Thursday, July 28, 2011

Hiring of Unemployed/ Lee Petillion

Legislation has been introduced in Washington prohibiting employers from not hiring people who are not employed. Apparently there are a number of employers that are putting on their job information sheets that people should only apply if they are employed. New Jersey is the only state in the country at this time that prohibits this. As small business people how do you feel about this?

Lee Petillion has been elected to the Board of Small Business California. Lee is an attorney at Petillion Hiraide and Loomis with offices in LA and South Bay. He specializes in corporate financing for early and growth stages companies. He will be heading up the access to capital committee for Small Business California.

We are excited about having Lee on our Board as he has a great background in access to capital for small business. He also has experience in writing legislation to help small business and with his help Small Business California will be introducing legislation next year to help access capital.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Friday, July 22, 2011

FLASH: Getting Back To Basics

I don’t usually send information this lengthy but workers compensation is a big issue for employers. See below.

Combined loss ratios in workers compensation are running close to 130% and for most businesses they are beginning to see small premium increases. My guess is at some point these will escalate fairly dramatically. We also are going to be watching what develops as a result of court cases that could increase cost.

The increase in permanent disability benefits has been a concern for employers and they do need to be adjusted. It is good to hear from our good friend Christine Baker that she wants to see cost reductions along with changes on the PD benefit.

As all of you I think know Small Business California has worked closely with Christine in her tenure as ED of the Commission on Health Safety and Workers Compensation and were an early supporter of her for the Director of DIR.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116


Friday, July 22, 2011
DIR's Baker Says Cost Savings Will Accompany Any PD Increase

Employers have nothing to fear from an anticipated increase in permanent disability benefits for injured workers, but ancillary players in California's workers' comp system -- insurance carriers, attorneys and other vendors -- better look out.

Christine Baker, acting director of the Department of Industrial Relations (DIR), says the administration is ready to increase PD benefits but only after if finds cuts elsewhere in the system to pay for the increase.

"PD benefits were cut substantially but our system is still the fifth costliest system in the country. Somebody is getting all that money, but it's not the injured workers,"

Baker told a group of employers yesterday at the California Coalition on Workers' Compensation's annual meeting in Anaheim. "We believe we need to restore the balance in the system...that labor/management balance between the costs and the benefits."

She pointed out that PD benefits account for less than one-fifth of the total benefits paid,so an increase could easily be off-set by cost-savings elsewhere in the system.

"The very large fluctuations in the costs to employers and the benefits available to injured workers over the last 15 years are the result of many interest groups in a system originally designed to serve the two key stakeholders -- employers and injured workers," Baker pointed out. She noted that applicant attorneys, insurance carriers and medical providers should and will have a voice in the negotiations, but maintained that their voices are secondary.

"Applicant attorneys represent injured workers the same way that insurance carriers represent employers. So in the same way that insurance carriers should have a role so should the applicant attorneys. But the two key stakeholders are labor and management."

The message resonated with the employer dominated crowd, which is clearly on edge over potential changes in benefits as well as expected increase in premiums to account for past cost increases.

Baker maintains that there are different ways to address the PD issue.
If the administration can find enough cost-savings then a solution could be enacted through the PD schedule. "If we can't find enough things to off-set the costs then we have to do it legislatively," says Baker.

"That will be a tradeoff. Sure one could add dollars there, but can we find a dollar savings? I'm not sure. We don't want to have a tidal wave of costs coming in to the system without a measure of savings."

Operational Savings

One of the first areas mentioned for likely cost savings is eliminating the high direct and indirect cost of medical liens.

Baker pointed out that the backlog of liens is the system is delaying resolution of cases and adding unnecessarily to the overall cost of claims. She says the Workers' Compensation Appeals Board doesn't necessarily need more judges to hear cases, just a better way to triage cases.

"In Los Angeles, 85% of the work load is liens. The answer there is not more judges, it's eliminating the unnecessary liens," she says, maintaining that the long-term solution is to reduce the disputes that lead to liens.

"There has to be a better way to resolve fee schedule disputes than asking a workers' comp judge to decipher procedure codes and conversion factors...Authorization of treatment was in dispute in 7 out of 10 medical liens surveyed. Clarifying the extent of [Medical Provider Network] control could reduce the number of those disputes."

DIR and the WCAB are also preparing to cut down on the amount of paperwork associated with liens through electronic filing and cracking down on the filing of amended liens. Baker likened the amount of paperwork from amended liens alone to a tidal wave crashing down on the district offices. She promised that new procedures will be coming shortly from the WCAB to enact these changes.

