ballard said. He pointed to the governor's veto of one labor-backed bill, AB 274, an employment measure.

That was only one of two bills rejected by the governor that the state chamber had targeted as anti-business.

Overall, Davis vetoed only 6 percent of the bills on his desk, the lowest rate during his five-year tenure. Those that he did veto would have cost the state an additional $282 million in spending in 2003-04, officials said.

"The breadth of anti-business legislation that came through the last week (of the session) was so great that from a resource standpoint ... we were spread thin," Costigan said.

That's the case with SB 796.

Opponents contend Davis signed the bill after the recall election as a payback to labor. Davis officials did not return telephone calls for comment.

Calling it bounty-hunting legislation, critics say SB 796 could spark a wave of costly and abusive lawsuits.

The legislation would allow a worker to sue on behalf of other employees for wage and labor code violations. Moreover, it permits a judge to force employers to pay attorney's fees and penalties.

"This gives workers a valuable tool to make sure sweatshop owners will pay minimum wage," Ballard said. "This will keep labor law violators in line." He said criticism by business groups is "a parting shot at the governor."

Sacramento labor law attorney Sam McAdam said workers will be able to bypass the traditional state administrative remedies and head directly to court.

"This is a very significant piece of legislation that will deter businesses from staying or growing in California," McAdam said.

Other legislation the state chamber says could hurt business include new recycling fees paid by electronics manufacturers, a ban on the issuing of corporate-owned life insurance policies that make the employer the beneficiary, and a requirement that employers pay legal and court costs in wage rulings in favor of employees.

With a new Republican governor taking office, business groups plan to push for legislation to restore investment credits for the purchase of manufacturing equipment, as well as further workers' compensation program cuts, curbs on electricity rates and closing loopholes in consumer protection laws to prevent frivolous lawsuits -- a leading reform issue for Gov.-elect Arnold Schwarzenegger.

The Legislature failed to enact changes to Section 17200 of the Business and Professions Code, which allows prosecutors and individuals to correct corporate misdeeds, such as selling meat beyond its expiration date. But some attorneys have used that key consumer protection law to file thousands of lawsuits based on minor or easily correctable violations.

"The lawsuits have not stopped," said John H. Sullivan, head of the Civil Justice Association of California.

The association is huddling with business groups to consider launching a ballot initiative drive, a move that could cost millions of dollars.