Operational Changes Planned

Baker also promised to streamline DIR's internal operations while continuing beneficial programs, such as its crackdown on the underground economy. She indicated that there will also be changes in how anti-fraud dollars are spent.

"I'm not so sure it's so efficient to have enforcement dollars going to the DAs and labor standards enforcement. We will be reviewing this together with the [Department of Insurance] and the Fraud Assessment Commission," Baker said.

She later clarified to Workers' Comp Executive that she is not necessarily looking at eliminating anti-fraud funds for the District Attorney's but for a greater emphasis on the bigger fraud cases.

She notes that the data matching program between DIR and the Workers' Compensation Insurance Rating Bureau, which will be undergoing some refinements, allows the department to quickly and cheaply identify uninsured employers. DAs, she maintains, should be using the funds to go after the higher fruit on the tree.

One planned change to the data matching program will be to limit the employer samples to those with at least 5 employees. Baker noted that currently the approach of using employer lists from Employment Development Department and WCIRB that cover all employers is producing too many false positives.

It turns out that many of the employers initially identified as being uninsured are actually owner operators and thus exempt from coverage, so setting the bar at five employees or more is intended to better focus their efforts on the truly uninsured.

Filed by Brad Cain from the happiest place on earth

Wednesday, July 20, 2011

Amazon Ballot Measure

Small Business California has been a strong supporter of requiring Amazon to collect sales tax. We feel that our brick and mortar stores deserve to be on a level playing field with out of state Internet companies. It is a simple fairness issue.

Amazon is in the process of circulating a petition to put this on the ballot. See below the wording of this. It will take about 505,000 signatures to put this on the ballot June 2012.

I don’t know if we can prevent this from getting on the ballot as Amazon has a lot of money to pay for signatures. I do think however we should be talking to our employees, customers and friends about this asking them not to sign.

Even if we fail we will have laid the groundwork to defeat the measure when it comes up on the ballot. What do you think?

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

The Attorney General of California has prepared the following title and summary of the chief purpose and points of the proposed measure:


If signed by the required number of registered voters and filed with the Secretary of State, this petition will place on the statewide ballot a challenge to an existing state law. The law must be approved by voters at the next statewide election to remain in effect. The law expands the definition of retailers
considered “engaged in business” in California to include certain Internet retailers selling toCalifornia consumers, so that out-of-state Internet retailers also collect existing sales or use taxes. (11-0019)

Tuesday, July 19, 2011

The results of our survey are a follows.
When small businesses were asked about what they are thinking about the future of their business.
1. 32 said they would move out of state
2. 63 said they wouldn’t move
3. 32 said they would move if they could but my type of business can’t
4. 20 said they plan on moving

San Francisco is implementing a new registration fee for Point of Sale Stations. As I understand it this was authorized by the state for local jurisdictions. Are any of you seeing this from your Cities or Counties.
If you have not seen this it might be coming. See letter from SF below. Click on the letter to enlarge the document.

For those of you in SF were you aware of this?

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Monday, July 18, 2011

Doing Business In California

We hear consistently California is a difficult place to do business. I would like to know your answers to the following questions about your business.

I would appreciate your answering the following questions.

1 I would move out of state if I could
2. I wouldn't move
3. I would move if I could but my type of business can’t
4. I plan on moving.


Small Business California may do a press release on this so I would appreciate as many responses as possible. All responses will be confidential.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Friday, July 15, 2011

Moving On to the Next Big Thing

Many of you know Marty. Please note he is leaving but I thought you would find his accomplishments interesting.

Marty we wish you well.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116


From: Marty Keller [mailto:Marty.Keller@OPR.CA.GOV]

Subject: Moving On to the Next Big Thing

Dear friends and colleagues,

It is with a sense of accomplishment and gratitude that I write to let you know of my decision to resign as the state’s Small Business Advocate effective July 31, 2011.

I am leaving this great job in order to work directly for small business owners. Come the beginning of August, I will be embarking on a different course of advocacy, one that will not be shackled by the restrictions of political appointment. I look forward to sharing the details of this new and exciting adventure in two weeks’ time. You can be sure I will be inviting you to join me.

In the meantime I want you to know how much it has been my privilege over the past four years to serve California’s 3.5 million small business owners as their principal advocate in state government. In this capacity I was happy to advocate on behalf of our state’s thousands of Disabled Veteran Business Enterprise (DVBE) owners as well.

For most of that time the office comprised just me and Michael Gonzalez as my deputy—and Michael has been gone for almost a year. The disparity between our meager resources and the sheer number of small businesses was extremely daunting, and became more so when the financial system collapsed in 2008. In order to accomplish anything of value we had to build and empower a “network of networks” to leverage the immense talents and insights of all those committed to the central contribution of small business to a strong, vibrant, and innovation-centric state economy.

And so from the beginning of my tenure I was able to rely on hundreds of business owners, association leaders, government officials, and technical support professionals, not just in California but across the country. Together we accomplished a number of useful and powerful results that, especially in light of the financial downturn and the current sluggish and fitful rebound, offer our state’s small businesses and DVBEs some tools for profitability and expansion.

• Governor’s Conferences on Small Business: We produced two highly successful Governor’s Conferences on Small Business & Entrepreneurship—the first in Los Angeles in November of 2008 and the second in Oakland in May of 2010. These conferences provided amazing connectivity to information and decision-making not only for those who attended but for the networks to which we all belong. That first conference produced a collaborative list of eleven recommendations to state officials for improving the small business climate; more than 2/3 of them have been implemented partially or completely.

• The Small Business Network: We created an information distribution network, one that regularly sends our items of interest to small business owners and supporters, which are in turn forwarded to greater numbers through network connectivity.

• Small Business Website: We created the state’s first small business website, initially through the Governor’s Office of Planning and Research, where OSBA statutorily resides, and then after April of 2010 through the Governor’s Office of Economic Development. We created a centralized small business/DVBE events calendar on the GOED web page.

• Interagency working group: We initiated an interagency working group which, meeting bi-weekly, provides every agency of state government with a small business mission the opportunity to share information and create collaborations to benefit small businesses.

• Small Business/DVBE Procurement Goals: I had the privilege of working with the state’s 250+ small business/DVBE advocates, thorough professionals dedicated to helping small businesses and disabled vet business owners do business with their particular state departments. During my four years the state has managed on average to place 25% of its procurement with small businesses, and has steadily increased its DVBE placement to just shy of the statutorily-mandated 3%.

• Outreach Programs: We partnered with the state’s remarkable Small Business Development Centers (SBDCs) and Business Matchmaking to sponsor ten outreach events both last year and in the current year, to bring to the far reaches of the state the kind of information and networking offered at the Governor’s Conferences.

• Legislation: We worked on legislation to make it easier for small businesses to succeed in California. AB 31 by Sen. Curren Price expanded procurement opportunities, and last year’s budget brought significant money to our SBDCs and various small business loan programs. My greatest disappointment is the total refusal by the legislature to effect meaningful regulatory and tax reform.

• Small Business Ombudsman: While working on these big picture items, we also worked daily with individual small business owners, connecting them to resources or potential collaborators, collecting unpaid bills from the state, helping them deal with officious bureaucrats, and giving them advice on how to solve their particular problems.

All in all, I believe we made state government a better partner for small businesses than it was when I got here.

But we have still a long way to go.

Small businesses are still, by and large, patronized rather than vigorously supported by our state leadership. While legislators love to give speeches about the importance of small businesses to our economy, they continue to impose onerous and/or petty mandates, while blocking effective reforms. This neglect is no longer sustainable.

In closing, I want to thank every small business owner that I have been privileged to work with, and the leaders of the various small business advocacy organizations across the state, along with my colleagues in local, state, and federal governments. You have shown me universal kindness in our dealings together, and you have put up with all my shortcomings with great forbearance. I look forward to continued collaboration.

Although the economy is tough now, and signs continue to suggest a long slog to recovery, I remain confident that the next wave of prosperity will exceed the expectations of most of us. The explosion of creative ideas, universally supported by the amazing tools and low costs of the network, and proceeding from the new era of abundance that the elimination of bottlenecks that the Internet has facilitated, means that in the near future everyone will be a potential entrepreneur.

We are Californians. “Grateful to almighty God for our freedom,” as we say in the preamble to our constitution, we created our government “in order to secure and perpetuate freedom’s blessings.” It is now up to us to ensure that government does this job we set for it, and stops overstepping its bounds. See you in August.

Yours for an abundant and profitable future,

Marty Keller
Director, Office of Small Business Advocate

Wednesday, July 13, 2011

Consultants/Health Reimbursemetn Accounts in San Francisco

I have heard complaints from small business owners about consultants. As most of you know many consultants are not licensed and there really is no oversight of their activities. It has been suggested to me actually by a consultant that these people obtain some form of licensing provided by the state.

Have you had problems with consultants?

What were they doing for you?

Do you think there should be some form of state oversight?

For those of you in San Francisco Thursday at 10 in the GAO committee there will be a hearing on legislation by David Campos requiring businesses with 20 or more employees to pay I believe quarterly into their Health Reimbursement Account at the prescribed $1.36 per hour or $2.07. But it is estimated the cost for businesses affected is about $50 million. While the Economic Report is not yet completed we are being given indications this cost about 1000 jobs.

It will be in either room 250 or 278 at City Hall. It is expected labor will have a big turnout for this.

For those interested I encourage you to attend. If you have any questions please let me know.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Tuesday, July 05, 2011

Bank of America/ SB Cal seeking new Board member

I previously sent an email on Bank of America increasing their interest rate on late payments to nearly 30%. In the interest of fairness please find response by B of A to Kurt Chilcott a CDC lender who is a member of Small Business California.

Small Business California is looking for a new board member in the San Diego area. If you or someone you know is interested please let me know. The ideal board member would have a knowledge of the small business community in San Diego and a desire to shape small business policy in Sacramento and Washington.

Hope you had a great 4th.

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

On June 25, new guidelines for consumer cards went into effect; customers were notified of these changes in April. If a customer is late with a payment, an interest rate increase is possible. Please note that last word. The bank would first review the account to determine if it is appropriate to raise the rate on future transactions. If there is a penalty for late payments, the maximum the new rate could be is 29.99%, and the customer would be notified at least 45 days in advance. Again, this is for consumer cards, and please note that most other major issuers already had a penalty rate. We also constantly work with our customers to help them understand and manage their accounts, using such tools as free automatic alerts for payment due dates.

As for small business cards, Bank of America eliminated many punitive fees and practices last year:
o Unlike most other issuers, we no longer charge over-limit fees.
o We no longer increase APRs on existing balances.
o We allocate payments above the minimum payment to higher-rate balances first.
o We provide a minimum of 25 days from statement closing date to payment due date.

Also, here is the link to the release last month on our new Small Business Charge Cards:

Kurt, thanks again for keeping us informed of talk out in the field. Hopefully this information will improve others’ understanding, and please let me know if I can provide anything else.

Enjoy the 4th!

Susan Povak | SVP/CSR National Program Manager | Community Affairs
Bank of America 100 Federal Street MA5-100-10-09 Boston MA 617.434.7333

Friday, July 01, 2011

Please see below changes in IRS Gas Mileage Rate and Sales Tax rates effective July 1. Thanks to our member Burr Pilger and Mayer for sending this.

The year is half over. Small Business California has been active this year in Sacramento and Washington. We have become a go to organization in Sacramento for legislators looking to pass legislation that helps small business.

Our lobbyist Lori Kammerer has testified on dozens of bills and usually is the only representative from the small business community.

We are sponsoring two bills [Buy California and Claims Administrator Reporting of Workers Compensation claims] and have gotten amendments on numerous bills. We also have been a major force in having out of state Internet companies collect sales tax on purchases.

Hank Ryan has continued to expand On Bill Financing in California and is working to expand small business use of energy efficiency vehicles. He frequently gives comments to the CPUC and over the last 6 months SB Cal has met with two CPUC Commissioners and many staff members.

In Washington we were a player in repeal of the 1099 requirement and getting a continuing resolution for the Small Business Innovative Research program.

We continue to be a resource for the media around the country. We provide comments regarding small business positions but more importantly we give them small business owners they can talk to. In the last couple of days our members have talked to the LA Times, SF Chronicle and the Sacramento Business Journal.

If you haven’t joined Small Business California I hope you will consider doing so. The cost is $150 for businesses with less than $1 million receipts and $300 for those $1 million or more.

You can join on line by going to:

Have a great 4th of July weekend!

Scott Hauge
Small Business California
2311 Taraval Street
San Francisco, CA 94116

Beginning July 1, 2011, Two Changes Set to Take Place

IRS Increases Mileage Rate to 55.5 Cents Per Mile

Due to recent increases in the price of fuel, the IRS has revised the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated.

The revised standard mileage rates are:

• 55.5 cents per mile for business use of an automobile.
• 23.5 cents for use of an automobile as a medical or moving expense.
• For automobile use as a charitable contribution, the mileage rate is fixed by statute and will remain at 14 cents.

These revised rates will become effective for mileage allowances that are paid both (1) to an employee on or after July 1, 2011, and (2) for transportation expenses an employee pays or incurs on or after July 1, 2011.

State Reduces Sales Tax Beginning July 1, 2011

Sales tax rates in the State of California will be reduced on July 1, 2011, by 1% due to the expiration of the temporary extension put in place by then Governor Schwarzenegger. The new effective rate for San Francisco will be 8.5%. In Oakland, the new rate will be 8.75%.

For other jurisdictions, see the pdf published by the State Board of Equalization:

If you have further questions, please contact your BPM advisor or email us at